Lakeside Bank, St. Charles, La — The Way Banking Should Be

Editor’s Comment: Only one Bank has failed in Louisiana since the financial crisis began. And only one bank in the United States has commenced operations in the year 2010 — this one in Louisiana. Despite an unofficial moratorium on new bank charters of 70-year-old retiree, Hartie Spence, managed to navigate the regulations and got the only new start-up bank to open in the country, operating out of a secondhand double wide trailer.

The probable reason for the apparent safety of banks in the state of Louisiana is the rampant poverty. But it shows that even where people have very little money the financial system can be stable as long as outsiders don’t meddle in their financial affairs. Louisiana was a bad target all Wall Street and thus avoided the absurd fraudulent increases in appraisal values that lie at the core of the financial crisis. Landing was based upon the actual value of the property, the willingness of a lender to take the risk, and the ability of the borrower to repay.

For hundreds of years that was the lending model and obviously the only one that makes any sense. For 10 years that model was turned on its head in places other than Louisiana where lenders were not lenders, where inflated appraisal values were a good thing, and where the ability of borrowers to repay a loan was obstructed by layers of unknown entities never disclosed at the time of closing and obstructed by exotic terms and presumptions that were plainly wrong but which work to the benefit of the intermediaries who had arranged for the funding of the loan from investors and the buying of the loan product by unwitting borrowers.

I don’t know anything about this particular bank other than what I have read. I don’t know the people in it and I don’t know their business model. But in an economy where new bank charters are being discouraged, and new start-ups of any kind of business are made increasingly difficult while the government aids the large corporations and financial institutions that got us into this mess, I think this bank deserves the support not only of its own community but anyone who is looking for a new banking relationship. Between the Postal Service, the Internet and the telephone your bank can be anywhere.

August 28, 2010

In Hard Times, One New Bank (Double-Wide)

By ANDREW MARTIN

LAKE CHARLES, La. — The only new start-up bank to open in the United States this year operates out of a secondhand double-wide trailer, on a bare lot in front of the cavernous Trinity Baptist Church. A blue awning covers the makeshift drive-through window.

Called Lakeside Bank, it is run by a burly and balding former tackle for Louisiana State’s football team named Hartie Spence, who doles out countrified humor along with deposit slips and the occasional loan.

“This is the one place where the cause of death is mildew,” he quipped, standing outside the trailer in withering heat.

Asked how his bank in this steaming town of oil refineries and oversize casinos managed to win over federal regulators, Mr. Spence, 70, said, “I’m still thinking it’s my looks that did it.”

The dearth of new banks follows a particularly wrenching period for the industry. As the financial crisis deepened, hundreds of banks and thrifts closed and thousands more were saddled with bad loans and credit card defaults, costing the industry billions of dollars.

As a result, the number of investor groups applying to start a new bank from scratch has dropped precipitously. And for the intrepid few who have tried, regulators — sharply criticized for lax oversight in recent years — are being particularly stingy in granting approval.

So far this year, Mr. Spence holds the privilege of opening the only truly new federally insured bank. (In seven other instances, investors received regulatory approval to buy an existing bank, usually one that had failed, and reopen it).

Of course, many of the nation’s biggest banks were bailed out by the government, and have since rebounded. But since January 2008, more than 280 smaller banks and thrifts have been closed, and many community banks are struggling to recover from the real estate collapse.

Those bank failures have cost the Federal Deposit Insurance Corporation’s fund roughly $70 billion, and not surprisingly, the agency’s regulators are now giving greater scrutiny to new bank applications, according to bankers and industry officials.

Technically, banks obtain charters from their primary regulatory agency, either state banking regulators or, for national banks, the Office of the Comptroller of the Currency. But the charters are contingent on the applicants’ obtaining deposit insurance from the F.D.I.C.

The F.D.I.C. said the reduction in charters simply reflects the effects of the recession on new businesses. “There was considerable interest in forming banks before the economy deteriorated,” said an agency spokesman, David Barr. “In today’s climate we are seeing very little interest.”

