Independent Banker - January 2020 - 55

community. At least half of Bank of
Bird-in-Hand's customers are Amish
or Mennonites. (See sidebar, left.)
" We offer very simple products.
There's nothing fancy in our
repertoire, " Maley says. In addition
to the unique needs of the Amish and
Mennonites communities, offering
agricultural loans is critical, too,
because many Amish are tobacco
farmers, dairy farmers and organic
produce farmers.
Focused business plans like this are
emerging due to more stringent rules
on de novos, according to Thomas
Ko, a partner at Stroock & Stroock &
Lavan in New York City and a bank
regulatory attorney for the past 20
years. " The criteria are much tougher,
and the [regulators] expect much
more capital from de novos, " he says.
Technology, people and funding
Despite challenges in recent years,
successful de novo banks are
emerging in today's market. What
separates the wheat from the chaff
often comes down to a few key factors,
according to industry participants.
Several de novo leaders cited the
same strategies: cater to a typically
underserved niche market; utilize
cloud computing and other new
technologies to boost efficiency; raise
more funding than what may have
been previously necessary; and get
experienced top leaders and board
members on board.
Cai-Lee launched Piermont Bank
in July 2019. It was the first de
novo in a decade to receive both
regulatory approval from the New
York State Department of Financial
Services and the FDIC. A former
executive vice president for East West
Bank, Cai-Lee helped assemble an
executive team with vast experience at
community banks and other financial
" EVERY BANK NEEDS TO BE TRANSPARENT.
OUR RELATIONSHIP WITH REGULATORS
AND INVESTORS IS 100% TRANSPARENT.
EVEN OUR MOST JUNIOR PERSON AT THE
BANK IS AWARE OF WHAT WE'RE DOING. "
-Judith Erwin,
Grasshopper Bank
institutions, as well as a board
with deep banking experience and
extensive subject-matter expertise, as
well as diverse backgrounds.
Using cloud computing and digital
platforms has allowed Piermont
Bank to quickly meet the needs of its
primary target customers: privately
owned, entrepreneur-led businesses.
" We can turn around commercial
loans from application to funding in a
much-reduced timeframe than what
you typically would experience, " CaiLee
said in a July 2019 press release.
" We are combining the best of two
worlds-we automate and digitize
everything non-client-facing and
invested outsized human resources in
client-facing functions. This approach
allows us to deliver services with a
fully dedicated relationship advisor,
one meeting at a time, with greater
time and cost efficiency. "
Erwin of Grasshopper Bank
advises new banks to focus on
communication. She says they should
keep regulators abreast of potential
changes in the business plan, gather
feedback and connect with existing
and potential customers. " Every bank
needs to be transparent, " she says.
" Our relationship with regulators
and investors is 100% transparent.
Even our most junior person at the
bank is aware of what we're doing.
Clients can ask us anything and we
will tell them within privacy and
regulatory constraints. "
The success of today's de novo does
not rely solely on the business plan,
Ko says, but is " heavily dependent
on the organizers and their ability to
raise capital. " Experienced bankers
should be on a de novo's launch team,
too. He adds: " What really, really
helps ... is people who can understand
risk and have a clear business plan
with clear sources of funding. "
Experience matters
Maley of Bank of Bird-in-Hand has
been part of a de novo launch before.
She says the main asset a de novo
has isn't in " the assets on the balance
sheet, but in your people " -a belief
echoed by other de novo CEOs.
In the first year, Bank of Bird-inHand
hired just 10 people, largely
managers for lending, technology
and other departments. Maley looked
for bankers with startup experience
who were " rainmakers in lending and
deposit-gathering, " as well as those
with a desire to be progressive.
Like other successful de novos,
Bank of Bird-in-Hand aimed early
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