The organizers of InclusiveBANK, a prospective de novo bank, are looking to serve small businesses and the underbanked in New Orleans following years of consolidation that left the market with just a handful of locally headquartered community banks.

Since 2014, banks have completed a total of 35 whole-bank M&A transactions in Louisiana and there are just eight community banks chartered in New Orleans, according to S&P Global Market Intelligence data. As the industry consolidated, many customers in the racially diverse market have been "lost in the shuffle," according to InclusiveBANK President and CEO Joe Omner. The de novo is looking address the need for minority deposit institutions and community banks in the region.

"We just feel like there's a big need for a multi-racial MDI," Omner said in an interview. "New Orleans is very underserved right now as far as we are concerned in the minority sector for banking."

InclusiveBANK filed an application with both the Federal Deposit Insurance Commission and the Louisiana Office of Financial Institutions (OFI) on Oct. 30 and hopes to open by April 2025, Omner said.

"We're expecting a positive response," the CEO said. "We've had very good relationship with the FDIC and the OFI and have had weekly meetings with them for several months trying to get to this point."

InclusiveBANK would be a multiracial minority deposit institution (MDI) with board members of Vietnamese, African-American and Indian descent, said CFO Beth Zimanski. The company hopes raise $26.4 million in capital and wants to raise least 51% of that total from minority investors, according to Omner. InclusiveBANK will also reach out to other banks that can get Community Reinvestment Act credit by investing in an MDI, he added.

InclusiveBANK wants to serve New Orleans's "very large" underbanked population; people who have bank accounts but often rely on alternative financial services like money orders or payday loans rather than bank loans and credit, said Omner. Some 19.8% of New Orleans residents were underbanked as of 2021, while 6.6% were completely unbanked, according to an FDIC survey.

The company will also look to serve small businesses that regional banks may not, Omner said. A small business looking for a $50,000 line of business credit, for example, might not be worthwhile to a larger bank, he said.

"The community bank has been the backbone to provide services to small businesses, to entrepreneurs to the mom-and-pops as well as just the community at large," Omner said. "Our intent is to continue to bank those customers in a way they're used to."

InclusiveBANK's business plan makes sense given previous consolidation in the New Orleans market, Performance Trust Capital Partners investment banker Andy Hitt said in an interview. In the last six months, Performance Trust completed two "fairly large" initial public offerings in New Orleans at Fifth District Savings Bank and Fidelity Bank, Hitt said. Given the success of those two offerings, investors seem to be receptive to financial institutions.

"The attraction to a lot of potential investors is there has been a good bit of consolidation in our market," Hitt said. "There aren't many locally based banks or financial institutions where ideally, you get better service and more personal customer service."

Liberty Bank and Trust Co., the only MDI currently headquartered in New Orleans, has been very successful and there is likely room for another MDI in the market, Hitt said. The population of New Orleans is 67% non-white according to US Census Bureau data; regulators should be "very receptive" to an MDI application, Hitt added.