New Banks are a Capital Idea
by July 12, 1999 12:00 am 49 views
Anyone with the idea of forming a new bank needs at least $4 million initially, says Shell Spivey, who helped found Community Bank nearly four years ago.
“In order to start up a new bank any more, you need about $4 million to capitalize it,” Spivey says.
tAnd investors should know they’re going to lose money in the beginning. “It’s not like a restaurant, where, if you hit a home run, you’ve got money coming in from Day 1.” Instead, Spivey says, new banks may lose $500,000 to $1 million before turning a profit.
t”Some banks do it in a year. In less than a year, that’s rare.”
tHe adds, “The last figure I saw, [the average] is 24 to 36 months for a startup to make a profit. Generally, the bank must have $15 million to $17 million in assets before it’s making money, Spivey says.