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Waterford Village Bank is down, but not out Organizers were unable to raise enough capital, but will refile their application with regulators

Time has run out for Waterford Village Bank -- for now.

Organizers of the proposed new bank in Clarence were unable to raise enough capital to open the doors before the state's temporary authorization from regulators expired Feb. 12, according to the bank and state regulators. The group came up about $2 million short of its goal.

As a result, according to the state Banking Department Web site on Tuesday, Waterford "has therefore forfeited its rights and privileges as a corporation, and its corporate powers have ceased."

But President and CEO Kathleen Kiesel Flemming isn't giving up on her hopes of opening the first new commercial bank in Western New York in decades. She said Tuesday that she plans to refile the application with regulators by March 31, and hopes to hire investment bankers to ensure the capital-raising is completed this time.

Still, the failure to open on time represents a defeat for the charismatic and energetic Flemming, an Amherst native who previously opened and ran a successful new bank in the St. Louis market before returning to her hometown after 25 years away. She doesn't have to start from scratch, but she must now reapply to state regulators for a new charter, although her business plan hasn't changed and her federal regulatory approval still applies until July 28.

"Is it a setback? Yeah. But is it the end of the deal? Absolutely not. We just simply ran out of time," Flemming said. "It was approved the first time. There's nothing that would prevent it from getting approved again. We are confident that a second round of funding will be successful."

The bank already purchased the property for its headquarters, prepared the site, and brought in a 1,200-square-foot branch trailer and ATM, so it's ready to open. Construction on an actual branch will begin when final approval is granted. The new projected opening date, if all goes well, is late fall.

Flemming, 45, announced her plans for Waterford with great fanfare in the summer of 2004, just nine months after returning to the region. Together with a group of 10 organizers she was leading, she said a need existed for another bank in the area and for more personalized service, especially in the eastern suburbs where the population and wealth are growing.

Plans called for the bank to focus on offering traditional banking services to individuals and small businesses from its main office at 8411 Main St. in Clarence, with hopes of later adding more offices. But it would also develop a private banking business for professional athletes regionally and nationally, akin to one Flemming had started in St. Louis.

If it ultimately opens, Waterford would be the first new bank or thrift locally since Greater Buffalo Savings Bank opened in November 1999 and the first new commercial bank since Niagara Frontier Bank of New York in 1969. But Flemming's initial hopes to open by the spring of 2005 have already been delayed several times by struggles to get regulatory approval and raise capital even before the latest quashing.

State regulators approved a conditional charter last June, and the Federal Deposit Insurance Corp. gave the OK for federal deposit insurance in July, paving the way for organizers to start raising the $10 million Waterford projected it would need.

But the state didn't allow the fund-raising to begin until October, at which point a five-month clock started ticking. And the private offering that was expected to last just a few weeks instead stretched past this month's deadline.

Flemming said the group was challenged by having to raise capital during Thanksgiving, Christmas and New Year's, known to be a difficult time for fund-raising. In addition, some of its investors who committed to purchasing shares didn't come up with the money in time to meet the state deadline. So the group raised just over $8 million from 50 investors, coming up short.

Restarting the application process now means the new offering will likely take place in the summer instead, which Flemming said is "a much better time to raise capital." And the bank has more time to firm up all of its investments.

Organizers are also negotiating with an investment banking firm that specializes in raising start-up capital for new banks. The firm, which Flemming did not identify because no agreement has been reached, has helped 120 banks since 1987.

Finally, Flemming said, organizers may reduce the minimum purchase amount for the offering. The bank was selling shares at $100 apiece, with a minimum purchase of $100,000. Flemming said they will likely reduce that to $10,000 to make it easier to attract investors.


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