Startup Banks Flourish With Meaningful Relationships

Startup Banks Flourish With Meaningful Relationships

For the past 12 years, Ken LaRoe has been dedicated to providing banking services that support sustainable business practices.

Climate First Bank, his latest project that opened in June, is an environmentally focused financial institution based in St. Petersburg, Fla.

Central Florida is embracing the bank's climate-focused mission. Climate First's capital goal of $17 million was almost doubled by the investor funding of more than $30 million at the bank's opening. 

However, startup banks face unique challenges in balancing their environmental, social, and governance (ESG) mission with their pursuit of profit.

"This whole thing is super hard because you're two businesses at once. You’re running a for-profit and nonprofit at the same time," said LaRoe, who founded Florida Choice Bank in 1999 and First Green Bank in 2009.

In 2006, he sold the former, while 12 years later, he sold the latter. "I used to say there was no conflict, but there’s total conflict, but there’s total conflict all the time between the two."

LaRoe noted that there could be a conflict between fulfilling a bank's mission and making profitable decisions about business.

LaRoe has been familiar with the challenges of carrying out the bank's climate-focus mission across multiple areas of its operations since its founding.  
He told Banking Dive back in October 2020, before the bank officially launched, that it would have to fund loans without ESG considerations to remain in business. 

The bank stated earlier that it planned to partner with Neobank Atmos Financial, a fintech similar to Climate First.

Atmos will be able to tie up with a bank whose mission aligns with its own, adding to Climate First's deposit base. 

As well as sharing information regarding new and upcoming projects, the two firms view this partnership as a valuable resource. 

Amos is seeking to expand its platform to include direct lending and commercial accounts. Climate First recently launched its rooftop solar lending program, an area Atmos is also eyeing.

The program will provide capital to startups.
LaRoe was prompted to contact Lauren Sparks, CEO of Houston-based de novo Agility Bank, by his interest in collaborating with other mission-focused banks.

Last year, Sparks formed the women-owned digital community bank to provide bank accounts and loans to women and minority-owned businesses. Similar to LaRoe, Sparks said mission-based banks face unique challenges. 

Sparks and LaRoe have agreed to share information and best practices as they navigate the de novo market as mission-based firms. 
The two CEOs also discussed the possibility of future collaborations, including lending partnerships and marketing and educational collaborations.