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CREED Brings Crowdfunding to the U.S.

Posted by Wendell Brock on Thu, Dec 10, 2009

De Novo Strategy is a supporter of CREED and its nonprofit work; we invite you to participate in this project that CREED has just launched. It is a project that every entrepreneur should be a part of and enjoy supporting! Maybe a banker would catch the vision on and support this too!

CREED, a non-profit 501 (c)3 corporation, is launching a crowdfunding initiative to jumpstart small business in the U.S. Crowdfunding involves collecting small donations via grassroots marketing campaigns. The donations will be used to fund $5,000 in free start-up capital, awarded to the entrepreneur who sends in the most compelling business plan. 

Crowdfunding or crowdsourcing programs have been run successfully by two organizations in Ireland,Outvesting and iQ Prize. The two entities raised an aggregate 15,000 euros, by way of 50-euro pledges, to fund small business start-ups. 

CREED's effort will be similar. The non-profit is currently accepting $50 pledges, with a goal of accumulating $5,000. Once this pledge goal is reached, CREED will publish business plan submission guidelines and begin accepting business plan entrants. Everyone who pledges $50 to the effort receives one vote to help determine the best business plan among those entered. The plan with the most votes will be awarded $5,000 in start-up capital, with no strings attached. 

Please visit Crowdfunding to learn more about CREED's this great American opportunity.

Follow us at CREED

Topics: Banking, Marketing, De Novo Strategy, organizers, CREED, entrepreneur

How to Buy a Bank

Posted by Wendell Brock on Tue, Aug 11, 2009

An early decision bank organizers must address is whether to buy an existing bank or create a de novo bank. The right choice among these two options is always dictated by the particular set of circumstances faced by the group. At times, as circumstances and opportunities develop, bank organizers may even switch strategies in the middle of the process.

If the decision is made among the organizers to buy a bank, certain steps must be completed in order to get the transaction finalized. While each bank acquisition is unique, the steps generally fall into four major phases.

Phase One: corporation formation

Once the decision is made among the organizers to buy a bank, the group members create a stand-alone corporate entity. The newly formed corporation has two purposes: to purchase a bank and manage the organization’s funds. Other steps that are completed during this phase include:

•    Identification of the target bank
•    Negotiation of the purchase agreement
•    Sourcing and hiring of executive officers
•    Selection of a new bank location, as dictated by the business plan and/or assess the condition of the existing bank location

Phase Two: application

After the target is identified and the stock purchase agreement is in place, the group begins on the change of control application. The business plan within the application includes 10 separate sections; these sections are broken down and worked on until each is at least 80 percent or more complete.

Typically, each organizer must also complete an Interagency Biographical Financial Report (IBFR). This can be one of the most difficult sections; it must include each organizer’s personal and financial records for the previous two years and the current year, as well as projected records for the next year. The organizers should be compiling this information while the other sections of the application are being completed.

Phase Three: pre-file and comment letter  

Once the business plan is 80 to 90 percent complete, the organizers schedule a meeting with the regulating agency. At this meeting, the organizers must explain and defend their business plan to the regulators.

After the pre-file meeting, the group fine tunes and completes the business plan and sends it off to the regulating agency. The agency then has 30 days to make comments and request additional information. Once that request is made, the organizers have 30 days to compile the requested data.

Phase Four: Sell stock/capital and open doors

Often, when a bank is being purchased, a substantial amount (greater than 75 percent) of the capital must be raised by the time the application is filed with the regulators. In the current economic environment, regulators only want to approve “sure deals.” They are so busy with all the banking issues, that capital uncertainty is one issue they do not want to worry about in a purchase transaction.

For this reason, the organizing group is typically left with a private placement offering as the simplest way to raise the capital. Often this is done amongst the organizing group plus a few outsiders. The amount of capital required is dependent on the business plan approved. Typically, the regulators will require additional capital above the purchase price of the target bank to ensure that the new business plan has enough capital to succeed.

Once the capital has been transferred to the sellers of the bank, the doors may open “under new ownership.”

This is just a broad overview of the bank purchase process; each deal has unique circumstances that must be addressed. These circumstances could be legal in nature and involve counsel. Others are small details that can be easily overlooked by organizers. De Novo Strategy, Inc. has the experience and dedication to make the bank purchase project a reality and to help with every step.

Topics: bank buy out, Buy a bank, bank acquisition, bank aquisition, De Novo Strategy, organizers, capital, bank investors, buying a bank, bank applications

Good Business - Developing A Community Financial Center

Posted by Wendell Brock on Tue, Aug 19, 2008

Bankers have an opportunity in their communities to develop good business by doing good things. At De Novo Strategy we believe a successful bank will work to become the "Community Financial Center" of the market in which they do business. They can do this, for example, by promoting opportunities for the citizenry to improve their financial strength and security; teaching adults and children to save for their future; and offering financial education classes. These are a few of the best practices we've noticed, and we believe these efforts will help your bank succeed. We'll highlight more of these best practices as we find them in the marketplace.

As banks work to reinvent themselves into Community Financial Centers, they will attract the attention of local businesses and people who work to make a difference. Astoria Federal Savings of New York, for example, has done this with an annual essay contest for children aged 5-12. The contest, designed to help children learn to save for the future, costs Astoria Federal approximately $5,000. Considering that Astoria Federal is the fourth largest depository institution in its market, $5,000 is a relatively small price tag for a program that gives back to the community and develops loyalty from children and parents alike. What parent would not appreciate the help to teach his or her children good financial management habits? And, what child who becomes one of the many prize winners would not want to bank at such an institution? It is all good.

Choice Bank in Oshkosh, Wisconsin, has also embraced the idea of becoming a Community Financial Center; Choice uses its website to promote interaction between the bank and community residents. Any community event can be posted on the bank's website, and news, weather and many other items are also posted for the public's reference. In certain circumstances, community groups may even reserve the bank's conference room for special meetings. Choice Bank is also ahead of the banking internet curve; they have a blog! The blog is used to disseminate news and information to customers, and people are allowed to make comments freely on the blog-how great is that? This open communication allows significant access to the bank's management, and shows one interpretation of what it means to be a ‘Community Financial Center'.

Starbucks Coffee changed the way Americans viewed coffee by selling it in an environment suitable for socializing, doing business and, of course, enjoying coffee. I've held many business meetings at Starbucks-even though I don't drink coffee-because the place works for business, especially for mobile business where an Internet connection is required. Banks have the opportunity, as Community Financial Centers, to develop a similar business- and people-friendly atmosphere. This would of course require a marked change from the cold marble surroundings for which many banks are known. Should more banks follow this path, people might someday be asking, "What community financial center do you use?"

P.S. if you are in Oshkosh, stop in to Choice Bank for a cup of the bank's very own Choice Bank Coffee.

By Wendell Brock, MBA, ChFC
Principal, De Novo Strategy

Topics: Community Bank, De Novo Strategy, Community Financial Center, Choice Bank

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BankNotes© is published by De Novo Strategy as a service to clients and other friends. The information contained in this publication should not be construed as legal, accounting, or investment advice. Should further analysis or explanation of the subject matter be required, please contact De Novo Strategy at