Plans for banking start-up in New Canaan abandoned

Fears of an economic downturn in 2023 have prompted organizers of what was to be the state’s first new commercial bank in over a decade to scrap their plans.

Founders of the New Canaan Bank chose to withdraw their application, according to officials with the state Department of Banking. Bank organizers withdrew their application on Dec. 14.

The state Department of Banking gave temporary approval to New Canaan Bank’s application on July 7th. The new bank would have been located at 208 Elm St. in New Canaan, which was once a branch operated by Bankwell Financial Group, headquartered in New Canaan.

Louis Garcia, who was to have been the new bank’s chief executive officer, said in a statement issued Thursday that “between the time we filed the application and received notice from the Federal Deposit Insurance Corporation, market conditions deteriorated.” The application was filed in December 2021.

“While we had significant investor interest, a stellar staff and location, the economic downturn presented enough concerns that we voluntarily withdrew our application,” Garcia said.

Garcia would not comment on whether he and his fellow founders might make another attempt to create a new bank when economic conditions are more favorable.

Had New Canaan Bank opened, it would have been the state’s first new commercial bank since Start Community Bank opened in New Haven in December 2010. The bank is now known as New Haven Bank, having changed its name in August 2019.

John Carusone, president of the Bank Analysis Center, a Hartford-based industry consulting firm, said the bank’s plans were scuttled by economic uncertainty.

“An environment with rampant inflation and stock market volatility does not create the best prospects for a start-up bank.” Carusone said.

The 2008 recession put a damper on new banks being formed for nearly a decade, he said.

“After the recession, there was a deliberate regulatory slowdown from the FDIC,” Carusone said. “Every bank has to be insured by the FDIC. And when the regulatory authorities made it known they would begin accept application again, they set the standards for capitalization very high.”

Carusone said New Canaan Bank was looking to raise between $30 and $40

Grace Duffield / Hearst Connecticut Media Lou Garcia and Fred Afragola stand in front of the building at 208 Elm St. where they expected to open a new bank in New Canaan in the fourth quarter of this year.