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Part of a strong crop of de or new, banks statewide in 2007, Dallas outpostzs have largely escaped the impact of thedown economy. They’re not writinh off real estate loans becausethey didn’t make But they are facing increasing competition in the communithy bank niche as well as a continuing plethora of retaik banking branches from the giant banking companies. Although 2006 and 2007 were banneer yearsfor startups, 2008 is unlikelh to mirror that pace. “There were threr in February, one in March and two in May andnothing since,” said Paul an associate at Houston-based investment banker “Thde money just dried up.
” Now bank organizers are findingt it easier to sell investors on buying a bank that is already making money, Stephens said, because new banksa are traditionally expected to lose money the first break even the second and then make “meaningfulk earnings” in the third. Even if a purchased bank isn’t making money, an experiencex bank team can often cut costs and make it profitables faster than the de novo he added. A purchase also allowxs the group to bypass startupo costs and the lengthy regulatory processa and has been popularwith out-of-state banksa aiming to set up shop in The state is still a draw because of its growth.
Despite the vigorousz activity, Texas isn’t amony the states with the most intensee competition inbanking services, according to an analysis by the . the state’s major urban centers, includinhg the Dallas area, have seen a largwe increase inbank branches. The Dallas-Fort Worth metropolitaj area had 1,817 branches as of an increase of 506 locationssince 2002. “In the economy is better than most parts of the so community banks are making moneyand growing,” said Lee an Atlanta-based managing partner with investmenty banker Commerce Street Capital LLC of Dallas. “There’ws a slowdown in the numbee ofcharters now, because it’s harder to raise capital.
But it can be a bettert time to start at the bottom of aneconomixc cycle, where you don’t have a hot market wher e people are making a lot of loansw that will be questionable down the road,” said who has helped to raise capital for 126 de novo including many in Texas. “The new banksx that started out with fresh capita and no bad assets are at the head of theclasa now, at a time when the regionao banks have had to batten down the hatches and cut back on theirf employees. That gives the new banks an opportunity to pickoff (the largee banks’ unhappy) customers,” he said.
The greatest predictor of a new bank’sa success is who’s running the bank, and if they’v e been through the procesd successfully before, Bradley Among the class of 2007 is which opened in April 2007 near President Georgw Bush Turnpike and Alma Road in President and CEO Gary Mulhollen has workeed in community banking in the Dallas market since for banks bigand small. One draw for establishintg Vision Bank-Texas was to be able to cut throughb the bureaucracy and offer customers access to good bankere in aconvenient setting. A second branch is plannedd to opennext year.
People may question whether therde are toomany banks, but there are definitelyh not that many good bankers available, , he so recruiting them to his operation is one way to distinguisuh it from the multiple retail branches formag of some of the larger, national players. The bank employs 13. Visionb Bank-Texas, which has 96 shareholders, startedf with $14 million in As of June 30, the bank had $41 million in loanas and $37.
6 million in deposits, Mulhollen Projections called for profitabilitgy at18 months, and the bank did it in 12, he One factor in that milestone was the decision to leass space, which allowed the bank to open with less than half of the occupancy expense had it built its own building. Its bread and buttetr is small business, including loans of up to $3 million for companiex in sectors ranging from manufacturingy tohealth care. “We don’ t do any residential construction loans, and that was the plan from day he said. Still, the bank wages “a constanr fight for deposits,” he said. One nearby competitore is another 2007 de novo targetingv Richardson andnearby areas: .
Opportunityg Bank opened in June 2007 near Campbell andPlanlo roads. “We’re very happy with where we’res at. We have no real estate but we are seeing some deals that otherbankse can’t take on anymore,” said Bill senior vice president-operations and retail. The bank, whichb employs 21, is on task to hit profitability atthe 18-month mark, he said. It has depositsd of $45 million and $32 million in