First New Community Bank In Decades Headed To US Market

The U.S. is set to see its first new community bank in decades, as the Federal Deposit Insurance Corporation (FDIC) lent its approval for MOXY Bank to launch in Washington, D.C.

The bank is one of several newly proposed community banks in the region, with goals of disrupting the financial services landscape, including business and corporate banking. MOXY Bank, for example, aims to introduce corporate treasury management services, as well as offerings for small business (SMB) owners.

“The bank’s focus is to create financial equality throughout the communities served, by combining the latest technological advancements with community banking values,” MOXY said in its announcement last year before the FDIC’s recent approval. With clearance to move forward with its plans, the community banking landscape will see its first new industry player in years.

Bloomberg listed Casey G. Mauldin as MOXY’s Chief Executive Officer, with William M. Fleming as its Senior Vice President and Chief Financial Officer.

DLA Piper, which advised MOXY on its FDIC application, said in a statement this week that the bank is still awaiting clearance from Washington’s Department of Insurance, Securities and Banking. The FDIC’s announcement said a private placement offering will raise at least $25 million for the bank ahead of its launch.

Reports in FinTech Futures on Wednesday (Jan. 30) noted two other community banks proposed for the area, including Vision Bank and Trustar Bank, both of which are in the middle of seeking regulatory approval.

“After a decade of community bank consolidation, without a single new bank charter, we see a generational opportunity to bring true community banking — and unparalleled customer service — back to the Greater Washington region, arguably the best banking market in the nation,” stated Vision Bank, according to reports.

In an interview with American Banker earlier this month, Trustar CEO Shaza Andersen said the institution could open its doors as early as this June, with plans to raise up to $50 million in initial capital, the publication said.

The effort among newcomers to disrupt the community banking space comes as the industry emerges as a key source of financing for small businesses. In a report published last year, the U.S. Government Accountability Office (GAO) analyzed lending among community financial institutions (FIs) between 2001 and 2017, and concluded that these FIs “are important sources of credit to small businesses.”

Analysis found that community banks’ role in SMB lending may be even greater than some data revealed, considering that the definition of “small business loan” excludes loans larger than $1 million, the GAO noted.

“When we accounted for exits from the community bank population, the increase was even larger,” the GAO’s report stated about the industry’s growing role in SMB finance. “Specifically, survivor community banks’ total business lending increased by about 36 percent, from $563 billion in outstanding loans in 2010 to $765 billion in 2017.”

The emergence of several possible new community banks could signal interest in the small business financial services community to boost competition from sources other than FinTech firms, just as challenger banks in the U.K. have emerged to do.

The FDIC held a meeting in 2016 with community bankers about their concerns with facing competitive headwinds, not only from large FIs, but from FinTech firms as well.

“I think these [non-bank], FinTech-type opportunities are going to be the biggest threat to, especially, community banks going forward,” said David Seleski, president of Florida-based Stonegate Bank, at the time. “There are so many services we offer to our clients, but there’s also a threat from non-banks eating into our traditional profit area.”

In 2017, small businesses sent a letter to Congress, urging lawmakers to ease regulatory burdens on community banks in an effort to heighten access to small business financing.

“We believe Congress should develop common sense reforms for community, mid-size and regional banks, which would help empower Main Street businesses,” the letter, signed by more than 100 state and local chambers of commerce, read. “We urge you to make such legislation a priority.”