However, last year the agency toughened its oversight of new banks, saying banks that had been open for fewer than seven years were “over represented” among failed banks in 2008 and 2009.

The reason, the agency said in a public release, is that many new banks strayed from their approved business plans and ran into problems because of “weak risk management practices,” among other problems.

Ralph F. “Chip” MacDonald III, a lawyer in Atlanta who advises banks on regulatory matters, said he believed the F.D.I.C. had imposed an “unofficial moratorium” on new bank charters, a charge that the agency denies.

Adam Taylor, president of the Bank Capital Group, an Atlanta company that helps investors set up new banks, said he had several recent clients, whom he declined to name, withdraw applications for new banks after it became clear that the F.D.I.C. would not approve them. He said the agency rarely denies charters — a fact confirmed by agency records — but that it places the applications in “purgatory” until the applicants give up.

The number of banks and thrifts — also known as savings and loans — in the United States has been declining steadily for 25 years, because of consolidation in the industry and deregulation in the 1990s that reduced barriers to interstate banking. There were 6,840 banks and 1,173 thrifts last year, down from 14,507 banks and 3,566 thrifts in 1984.

The number of charters has generally declined too, though there have been periodic swings. The lowest number of bank charters granted in any one year was 15, in 1942.

How, then, did Lakeside Bank win this year’s regulatory lottery?

Mr. Spence’s looks aside, he said that regulators were not ready to grant approval until Lakeside had raised enough capital, created a sufficiently conservative business plan and hired an experienced management team.

The initial idea for Lakeside Bank came from a local real estate developer, Andrew Vanchiere, who was dissatisfied with his existing bank. In 2007, he rounded up a group of local businessmen who set about raising $13 million in start-up capital and began looking for someone to run the bank.

The initial candidates were deemed too inexperienced by regulators. When the group contacted Mr. Spence in 2008, he was a few months into retirement and coming to the realization that fishing for trout and redfish just wasn’t enough to keep him occupied.

“I was bored absolutely stiff,” said Mr. Spence, who had successfully run several Louisiana banks during his career. “My response was, ‘Let’s do it!’

“You can manage a good bank in a bad economy, particularly when you are at the bottom,” he said. Noting that he has a clean balance sheet and can be selective about making loans, he added, “I thought it was a perfect time to be starting.”

Lakeside’s application was also helped by the surprising vitality of Lake Charles, a city of 72,000 roughly 30 miles from the Texas border. Lake Charles has gotten a boost from casino gambling and the oil and gas industry, as well as an infusion of new businesses, including liquefied natural gas terminals and a new plant that builds parts for nuclear reactors.

Louisiana, meanwhile, has fared better than many states during the economic downturn because of the petroleum industry and the infusion of government and insurance money to pay for damages from Hurricanes Katrina, Rita and Ike.

Only one bank has failed in Louisiana since the financial crisis began.

Regulators made it clear that Lakeside would not be approved if other banks in town were struggling to stay afloat, Mr. Spence said. But Lakeside, which opened on July 26, sits on a busy boulevard lined with about a dozen or more banks or credit unions, all of which appear to be thriving.

“There’s enough for all of us, and we are no threat to them for many, many years,” Mr. Spence said of his competitors.

Lakeside Bank is promoting itself as an old-fashioned community bank that focuses on customer service and bread-and-butter banking products, even though it also makes them available online.

Whereas loan decisions for many big banks are made in distant cities, Mr. Spence said that Lakeside will make them right there in the double-wide trailer, at least until the bank moves into a more permanent structure in a year or two.

“That’s our motto, ‘The Way Banking Should Be,’ ” he said, adding later, “It got rushed enough yesterday that I had to answer the phones and work the switchboard.”

