If you need another sign that Springfield’s economic renaissance has finally taken hold, consider this: The state’s first new retail bank in a decade is opening up there.
The backers of New Valley Bank & Trust received preliminary federal and state approvals for the bank’s launch a few weeks ago. They’re now knocking on the doors of hundreds of potential investors for the $25 million-plus they need to get started. They have raised $10 million so far, from about 120 initial shareholders. Given the intense interest they’ve seen, they expect to reach their goal by the end of next month.
The bank is starting small, of course. There will be about 15 employees when the doors open, likely by the end of March, at two Springfield offices. After their first year in business, the founders hope to have about $100 million in deposits and $125 million in assets on the books, with the ability to make loans of up to $2.5 million.
To some extent, the birth of New Valley resembles how two dozen Springfield business leaders rallied nearly three years ago to buy a minor league hockey team, now called the Thunderbirds. Most of the team’s investors are among those involved in the New Valley launch.
New Valley grew out of talks between Frank Fitzgerald and Jeff Sullivan, who had previously worked together at the Bank of Western Massachusetts (now part of People’s United). They began a first round of fund-raising a year ago to cover initial regulatory costs. (Sullivan, a banker-turned-consultant, plans to run New Valley as its chief executive, and Fitzgerald, a lawyer, will be board chairman.)
New banks, known as “de novos,” are a rare breed around here: First Commons in Newton was the last one to open, in 2009. That’s now gone, gobbled up by Brookline Bank. There have been five state-chartered banks to open in the past two decades, including one in Springfield in 2008. All but one are gone too, swept away in M&A.
Why open one now? Fitzgerald and Sullivan say they see a need for a lender that can build personal relationships with small businesses, after a long line of local banks were subsumed by larger institutions.
And from a regulatory perspective, the Federal Deposit Insurance Corp. has been more encouraging recently, after essentially bringing the creation of new banks to a halt after the Great Recession.
Springfield’s star is on the rise. The city’s jobless rate of 5.5 percent still exceeds the state average. But it’s a huge improvement from 12.3 percent eight years ago. The recent opening of the MGM Springfield casino might be the most prominent catalyst. New Valley’s backers also point to the city’s new rail-car factory, run by the Chinese manufacturer CRRC. And MassMutual unveiled plans in February to add as many as 1,500 jobs in its hometown over four years.
Most community banks in this state are mutual banks — run on behalf of their depositors, not investors. New Valley, though, will be shareholder-owned. Many similar de novo banks were acquired before they got big; offers came along that were too good for shareholders to ignore.
However, New Valley’s founders hope they’re creating a business that will get large enough to leave a significant mark on Springfield’s economy, even as it benefits from a recovery that is well underway.