“I grew up in a small business family,” recalled David Mitchell, the founder and CEO of Owners Bank. “My mom owned a restaurant, and we went through three recessions where we should have closed the doors.”
What kept the restaurant afloat was a personal connection with the head of Rockville Savings Bank, now part of M&T Bank.
“The CEO used to come into the restaurant every Friday night with his wife,” he continued. “They gave us a $100,000 loan when B of A, Chase, Wells Fargo, whoever wouldn’t give us money, didn’t even care. So, for all these years I always thought about this niche. These small business guys are struggling on cash flow.”
The importance of that connection stayed with Mitchell, even as he moved into a tech-oriented role at Nymbus, a provider of banking technology solutions with an emphasis on helping banks launch new banking-as-a-service divisions. After Mitchell became an executive vice president and chief digital officer at Middletown, Connecticut-headquartered Liberty Bank, he drew from his experiences to propose launching Owners Bank as a new division.
Working as a part of Liberty provides over $7 billion in assets and a deep well of knowledge and talent to draw from. Owners Bank builds off that with branding and services tailored to the owners of small businesses, at first in Connecticut but eventually across the country.
Owners Bank began operations last April, offering deposit products such as checking and savings accounts as well as invoicing, money movement, and bill pay services across Connecticut. In July, the bank rolled out loans and lines of credit, followed by the launch of business credit cards on Sept. 5 last month. Owners is following that same rollout pattern in other states.
Loans are already available in Massachusetts, Rhode Island has deposit services available through Owners Bank, and Mitchell said service should launch in Pennsylvania on Oct. 1.
“We’re going to Florida in January, Atlanta in April, and the Carolinas right after that. We’ll be up and down the East Coast,” Mitchell said. “By the end of next year, we’re going in all 50 states.”
Mitchell noted that Owners is a private bank and does not publicly disclose most performance figures, but he was glad to share that their deposit goals have been met. He added that despite the continuing presence of economic turmoil brought on by Covid, Owners was doing quite well.
“What has been exceptionally surprising is our lending. Since it launched in July, we’ve significantly outpaced our initial goals and expectations. It validates our thesis that these small businesses really need cashflow and need help getting it,” Mitchell said. “We have millions and millions in our lending pipeline, and that’s astonishing because we are only offering loans $250,000 or below. These are 50-, 100-, 150-thousand dollar requests, which really does illustrate that cash flow has been an immense problem for so many of these people.”
He also admitted, “We just didn’t expect that we were going to basically double our pipeline both in the number of loan applications and in dollars, and that’s only through July, August and September, and with marketing in only two states.”
According to Mitchell, Owners did not have to engage in major marketing efforts in Connecticut – word of mouth and the reputation of Liberty Bank seemed to provide ample growth. He ascribes this both to the bank tapping into an underserved demand for loans among small businesses of five employees or less, and an emphasis on leveraging modern technology to deliver attention-to-detail more in line with old-school banking.
Owners Bank has no physical branches, but Mitchell said that doesn’t hamper building relationships.
“We’re high tech, but we are also high touch,” he said. If you’re a retail customer and you sign with Chime or some other retail digital ‘neo bank,’ good luck trying to find a 1-800 number. It will be 15 pages down on the web, they don’t want you calling. Small businesses, they still need that direct touch.”
Mitchell pointed to a new client based in Norwalk, which will move $2 million a month with Owners despite never having an on-site visit.
“When a customer is applying for a deposit account or a loan on our website if they have a question during that experience they can speak to a business relationship manager on their screen,” Mitchell explained.
He added these business relationship managers will be based in Middletown and have experience in banking, saying “It’s important to our culture. Because what makes great companies is the people, not just the products. That’s one of the things I’m most proud of besides the tech stack I put together, we have great people servicing these small businesses.”
