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.
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