Amid big bank turmoil, tiny First Green Bank opens

In the same week that Citigroup pulled Wall Street to new lows, that talk of nationalizing banks reached new highs, and the Obama administration struggled with resolving their "toxic assets," tiny First Green Bank opened its doors Tuesday in Eustis, Fla.

With no ads or promotion, the bank saw a steady stream of customers open accounts and ask for loans. By Thursday, First Green had $2.1 million in deposits and $51 million in its loan pipeline.

"People are elated to be moving their money out of big banks," says Ken LaRoe, First Green's chairman and CEO. "We have no toxic assets. We have no legacy deposits."

Is it really the moment to open a bank? "We think our timing is perfect," he says.

First Green and the three other US banks that opened this week are reminders of what's right with America. The skill of regulators and the intelligence of bureaucrats are sorely needed to stabilize existing banks. (Click here for a look at what they might do.) But the nation's future also depends on the pluck and derring-do of its entrepreneurs who, in the teeth of the worst financial crisis in 70 years, open their doors to new business and opportunity.

A clampdown

And therein lies a problem. This is the second time that Mr. LaRoe has opened a bank. He says the federal approval process was so rigorous this time that he worries that his bank will be the last to be chartered in the state of Florida for quite some time.

The Federal Deposit Insurance Corp. has clamped down, understandably. Having allowed dangerous lending excesses during the real estate bubble, it's now rigorously scrutinizing new would-be banks and the lending portfolios of existing ones. But being too tough is just as hurtful as being too lax if it deprives legitimate businesses of the credit they need to survive and grow.

RV and inspiration

LaRoe sold his first bank at the height of the bubble and spent months touring the US with his wife in an RV, cogitating on what to do next. He read "Let My People Go Surfing" by Yvon Chouinard, the founder of environment-conscious Patagonia. Inspired, he decided to open an environmentally oriented bank.

So he's retrofitted his two branches with extra insulation and energy-saving lighting, uses only checks made from 100 percent post-consumer waste, and has offered borrowers a quarter-percent off on construction loans if they'll adhere to green-building standards. He also plans to offer interest-free loans to employees who buy cars that get at least 30 miles per gallon and outright grants to those who buy a hybrid.

A letter from Ben

The bank so impressed 10-year-old Ben Sullivan that he wrote to LaRoe (click here to see his letter) asking if he could invest his $100 in the bank. LaRoe waived the $100,000 minimum requirement, matched Ben's $100 with bank and personal funds, and made him the newest and youngest shareowner of First Green Bank.

Will that pass muster with the regulators? "It doesn't matter," LaRoe says. "He's already got his [stock] certificate."