At 1001 Post Road in Darien, inside an appropriately sturdy brick entryway, homegrown Yankee capitalism is making a stand.
The Darien Rowayton Bank (DRB), which began in 2006 and was buffeted by the recession in short order, now finds itself recapitalized and “in a position to develop new business.”
Capitalized in 2009 by New York City-based investor Alcar L.L.C. with $10.5 million and recapitalized this year by Alcar with another $2.1 million, the bank also has secured a total $800,000 in capitalization locally: a recent $300,000 offering and original community input of $500,000.
The bank accepted no federal bailout money. It also is a landlord for its subdivided headquarters and recently leased its third and final tenant to accompany a jeweler and an investment service.
“It was founded in April 2006 by a number of people within the community,” said Robert K. Kettenmann, president and chief operating officer. “At the time it seemed like a perfectly good time to open a bank. I don”™t think anyone could have predicted what happened in 2008.”
The recession notwithstanding, said Kettenmann, “We got off to what I would call a slow start, which is not unusual for a de novo bank. As with many de novos, it takes a while to get moving in the right direction.” Neither, he said, is it unusual for de novo banks to return to investors for further capitalization, which DRB did with Alcar.
In 2008, the bank had been told by regulators to up its capitalization. “And in 2008 it was not possible to raise capital,” Kettenmann said. “It required a herculean effort on the part of the bank and its shareholders. And it required a change in control and new investment and that”™s what we spent most of 2009 doing, trying to regroup and raise new capital.
“And we”™ve been successful in that effort, which many banks have not been,” he said. “Now, we”™re an extremely well-capitalized bank in a community that”™s anxious to do business with us. We”™re off to a really good start in 2010 in terms of making loans.”
The CEO-designate is Albert L. Knotts, now a long-distance commuter from Virginia, but a 13-year county resident, as well: “I was the former chief credit officer of Union Trust Co. of Connecticut when First Fidelity first bought the bank,” he said. He expects regulatory approval to become CEO in the coming weeks. For the last three years, he has worked in the investment world in an orbit that intersected that of Alcar. He had been looking to get into banking and found in DRB “a community bank in a great marketplace in a wonderful town. And Bob (Kettenmann) and the management team did a great job of maintaining a healthy loan portfolio, so we had great loan quality. They had brought the bank to the edge of profitability, but unfortunately ran out of capital, where the markets were eventually closed down to them.”
Enter Knotts and his working relationship with Alcar, notably with Gary Lieberman, a former Bear Stearns executive. Robert Hirt, CEO of Residential Pacific Mortgage (RPM) and a major Alcar investor is also aboard. RPM is a West Coast company with 40 offices and is partnering with DRB to build what Knotts calls a “mortgage platform” for DRB.
“These are two very driven, entrepreneurial people,” said Knotts of Lieberman and Hirt, “and they were interested in doing business with self-employed people ”“ with entrepreneurs ”“ to generate deposits and also to build a mortgage operation within the bank.” The aspiration: “To cover the whole state of Connecticut one day. Being recapitalized, we find ourselves in the enviable position of being able to step up and be a credit provider for small businesses.”
Kettenmann said markets now harbor opportunities for those who are liquid, but operating businesses that have been hurt by the recession remain conservative in their uses of money.
“We”™ve definitely seen the commercial business stabilize,” said Knotts. “We”™re seeing both commercial customers and commercial real estate customers being somewhat optimistic. I would think in a market like Florida, it”™s probably a lot more pessimistic than it is here in Fairfield County.”
“We don”™t have a lot of the baggage that”™s preventing some banks from looking at new opportunities,” Kettenmann said. “We”™re not fixing a lot of things. We”™re in a position to develop new business.”
“We want to step beyond our legacy that we lacked capital,” Knotts said. “Now, we”™re clean, efficient and strong. And we”™re positioned to grow.”
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An enviable demographic
In the 2000 census, 70.4 percent of the adult population of Darien had a bachelor”™s degree or better. The national rate that year was 24.4 percent. That same year, Darien median family income was $173,777; nationally it was $50,046. In Rowayton, the median family income in 2000 was $154,159; and 69.1 percent of the adult population possessed a bachelor”™s degree or better.
