ABA Banking Journal - July/August 2016 - (Page 24)
How Bank Startups
Beyond the economic implications of the
de novo drought, the lack of bank startups
will have profound effects on future
banking industry leaders.
BY EVAN SPARKS
he year is only half past, but 2016 is well on its way to
joining 2011, 2012 and 2014 in a dubious distinction:
a year that zero new U.S. banks were chartered.
As consolidation of existing banks continues, many
have observed that the lack of new banks reflects
burdensome regulatory compliance, an inhospitable interest
rate environment, excessive capital requirements, an
insufficiently robust economy-or some mixture of all of these.
In his classic 1946 book Economics in One Lesson, Henry
Hazlitt writes that economics "is the science of tracing the
effects of some proposed or existing policy not only on
some special interest in the short run, but on the general
interest in the long run." And thus, while the drought of de
novo banks will ripple through the American economy, it
will have subtle, significant and virtually unexplored longrun effects on the next generation of bank leadership.
De novo bank founders are entrepreneurs, and the
entrepreneurial mindset is different from the "stewardship"
mindset that characterizes many bankers, says Trey Maust,
co-president and CEO of Lewis and Clark Bank in Oregon
City, Ore. While stewardship can yield growth-consider
Jesus' parable of the talents, in which the steward who
got the largest investment return for his master's money
was most highly commended-it also implies an inward
focus, a priority on preservation rather than risk.
ABA BANKING JOURNAL | JULY/AUGUST 2016
While it's a good model for a mature industry like
banking, every industry needs an entrepreneurial edge,
a bit of ebb and flow that brings fresh perspectives,
outside people and creative ideas. Since the recession,
the banking industry has been all ebb and no flow.
And what will that ebb tide mean for the future of
banking? Few bankers see the de novo drought ending
soon. The Federal Deposit Insurance Corporation says it
wants to ease the process for new bank investor groups,
something that ABA Chairman Dan Blanton strongly
encouraged in a recent meeting with FDIC Chairman
Martin Gruenberg. But the higher compliance burdens,
higher capital levels and low rates aren't expected to
go away (see James Chessen's column on page 22). "It
takes a unique situation to succeed today because of the
scale of all of the governance matters that the regulators
require of you," says Michael Ewing, vice chairman
and CEO of Oak View National Bank in Warrenton,
Va. "It's very difficult to find people to put up enough
capital to allow you get to the scale to be profitable."
And thus, if we are to look into the effects the de
novo drought "on the general interest in the long
run," we will see banks struggling to attract creative
outside talent, connect with small business customers
and channel innovation inside the bank.
Table of Contents for the Digital Edition of ABA Banking Journal - July/August 2016
HOW BANK STARTUPS BUILD LEADERS
LEADERSHIP LESSONS FROM THE WORST JOB I EVER HAD
BREAKING THROUGH $10 BILLION
PLATFORMS AND PARTNERS
EXCEEDING CUSTOMER EXPECTATIONS STARTS AT THE CORE
ABA COMPLIANCE CENTER INBOX
FROM THE STATES
CORPORATE SOCIAL RESPONSIBILITY
INDEX OF ADVERTISERS
ABA Banking Journal - July/August 2016