With an eye on opportunities created by recent bank mergers in the midstate, two banking veterans are teaming up to launch a new institution focused on lending to small businesses.
State regulators this week gave the new bank preliminary approval. Its organizers are now hoping to raise $20 million to $30 million in capital before beginning operations.
They are looking to build the new institution, called Advantage Bank, in part by acquiring an existing bank.
At the helm will be two people well-known in midstate banking: George H. Groves, who founded and ran The Legacy Bank in Susquehanna Township from 1999 to 2006; and Percival B. Moser III, who served as COO of Metro Bank until it was absorbed in February by F.N.B. Corp., the Pittsburgh-based parent of First National Bank.
Groves will be president and CEO of Advantage Bank, as well as a director. Moser will be chairman of the board. They are being advised by attorneys Nicholas Bybel Jr. and Carter D. Frantz of the Wormleysburg law firm Bybel Rutledge.
Other directors on the bank’s board are:
- J. Rodney Messick, CFO of Berkshire Hathaway HomeSale Realty Service Group Inc. in Manor Township, Lancaster County, and a former director at Metro Bank
- John B. Warden III, president of Warden Asphalt Co. in Lower Paxton Township, Dauphin County, and a former director at Legacy Bank
- Paul Woelkers, president and CEO of Lackawanna Mobile X-Ray Inc., a diagnostic imaging service based in the Scranton area, and a director at Landmark Community Bank in Pittston
Groves and Moser have identified a CFO, whom they decline to name. And they expect to find a chief lending officer from among executives affected by the string of bank mergers in Central Pennsylvania over the last year.
“There are some great candidates out there, and we’ll get one. We’ll get a great one,” Groves said, adding that the bank also is looking for office space.
New banks a rarity
Advantage Bank is one of only a handful of banks created since the recession of 2008, a downturn that prompted stiffer regulations and a tougher environment for startup banks.
The first post-recession startup was Bank of Bird-in-Hand, which opened in 2013 in Leacock Township, Lancaster County. Its founders raised about $17 million, said Bybel, who worked on that startup, too.
Groves, 72, and Moser, 69, cited their track records in starting and running banks, as well as their familiarity with the regulatory process, as key to earning regulatory approvals for Advantage.
“You have guys that know how to develop a strategic plan and how to relentlessly execute the plan,” said Bybel, who has advised two dozen startups over the years.
Groves first began discussing the plan with Bybel in January. He had been working previously as a consultant for Mid Penn Bank, which in 2015 bought the Schuylkill County bank he had been leading, Miners Bank. Moser, who spent five years as COO of Metro, came on board in mid-August.
Their plan hinges partly on finding and buying a small existing bank in early 2017, one that already is insured by the Federal Deposit Insurance Corp. The move will spare Advantage from having to go through the lengthy process of securing coverage as a startup on its own, founders said.
Likely targets are banks within driving distance of the Harrisburg area and with assets between $100 million and $200 million, Groves said. The targets could be banks with few other opportunities to merge, or that are struggling and in need of a turnaround.
The bank’s founders discussed their plan with FDIC officials in September, Bybel said. “We’ve gotten a very positive response from the regulators.”
Once a merger is approved and the bank is covered by the FDIC, Advantage will open business centers in Central Pennsylvania and begin looking for borrowers in its target market: Cumberland, Dauphin and Lancaster counties, as well as communities to the east, including West Chester and Downingtown.
Additional acquisitions could follow. “It depends on the opportunities,” said Groves.
Advantage expects to lend to smaller businesses that its founders believe could be better served. The bank will focus on industries whose businesses make good borrowers, such as veterinary and dental practices, Groves and Moser said. Most loans will be for less than $5 million.
“I do think that there are opportunities,” Moser said.
Those opportunities stem from recent mergers. But other factors also may prove favorable to the new bank. They include the prospect for higher interest rates, which are more conducive to bank profits, and a potential boost in economic activity under incoming President-elect Donald Trump, Groves said.
Banking regulation also could be friendlier in a Trump administration. Trump has promised to change or undo the post-recession Dodd-Frank rules that have drawn fierce criticism from the financial industry.
Groves and Moser expect to take 60 days to 90 days to raise the capital they need. It is expected to come from a balanced mix of bank directors and close friends, other individual investors and institutional investors that specialize in banks, Groves said.