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Midstate banking veteran Andrew Samuel to launch new bank in region

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Andrew Samuel
Andrew Samuel - (Photo / )

Andrew Samuel worked in Harrisburg and Lancaster for over 30 years before he moved to Florida in 2014 to head up a bank there.

The banking executive said he always wanted to come home and open a new community bank.

And now that his non-compete clause has expired, he is back in Central Pennsylvania, gearing up to open Linkbank, a community bank catering to nonprofits and small businesses.

“I’ve always been passionate about community banking, about building intimate relationships with your clients and the community,” Samuel said.

Samuel is no stranger to starting banks, having founded Graystone Financial Corp. in the 2000s. But he is making this latest attempt in a regulatory environment that has not been conducive to new banks.

Who are Linkbank's leaders?

  • Andrew Samuel, chairman and CEO
  • Brent Smith, president. Smith served as a senior vice president of corporate development at Sunshine Bank and the vice president of special projects at Susquehanna Bank
  • Jeffrey Renninger, COO. Renninger served as a senior vice president at BB&T Corp.
  • Jermaine Crosson, CFO. Crosson served as CFO at Sunshine Bank and a vice president and controller at Members 1st Federal Credit Union
  • Jane Tompkins, chief risk officer. Tompkins worked as the chief risk officer at Sunshine Bank and an executive vice president/senior credit officer at Susquehanna
  • Tiffanie Horton, chief credit officer. Horton worked as a vice president of consumer credit at Sunshine Bank and as a regional credit officer at Susquehanna

From Sunshine to startup

Samuel, a former Dillsburg resident, worked at several community banks in Central Pennsylvania before working briefly as a market CEO for Sovereign Bank in 2005. He then went on to serve as a founder and CEO of Graystone Financial Corp. and Tower Bancorp before Susquehanna Bank bought Tower in 2012.

After the sale, Samuel worked for Susquehanna before resigning and moving to Florida in 2014.

There, he served as president and CEO of Sunshine Bancorp, a Florida bank holding company with roughly $1 billion in assets and 18 branches. He wrapped up a sale of the bank on Jan. 1.

A non-compete clause kept him from working in Pennsylvania even after Susquehanna was sold to BB&T Corp. in 2015.

With the non-compete clause out of the way, he is leading a team that hopes to run Linkbank. Its holding company would be Linkbancorp.

The bank expects to operate three branches: one in Camp Hill, one in Lancaster and one in West Chester.

The company has signed a lease for the Camp Hill location at 3045 Market St., while a Lancaster branch has not yet been finalized.

The location in West Chester is currently the sole branch of Stonebridge Bank, which Linkbank is in the process of acquiring.

The bank’s holding company, Stonebridge Financial Corp., filed for chapter 11 bankruptcy in 2015.

Linkbank has agreed to purchase the bank only, with the proceeds going to satisfy the creditors of Stonebridge Financial. Samuel did not disclose the price.

Stonebridge has one branch and assets of $58 million, down significantly from previous years, according to the Federal Deposit Insurance Corp. It reported a net loss of $232,000 in the first quarter of 2018. 

Linkbank last month completed a capital campaign, which began June 1 and had raised $40 million as of June 27, Samuel said, adding that money was still coming in.

“It’s a testament to how community leaders and investors in Central Pennsylvania feel about the need for a community bank,” Samuel said.

In the meantime, Linkbank is awaiting regulatory approvals, said Samuel, who will be its chairman and CEO. 

The regulatory process for new banks has been difficult over the last decade.

Before the financial crash, dozens of new banks formed each year. But only sixteen banks have sprung to life since 2008, including Bank of Bird-in-Hand in Leacock Township, Lancaster County, three banks in California and two in Florida, according to the FDIC.

Another midstate startup bank, Advantage Bank, which also tried to acquire an existing bank, has hit some snags.

The Lemoyne-based entity withdrew its applications for state and federal approval to buy First Bank of Lilly after the approval process took longer than Advantage had anticipated.

Regulators today want startups to have more capital and grow more conservatively, which would reduce the likelihood of a de novo bank failing, something that was a big challenge in the financial crisis, said Jeffrey Marsico, executive vice president of bank consulting firm The Kafafian Group Inc., which is based in New Jersey and has an office in Bethlehem.

Launching a startup

Acquiring other banks to launch a startup rather than applying for a new charter altogether is a relatively popular strategy for startup banks today, said Jeffrey Marsico, executive vice president of bank consulting firm The Kafafian Group Inc., which is based in New Jersey and has an office in Bethlehem.

Marsico is speaking about startups in general, not Linkbank in particular.

It takes six months to acquire an existing charter as opposed to the year it takes to get a new one, according to Marsico.

“When you’re acquiring a smaller bank, the regulators know what you’re doing. You’re basically trying to impose your business model on the acquired financial institution,” said Marsico.

Acquiring an existing charter also means that a new bank has revenue as soon as it opens its doors. And it finds a core IT system already in place, Marsico said.

But startups don’t have completely free rein when they acquire another bank, according to Marsico.

Regulators, Marsico said, tend to place restrictions on a startup group’s ability to do everything it wants to do with a newly acquired charter, forcing the group to modify its strategy.

De novos, or banks that have been started from scratch, have some advantages.

They’re not stuck with a legacy infrastructure or problems, if there are problems, Marsico said.

Additionally, the management team doesn’t have to reengineer an existing business model. And new banks get to pick their footprint rather than starting off in a legacy geography, Marsico said.

“A lot of the banks that failed were relatively small startup financial institutions. So they’re trying to stop the repeat of that history,” Marsico said.

Samuel is confident Linkbank will receive approval, in part because of the experience and quality of the management team he has assembled for Linkbank.

“We have a pretty seasoned management team that’s done de novos before, has run banks from $100 million in assets to $18 billion in assets, knows the marketplace very well, is a young management team that still has a long runway,” Samuel said.

Additionally, regulators look for a robust level of capital – not only capital raised, but also the management team’s ability to raise more capital in the future, Samuel said.

“You have a good management team, capital follows them. And in our situation, we believe that the level of capital we’re raising, which is over $40 million, is something that will give regulators comfort,” Samuel said.

Brent Smith, who will be the bank’s president, said Linkbank’s board will also appeal to regulators, which include the Federal Reserve.

“The FDIC and the Fed both specifically look really deeply at the biographies of the board members and all of ours have prior board experience … They understand what it’s like to run a bank,” Smith said.

With all of the bank mergers that have taken place in Central Pennsylvania, Samuel believes regulators will see there is a need in the midstate for a community bank that is geared to small businesses and nonprofits. It would join other local community-focused banks, such as Centric Bank, F&M Trust, Mid Penn Bank and Orrstown Bank.

Smith is excited to be back in the community and reunited with his team, all of whom worked at either BB&T, Susquehanna, Graystone or Sunshine.

And, of course, he is excited about Linkbank.

“We want to work with family-owned businesses. We’re not the beginning of their story, and we’re not the end of their story. But if you think of it as a chain, we want to be a really vital link in the middle,” Smith said.

Editor's note: This story has been updated from its original version to show that bank analyst Jeffrey Marsico was speaking about startups in general, not Linkbank in particular. 

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Shelby White

Shelby White covers banking and finance, law and Lancaster County for the Central Penn Business Journal. For tips, email her at swhite@cpbj.com.

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