11 Responses

  1. […] original here: Lakeside Bank, St. Charles, La — The Way Banking Should Be … Posted in […]

  2. Thank you Ann

  3. edgetraderplus,
    thanks for the great point re ; Bystander Notes!
    Ann’s post came from Dr Graves @http://www.jurisdictionary.com/ . Mr Graves is a most helpful person ,the jurisdictionary course & website are helpful & empowering .If your pro se sign up for the free newsletter & you will get free law tips in the email.
    thanks for your help Dr Graves.

  4. Sunday 29 august 2010

    Playing hall monitor here. Another v helpful post from Ann on the importance of objecting in court. Even without a court reporter, one can make what are called Bystander Notes, which is your own recall of what was said on court, by you, the opposing attorney, even the judge, as neutral and exact as was stated in court.

    This becomes a “transcript” that can be used on appeal. Chceck your State Compiled Statutes/Supreme Court Rules for how this works.

    Ann’s post from another thread:

    “Ann, on August 29, 2010 at 12:23 pm Said:
    From a lawyer:

    Critical Courtroom Objections …
    Putting the Brakes on Crooked Judges & Lawyers!

    The most important thing to learn about winning lawsuits is the easiest to learn!

    Timely objections!

    You cannot win without controlling the court.

    Many people (from watching courtroom battles on TV or at the movies) believe we make objections to control “the other lawyer”. In fact, that is the smallest part of it.

    We object to threaten the judge with appeal!

    If a judge didn’t have to worry about appeal, he could rule any way he wishes — knowing absolutely nothing you can do will reverse his decisions.

    I’ll bet many of you didn’t know that.

    If an issue is not raised during lower court proceedings, appellate courts will not consider the issue after you lose.

    That is a hard-and-fast rule of appellate courts!

    If the other side crosses the line, you must object. If the judge sustains your objection, you stop the tricks.

    If the judge overrules your objection, you object again and state your reasons … even if the judge threatens you with contempt!

    At the close of the other side’s argument, you renew your objections once again.

    At the close of all deliberation, you renew once more, to make crystal clear to the judge that you are not playing!

    If you don’t object, you cannot win on appeal.

    And, of course, you must arrange in advance of every hearing and trial for the proceedings to be recorded by an official court reporter … or you cannot win on appeal.

    If the judge knows you cannot win on appeal, you’ve given him a free hand to do as he pleases. Not good!

    The judge is not the authority!

    You must make it crystal clear on the court’s record that the judge will be reversed on appeal if he rules against you, and you do this by making timely objections and renewing them if you are overruled.

    The reason we renew our objections is to give the judge one more opportunity to do what’s right! Appellate courts want the record to show that the judge was very much aware of your objections, the grounds for your objections, and stubbornly refused to follow the law!

    Each time you object (and state the grounds for your objections, unlike TV actors) you put the judge on notice that overruling your objection threatens appeal.

    If your objections have solid legal footing and the judge overrules your objections, he is skating on thin ice!

    When you renew your objections, he knows you intend to take him up on appeal if his errors harm your cause.

    For example, one of the most common errors is letting the lawyer on the other side “testify”. The lawyer on the other side is not a witness. He doesn’t have first-hand knowledge of the facts. He lacks “competence” to testify to any fact he learned from others. Far too many good people lose their lawsuits simply because they allow the lawyer on the other side to put facts into the record that are beyond the lawyer’s own, personal knowledge.

    Failure to object is fatal.

    “Objection, your Honor. Counsel is testifying to facts beyond his personal knowledge and lacks competence to act as lawyer and witness at the same time!”

    If the judge sustains your objection, you’ve put a stop to one of the most common outlaw games crooked lawyers play … and you’ve strengthened your case.

    If the judge overrules your objection, just stand up and say, “Let the record reflect my objection that opposing counsel lacks competence to testify to these matters.”

    When the other side finishes his presentation, object again!

    At the close of all the testimony, object again!

    Don’t let corrupt judges and crooked lawyers win!

