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Waterford Bank raises capital, will begin operations

After many months of struggle, organizers of Waterford Village Bank have completed their $10 million capital-raising campaign and received approval from state and federal regulators to open the bank's doors.

The proposed new bank in Clarence is expected to open for retail business on Feb. 26, although it will probably start making loans in January, said President and CEO Kathleen Kiesel Flemming. Officials still have to hire the remaining employees needed to open, and turn on the bank's computers.

il,2.35i,5p3 The bank currently has a 1,200-square-foot, full-service branch trailer set up on its property at 8411 Main St., but plans to begin construction on a permanent branch, with three drive-through lanes and an ATM, in the first week of January. Concept Construction of Elma is the contractor for the $1.8 million, 6,700-square-foot main office. Officials already have all necessary permits and approvals.

"We are very grateful to the local community for their confidence in our ability to open a bank that seeks to improve the lives of individuals and businesses in the communities that we serve," said Flemming, an Amherst native who lived in St. Louis for years and started a community bank there before moving back to Western New York in 2003.

Flemming and the other organizers believe there's a dearth of banks in Western New York, especially in the fast-growing eastern suburbs, to meet the needs of those who may feel neglected by larger institutions. Western New York has 26 banks and 450 branches in an eight-county region, but that's much less than in similar-sized areas around the country. And the Buffalo Niagara region hasn't seen the spurt of new banks that other regions have.

First announced in August 2004, Waterford would be the first new commercial bank in Western New York in at least 35 years and the first new savings or commercial bank here since Greater Buffalo Savings Bank opened in November 1999.

Plans call for it to serve consumers, professionals and small businesses in Western New York, and also to cater to the private banking needs of professional sports athletes, regionally, nationally and even from Canada. Flemming developed a similar niche in St. Louis.

Organizers are forecasting $70 million in assets after the first year and $130 million by the end of the third year, and expect to make a profit in the second year, Flemming said. Officials plan three to five more offices within five to seven years, including possibly in a "hot" market elsewhere in the country, such as Arizona, Florida or Texas.

"We are committed to our local community and being locally owned, but we have customers here who have second homes and business offices in those locations," Flemming said.

The bank plans to spend at least $150,000 a year on marketing, and has already invested more than $200,000 in technology to make it more efficient. It also signed on with KeyBank to offer customers access to Key's ATMs nationwide with no surcharge.

But while Flemming has past experience starting a bank and was able to get initial regulatory approvals more than a year ago, she and the other organizers stumbled over the fundraising.

The group, which needed $10 million to get final state approval, initially sought to sell shares at $100 apiece, for a minimum purchase of $100,000. But the effort came up $2 million short when time ran out last February, so they had to reapply to regulators to start again.

This time, they lowered the price to $10 per share, with a minimum of $10,000. They also concentrated the effort during the summer, not the winter, starting on July 17. And they hired SAMCO Capital Markets, a Dallas-based investment banking firm, to help. SAMCO sent letters to more than 11,000 households, held four investment seminars to drum up interest, and followed up with phone calls to seal the deal.

As a result, the bank was able to achieve its goal, getting its state authorization certificate on Wednesday and FDIC insurance on Thursday. Ninety percent of the bank's stock is in local hands, with one-third held by the board. Officials also were able to identify other candidates for the bank's board, which currently has seven members but has room for 15.

In the interim, however, several executives whom Flemming had initially hired left the bank. Flemming has since added others, including Chief Financial Officer Kim S. Destro. But organizational expenses have soared to over $1.6 million, not including SAMCO's fees.

"There were many obstacles in our way," Flemming said.


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