The Bankwatch

Tracking the consumer evolution of financial services

Ex S1 CEO moves ahead with Live Oak Banking Company

After talking about niches as a means to both understand and exceed customer expectations for Banks, here is an example from a previous industry leader. Hat tip Netbanker.

I first met Chip Mahan in 1995 when he was at the helm of Cardinal Bancshares and about to launch the first Internet-only bank in the world, Security First Network Bank. That effort eventually spawned S1 Corporation, now a leading banking tech company, with a half-billion market cap.

Chip is now setting up new Bank, Live Oak Banking Company, and expects to have a charter in 6 months. The plan is to specialize in lending to veterinarian practices and kennels, with a view to expanding to other niches in the future.

The Wilmington, NC-based company is still in formation. But it recently passed a regulatory milestone, raising $8 million in capital from fewer than 10 investors (see note 1, 2). David Lucht, who worked with Mahan as a credit officer for Cardinal Bancshares, is the Live Oak’s President.

What is particularly interesting is the listed number of employees, and the capitalisation.

* Required capitalization: $8 million
* Prospective employees: 15
* Address: 2605 Iron Gate Dr., Wilmington
* Principals: James “Chip” Mahan, CEO; David Lucht, president
* Focus: Business lending to vets, kennels and children’s day care operations

Jim speculates that given Chips background the web will be a key component of their model, and the employee numbers support that, since there is obviously no customer support anticipated. Also the capitalisation is sufficient to cover overhead, but not to support lending.

Unless there is more to come, this makes me conjecture, and I wonder if there are any other nuances to their model, acting as a lending exchange for example.

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Written by Colin Henderson

June 13, 2007 at 07:50

Posted in Banking Strategy

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