    Clever argument is not enough.

    Knowing the law is not enough.

    Controlling judges is what wins lawsuits!

    You control judges by making clear on the record that you intend to appeal if the judge rules against you!

    You do this by making timely objections and renewing your objections so the record is crystal clear!

    Know how to control the judge – or you will lose!

    Learn how to control judges by timely objecting!

    As Woody Guthrie used to sing, “This Land is our Land,” and that includes every courtroom and every courthouse from San Diego to Bangor, Maine. Why let lawyers control our lives with trickery? Why let judges destroy our lives by letting lawyers get away with their typical trickery?”

  5. Sunday 29 August 2010

    Ann:

    Thank you, again, for taking the time to share, for everyone’s benefit. This caliber of information, more than “marching on the street” cries, will provide immediate help to those most in need.

    Cheers!

  6. Oops, my e-mail address is ocean11@the-beach.net.

  7. The A Man
    Check out http://www.foreclosureprose.com for many info about foreclosure including discoveries.

    I have discoveries samples, Click on my name and send me your e-mail address.

  8. This is an example of collectively sharing information, as mentioned in my post that the moderator is once again holding up. It was posted on another thread and belongs here, too:

    “Amelia Colvin, on August 28, 2010 at 5:03 pm Said:

    GMAC HOMECOMINGS BALBOA INSURANCE VICTIMS
    I am a plaintiff in a case against these Defendants in Texas. My lawyers are interested in representing other victims. They take contingency fee cases, they get it, and they are licsensed in federal state and supreme court. really good guys. They can represent you in all 50 states. They are hands on lawyers, board certified civil trial and listed as in americas top 100 lawyers. please contact me here. they are also interested in a multi party suit against GMAC. they do not do class action suits.”

  9. Sunday 29 August 2010

    >”We need a foreclosure defense for dummies.”

    Agree, to an extent. There have been a slew of case law situtaions posted here, and on other sites people visit, enough to provide formidable arguments in most any court foreclosure case, at least in judicial states.

    I also posted a brief written about MERS that removes the curtain and can be used by anyone on this site. I do not remember on which thread it is, but it can be found at:

    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1469749

    Click on the “One-click Download.”

    The problem, as I see it, is that few people know how to write a pleading, let alone an effective one that will stand up in court. Once in court, few have the experience/know-how in dealing with adverse judges that will put them down, and foreclosuremill attorneys who are expert in FC law, and more importantly, court procedures that will have self-defenders spinning in circles before they can even think of a sentence to say.

    It is a daunting experience to enter a court room for the first time and expect to be effective.

    There is no getting around that not-so-small-problem. Collecting important cases in how the other side is losing, and then finding an attorney that “gets it,” and can put together a defense from the material may be the easier solution. However, that is fraught with finding an attorney that gets it.

    Your point is excellent, and airing it will bring forth more discussion, like mine, and collectively, some kind of solution or improvement can result.

    As an side, for the many who keep posting about how there should be justice/recognition from the powers that be, here is a well-written article that shows how the government has much bigger fish to fry than trying to solve a foreclosure dilemma for people over whom they could care less, beyond lip service and “cash for clunkers” and empty HAMP solutions.

    It should not be lost that this is the 5th anniversary of Katrina, and the people of New Orleans have never been made whole by a governemtn that pledged to help. Pledges are easy to make, and the government excels at making them, but keeping them is not in their political interest.

    Article: http://tinyurl.com/2fzjdg3

  10. DISCOVERY WE NEED A QUESTIONAIRE FOR JUDICIAL AND NON JUDICIAL STATES. WE NEED A FORECLOSURE DEFENSE FOR DUMMIES.

  11. Sunday 29 August 2010

    Of course, it is always possible to “do the right thing,” after all, this country flourished for 150 years without the Federal Reserve and the IRS.

    Here is a little glimmer of the ilk most all of us face, from Wall Street to Pennsylvania Ave:

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