Before acquiring a small bank, Dallas-based Maple Financial Holdings Inc. investors considered forming a de novo or buying a larger bank, CFO William Wolfe said.
Instead, they applied to become a bank holding company in July 2017 and received approvals from the Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency. The holding company acquired First National Bank of Edgewood in November 2017 for about $3 million, Wolfe said. Investors raised $62.4 million in equity, but recently closed unit MapleMark Bank's initial capitalization at $90 million.
"The board discussed it and said, 'Yeah, we're seeing so much demand from the Dallas area from a lending perspective that, let's go get some more capital,'" Wolfe said in an interview.
Wolfe said when investors began raising capital in early 2017, "the window was theoretically open" for de novos, but few had received approvals since 2010. MapleMark investors also considered buying a larger bank with $250 million to $500 million in assets, but Wolfe said they did not want to end up with an expensive technology platform and unnecessary branches or employees.
"We kind of said if it's the same, and we reduce our regulatory risk by doing a little platform deal for a $20 million bank in east Texas that will get us expedited and open for business, that's probably the best path forward," Wolfe said.
Randy Dennis, president of DD&F Consulting Group, recently said that some investor groups are choosing to buy existing charters to avoid the challenges of starting a bank from scratch. While there has been an uptick in the number of new bank applications, Dennis said a "true startup" takes at least six months to get off the ground.
Maple Financial's acquisition was approved in about four months. "I attribute that to a management team that all the regulators had seen before," Wolfe said. "And it was a stellar business plan that was really focused on traditional banking and serving the local needs of commercial clients."
While the Federal Deposit Insurance Corp. has taken steps to encourage de novo formation, including shortening the heightened supervisory period from seven years to three years, developing a handbook and hosting outreach programs, Dennis said some banks are stumped on how to fund future growth since they can no longer rely on noncore funding.
"I think [the FDIC has] been really bending over backwards to try to help banks form," Donald Musso, president and founder of consulting firm FinPro Inc., said in a recent interview. "But the rules are the rules."
Acquiring an existing charter gives organizers a head start in terms of earning assets and deposits, Dennis said. He added that opportunities to acquire small banks are plentiful, given that there are about 500 institutions across the country with less than $50 million in deposits.
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Maple Financial moved its headquarters to Dallas, and its remaining capital will be used for organic growth, Wolfe said. It also has branches in Edgewood, Texas, and Tulsa, Okla. Wolfe said the bank hopes to grow above $1 billion in assets in about five years and plans to tap into a wider audience, either on a national scale or a targeted geographic scale.
"We're finding that because of all of the M&A activity, it's kind of left a doughnut," Wolfe said. "There's lots of small banks and there's big-bank competitors, but in between, there's a space where there's a definite need for a new entry."
He said MapleMark is a commercial bank, with most of its clients small-business owners and family offices. Wolfe called MapleMark a "boutique-y bank" with a focus on the "high-end." He said the bank's target loan size is between $5 million and $15 million.
He said part of MapleMark's business model is to focus on technology rather than creating an expansive branch network.
"There will be a heavy digital banking component that will allow us to broaden our reach, beyond just the one-to-one traditional black-card, private-banking model," Wolfe added.
