The resurgence of de novos

Ken LaRoe photo courtesy of MacKenzie LaRoe

As the number of financial institutions have dropped, the number of de novos has started to rise. The founders of three startup banks discuss the importance of community banks to the country as mission-driven organizations.

By Colleen Morrison


The June 2022 FDIC Quarterly Report pointed to a total of 4,771 insured financial institutions in the U.S., a decline of nearly 50% over the past 20 years. But this bank consolidation trend may be on the verge of being countered, at least partly, by growth in de novo banks. In fact, 2022 has a replenishment rate—the number of de novo banks opened versus those banks that have merged, closed, or failed—of 11.7%, up from just 5.2% a year ago.

“Community banks are the backbone of small business, and small business is the backbone of our country,” says Ken LaRoe, founder, CEO and chairman of the board at Climate First Bank, a $240 million-asset de novo in St. Petersburg, Fla. “To me, a banking charter is a tremendous business delivery system. We’re helping small businesses who meet our value proposition, and it’s profitable.”

And community banks themselves bring a unique value proposition to the markets they serve, says Shaza Andersen, founder and CEO of $600 million-asset de novo Trustar Bank, based in Great Falls, Va. “Bank consolidation tends to leave gaps in the market that are best served by community banks,” she says. “We were driven to start Trustar Bank by customers and employees who wanted a community bank that best served their needs rather than relying on larger institutions.”

Lauren Sparks, founder, director and CEO of $42 million-asset Agility Bank, a de novo in Houston, Texas, also emphasized the vital role community banks play in the financial infrastructure. “It’s about how important community banks are to the economy. We have to make sure we keep them relevant and available for Main Street.”

Community banks serve their customers and communities first, making them mission-driven organizations.

Shaza Andersen: Community banks serve a vital role in communities across the country. This was especially true during the pandemic, supporting the PPP [Paycheck Protection Program]. Community banks stepped up for medium and small businesses throughout the nation, helping to save jobs and businesses.

Ken LaRoe: There’s margin in the mission. I think we make more money because of our value proposition. We’re one of the fastest-growing banks in the country since 2017. Is that because of our values proposition? It’s not in spite of it, I can assure you that.

Lauren Sparks: Your bank should be your trusted advisor to help you navigate the opportunities and tools out there. The key is that the technology is part of the relationship. Striking an artful balance between technology and relationship will bring customers to your bank.

A mission-driven approach puts community banks in a unique position.

Andersen: The ability to be agile, nimble and highly responsive is the advantage that community banks have. We know our customers, our markets and the unique needs of both better than anyone. Use that to your advantage and create the best banking experience possible.

LaRoe: And your staff is a key part of it. For example, our CTO joined us after reading about us in the Tampa Bay Times. He worked for a Silicon Valley firm and wanted to join our bank because of our mission. He wrote the code for us to do a fully digitized solar loan program, including AI decisioning. Now our clients can complete an application in two and a half minutes and have an answer. Since we launched May 1 with the digital platform, we have closed $8 million in solar loans.

Sparks: There’s a lot of what we’re doing today that will change, because we will learn from it. We have unique generations of clients who don’t speak the same language, and some will not consider channels that others will, so it’s about being agile. We have the opportunity to keep reinventing ourselves. It’s a different world, and it’s exciting to be in banking now.


ICBA offers resources for de novo banks

To support de novo banks in their early-stage journey, ICBA offers resources to guide the process, including a three-year complimentary membership. This membership provides access to educational opportunities, compliance and risk resources, industry toolkits, discounts with Preferred Service Providers and more.

Learn more about ICBA’s resources for de novo banks »


Colleen Morrison is a writer in Maryland.