Advantage Bank has withdrawn its applications for state and federal approval to acquire First Bank of Lilly, a deal that would have paved the way for the startup bank to begin operations.
The approval process was proving to be tedious and no longer worth the wait, said one of Advantage’s founders.
“We felt that getting regulatory approval for Lilly and other potential future acquisitions would take longer than we needed to build our size and scale to become profitable,” said George Groves, one of the organizers of Advantage Bank.
The Lemoyne-based bank first announced plans to buy the Cambria County-based First Bank of Lilly last July. Lilly is a one-branch bank with six employees and some $22 million in assets, according to the Federal Deposit Insurance Corp.
Advantage has sought to merge with a bank that already had insurance through the FDIC. Doing so would save Advantage the hassle of having to obtain FDIC insurance on its own.
To achieve their goals, the bank’s organizers were hoping to raise at least $20 million.
The deal with First Bank of Lilly was originally supposed to close at the end of last year, but hurdles pushed back the merger into late in the first quarter of this year.
As the end of second quarter 2018 draws near, the merger still hasn’t closed. Advantage decided to cut its losses on June 12.
Withdrawing its applications was the right thing to do for Advantage’s investors, Groves said. He noted that the bank has returned the money it raised. Groves did not disclose how much was returned.
“We’re going to assess the situation and see what we do next, if anything,” Groves said.
A banking veteran, Groves founded The Legacy Bank in Susquehanna Township and served as the bank’s chairman and CEO from 1999 to 2006 before it was sold to F.N.B. Corp.
Other Pennsylvania business and banking leaders have played a role in organizing Advantage.
Percival Moser III – former COO of Metro Bank – is the board chair. One board member is David A. Schankweiler – founder and former CEO of Journal Multimedia, the former parent company of the Central Penn Business Journal before it was sold in 2016 to BridgeTower Media.
Starting new banks has been difficult since the recession.
Sixteen banks have been formed 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.
Before the financial crash, dozens of new banks formed each year.