16 July 2020

Businessman Files to Set Up Rare New Bank

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Bill Greiner is fed up with banks. But instead of quietly seething or complaining to customer service, the 48-year-old is taking a more radical approach: He is trying to launch his own lender. Mr. Greiner’s proposal, filed with regulators in October, is the first deposit-insurance application for a new bank that the Federal Deposit Insurance Corp. has received all year. If Primary Bank, Mr. Greiner’s proposed firm, wins approval, it would be only the second new bank the FDIC has cleared in the U.S. since 2010.

Mr. Greiner is taking a gamble: Ever since the financial crisis, banks have been struggling with renewed regulatory scrutiny, competition for a limited pool of loans and low interest rates, which squeeze margins and put pressure on profits. Given that backdrop, it is no surprise that not many new banks have seen the light of day. From 2000 to 2007, the FDIC approved on average 159 applications for new banks each year. Last year, it approved just one new application.

According to research from Federal Reserve economist Jacob Gramlich, factors like low interest rates and weak demand for banking services account for “a very substantial piece” of the decline. The overall number of banks in the U.S. has fallen consistently for three decades. But the paucity of new banks in the past five years has heightened concern that small businesses might not have as many options as they once had for loans, cash management and other banking functions.

Mr. Greiner believes Primary Bank will fill a void for smaller loans in his region. The new bank has raised $3 million from more than 130 investors as initial capital to hire executives and start building a branch.

More than 90% of these investors are from New Hampshire, which Mr. Greiner said indicates broad-based local interest. He estimates Primary will attract $80 million in deposits in its first year and $130 million in its second, both from these initial investors and subsequent customers. Primary will aim to make loans of $100,000 to $4 million to small businesses and nonprofit organizations in and around Bedford, a well-to-do town southwest of the state’s largest city, Manchester.

Raised in Florida, Mr. Greiner moved to New Hampshire two decades ago. From 2003 to 2004, he led Bedford’s council, running town meetings and cutting ribbons, among other duties. He has stayed involved, this year getting into a political quarrel with two candidates running for local office. Most days, Mr. Greiner works out of his second-floor office managing his real-estate investments. But it is the new bank that takes up an increasing amount of his time.

Mr. Greiner’s dissatisfaction with larger banks has roots in the financial crisis, when he was trying to close a deal but couldn’t get suitable loan terms from Providence, R.I.-based Citizens Financial Group Inc., with which he had done business for years. He started dealing more with locally owned banks that he found more receptive.

In 2011, one of his main lenders, Hampshire First Bank, agreed to a sale to its larger rival, NBT Bancorp Inc., based in Norwich, N.Y. Following the sale, Mr. Greiner found Hampshire started taking “much longer than normal” to process his loan business, including a $1.25 million loan he had taken out to expand.Bil

Following the sale of Hampshire First, two other small banks in the area also sold out to larger banks, cementing Mr. Greiner’s view that he could profit from stepping into the breach. He has hired a handful of senior executives, including former Bank of New England President William Stone as Primary’s chief executive. Mr. Greiner, who will be one of the bank’s biggest shareholders and serve on the board, also has rallied a group of 12 others to serve as board members, including John H. Lynch, a former New Hampshire governor.

While not commenting on Primary specifically, New Hampshire Banking Department Commissioner Glenn Perlow, whose approval is needed for the pending bank to launch, said he sees the need for new institutions in the state.

Mr. Greiner hopes to get regulatory approval for the bank as early as next quarter and to eventually raise as much as $40 million in capital, through the community and with the help of some New York investment banks.

Click here to access the full article on The Wall Street Journal. 

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