Diary of a Startup in a Regulated Industry

by francine Hardaway on November 10, 2008

What do we need to fix an economic crisis?
 Where do you get money?

With this cheer in mind, a group of bankers, lawyers, entrepreneurs and I forged ahead last year to start a new bank with a new vision. You know me, I'm transparent, so here it is–without violating any SEC rules.

We have a great idea. We are starting three banks at once, under the overall governance of a holding company.

Three banks serve three different communities in three different states, California, Arizona and Texas. They are all states we know well.
Three banks diversify risk. Three banks have three different business plans, each unique to the needs of its community.
Three banks allow more people to be involved. We have three separate bank boards, and a holding company board. Very difficult to get away with any hanky-panky with that kind of organizational structure, IMHO. Also, there's me, the Town Crier, on the board of the Arizona bank. And the investors. We want LOTS of investors. In the past, banks were often put together by rich guys pooling their money. Not us.

We formed the holding company. We got the charter approved for the first bank. (I can't mention any names because we are in a "quiet period" for raising capital.)

Then the FDIC decided it would not charter any new banks in Arizona for the forseeable future, because the existing banks in Arizona are in such a mess.

Let me see: the existing banks are in real estate. We had no plans to be in real estate.
The existing banks don't serve entrepreneurs. We wanted to serve entrepreneurs.
The existing banks no longer have the capital to serve operating businesses. We want to serve operating businesses.

So we can't exist because???? Because no one wants to bother applying a new solution to an old problem when they can apply an old solution. (I'm a little frustrated, can you tell?)
I understand the FDIC's point of view; they're buried in problems in the state of Arizona, brought about by the real estate meltdown and the credit crunch.

But we want to be part of the solution: we are new community banks coming in with fresh capital raised from small investors who want to be part of a new concept in banking — community banks actually OWNED and run by the communities they serve.


So we hit a bump in the road. We spent five hours in a meeting on Saturday, and we made a new plan. We get the California bank open, we work on getting the Texas bank open, and we pray for Arizona.

I love the team of guys I am working with. Yes, I'm the only woman on the Arizona bank board, but believe me I am not a token. We are a team, working together, and they hear me when I talk about entrepreneurs and their needs.

We will get this done.

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{ 2 comments… read them below or add one }

John November 10, 2008 at 8:57 am

Wow, what a cool venture. Go get ’em Francine!

Michael R. Bernstein November 10, 2008 at 9:15 am

Add New Mexico plz?

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