When Jerry Tarrant sought to buy a building for one of his businesses, he recalled this week, he received approval for a loan from the local staff of an out-of-state bank — only to see the bank’s headquarters later deny the loan, calling it too risky.
“I think that was a firsthand experience of people not really knowing the local feel and what we were doing,” said Tarrant, an entrepreneur and cofounder of MyWebGrocer.
Tarrant has been working with a group of Chittenden County heavy hitters — including S.D. Ireland president and chief executive officer Scott Ireland, Redstone Commercial Group chief executive officer Larry Williams and retired Wall Street executive Bruce Lisman — to build a bank they hope will operate differently.
The Bank of Burlington, according to Tarrant, “will take the time to get to know businesses, to get to know the people if we don’t know them already. Between somebody in this group, we know everybody.”
The new Vermont bank announced last week that it has raised $33 million, exceeding its goal of $24 million to $30 million.
The bank has been granted a preliminary charter from the Vermont Department of Financial Regulation. According to the department’s interim commissioner, Kevin Gaffney, the only holdup for final approval of a charter is approval from the Federal Deposit Insurance Corporation.
“It’s going to serve a need here in Vermont,” Gaffney said of the bank. “Small businesses are the backbone of Vermont, not only for the business owners but for the employees that rely on those businesses for good-paying jobs. Their size is going to allow them to be nimble and to serve the needs of individual business owners in the local community.”
If the bank obtains FDIC approval in time, it will open in August, according to Victoria Bronner, vice president and treasurer of the bank.
Geoffrey Hesslink, its chief executive officer and chair, said mergers among financial institutions serving Vermont have created an opportunity for a new lending institution.
“One of the consequences of being bigger is loss of connection to local markets, lower service levels, slower response times, inability to customize banking for customers’ needs,” Hesslink said.
The bank only plans to make commercial loans, according to Bronner.
“We don’t see a competitive advantage in that consumer space,” she said, referring to loans to individuals.
The bank, headquartered in South Burlington, will serve Chittenden County and other nearby counties, according to Bronner and Hesslink.
“We’re going to be a little different than banks you might be accustomed to,” Hesslink said.
For one thing, the bank will have no branches. It will be accessible online and through mobile technology, though bank employees will pay visits to commercial customers.
While the bank will lend only to businesses, it will accept deposits from people and municipalities.
Hesslink said the bank has 115 investors. He and Bronner would not say who their biggest investors are, though Bronner noted that more than 96 percent of them are individuals. She said the bank tried to attract investors who would also be clients.
“It’s about local capital supporting local businesses,” said Joe Larkin, founder of Larkin Realty and a founding investor in the bank. “I think it’s unique to see a startup in that industry, and exciting.”
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