Amid an avalanche of bad news about banks failing and loans turning sour, Spring Bank is just getting into the business.
At first blush, it may sound like a case of really bad timing for a bank to open during one of the worst periods for banking in history.
But when you think about it, says David Schuelke, chief executive of the new bank in Brookfield, the timing actually is auspicious.
"This is a great time to start a bank. We're starting clean and fresh. Other banks have issues," Schuelke said.
The main issue: Large banks are focused on internal concerns, such as deterioration in their loan portfolios, and are trying to conserve cash.
That has made the competition for local business loans less aggressive than a couple of years ago when banks worked feverishly to outbid each other, said Schuelke, a former JPMorgan Chase & Co. executive in northeastern Wisconsin before being hired by bank organizers to head Spring Bank.
In addition, Schuelke said, Spring Bank doesn't have bad loans of its own. Rather, it has about $12.5 million in start-up capital it raised from investors to get the bank up and running. It opened its doors in September.
Spring Bank is focusing on lending to small- and mid-sized privately owned businesses - the kind Schuelke said often are frustrated by their treatment by large banks with loan policies that don't always translate favorably to every market.
"Entrepreneurs, small and medium-size business owners are looking for service - that ability to sit across a table from somebody who can make a decision," Schuelke said. "The products in banking don't vary a whole lot. It's how you do things, who delivers and how you deliver your service."
Banking consultant David L. Donihue said Schuelke is right.
"The big banks are all concerned about problem loans," said Donihue, managing director at Maximizing Shareholder Value & Co., of Leesburg, Fla. "They are sidetracked from their day-to-day operations. They don't have time to go out and market. And not only time, I don't think they have as much money to lend. I think it's a great time for not only the brand new banks, but the community banks that have been doing things right, to take money away from some of the bigger banks."
Spring Bank, located in temporary offices until an office building that will house its headquarters is built at the corner of S. Moorland Road and W. Greenfield Ave., has 10 employees. Among them are some veteran bank executives from the area, including Dean Zwick, who was with Oak Creek-based Tri City Bank, and Glenn Michaelsen, formerly of Investors Bank in Pewaukee.
Schuelke said the bank's broad market is southeastern Wisconsin, with special focus on Waukesha, Ozaukee, Washington and western Milwaukee counties.
Donihue said if Spring Bank were just beginning to raise start-up capital now, it - or any new bank - would have a tough time. Spring Bank began raising money from investors before the fallout from the mortgage slump was full-blown. Even still, it took Schuelke and the organizing board about 30 to 45 days longer than expected to get the money they wanted to launch the bank.
Schuelke said the bank's plan calls for reaching profitability on a monthly basis in the second half of its second year in business. A major slowdown in the economy could delay that.
"A long recession isn't going to be good for anybody. But the benefits of being a new bank are great because we don't have any overhang heading into this period. But it would be challenging to any financial institution," Schuelke said.
Eventually, Schuelke said, he could envision Spring Bank with from $500 million to $700 million in assets.
"We're dedicated to succeeding here," Schuelke said. "It's about providing outstanding service every day."
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