e3bank Reorganizes; Plans New Equity Offering in 2010

Last week, e3bank's Chairman Sandy Wiggins and President/CEO Frank Baldassarre announced tactical changes to their business plan in order to comply with the changing regulatory environment, which will have a direct effect on the bank’s current equity investment offering.

In accordance with the bank's guiding principle of Transparency, e3bank will be closing the current escrow account and will be refunding the full amount of investors' subscriptions with interest before reorganizing and commencing a new amended offering.

"We have decided to withdraw our current capital campaign due to modifications that we are making to our business plan," said Baldassarre. "These modifications reflect extensive discussions with the regulatory agencies and our advisors regarding the new de novo bank process. e3bank is not changing our mission, products or our delivery system."

e3bank currently anticipates starting a new equity offering in the New Year once amending the Offering Circular to reflect changes in the application, and are targeting being able to commence operations by the end of the second quarter of 2010.

I had a chance to catch up with Frank Baldassarre about the changes affecting the bank and the financial markets:

GS: Tell me about the changes in e3bank's structure?
e3: We decided to scale back from having a national scope to focusing on the Metro-Philadelphia area. And the time-frame for regulatory scrutiny has changed from 3 years to 7 years for what's considered a de novo bank, so those changes allowed us to reorganize.

GS: You had an ambitious offering in a tough environment this past year, what will happen with those investments?
e3: We're returning 100 percent of the investments to the investors, plus some interest that was earned.

GS: And what was the reaction from investors?
e3: They were disappointed, as we were, but they also appreciated the transparency. We were living up to that core value. There's been a very favorable response to the way we've handled this change.

GS: What's your outlook for 2010?
e3: We're looking to get regulatory approval as soon as possible and expect to open in the second quarter of 2010. This is the right time for our business model, and our mission will remain identical.

GS: What milestones are you hoping to reach by this time next year?
e3: We hope to be a huge success in the Philadelphia region. Our market research shows that e3bank has strong potential in this market. And we'll have well-managed deposit and loan growth. There's a lot of unmet demand for banks, especially those with a more responsible focus.

GS: Are you seeing the triple-bottom-line (TBL) market expanding or contracting at this time?
e3: We see it continuing to expand, and interest in what we're trying to do has been great. I continue to get asked to speak at conferences, most recently to a group called the Environmental Bankers Association. Overall, I feel strongly about the reception we've received from investors around the world.

GS: Do you think they are responding to the message?
e3: The message of TBL in the financial services sector is resonating; people want to do the right thing and the TBL approach is the right thing. We even had an encouraging note from a banker who was watching our model closely and hoping to adopt some of the principals to his own bank.

GS: I know you can't tell me what bank he was from, but what did he say?
e3: He said, "Keep up the good work!"

And from what we've seen of e3bank thus far, that's just what they will do.

For more details on e3bank, check out: www.e3bank.com.

e3bank: A new bank built for the green economy

You might think now is a terrible time to start a bank. The banking industry has gone from tailspin to government-owned in the past 8 months.

The collapse of one major financial institution after another -- either through mergers or failures -- has made the very profession seem like, well, something to avoid like swine flu.

But for the founders and principals at a new start-up bank that received its charter this past March, now is the perfect time to start a bank. If, that is, you're starting a bank based on a different value system.

Enter Sandy Wiggins and Frank Baldassarre. Of the two, Frank is the only one who resembles a banker, and that's because he is, and has had an extensive career as a banking professional with such regional institutions as Fox Chase Bank of Exton, PA, and First Financial of Downingtown. Sandy was the charismatic chairman of the US Green Building Council and has three decades of experience in the building industry.

Together, they are launching e3bank, set to open for business this fall and currently embarking on a $30 million private offering to shareholders willing to put up a minimum of $5,000. Their goal is to have a large number of shareholders, most of whom have made a modest investment.

"We don't want to have a single large investor who could call the shots and control too much," Wiggins told me in a recent interview. "We want to be inclusive, so we've made the minimum investment low enough to democratize ownership in e3bank."

So they are seeking a steady stream of small, $5,000-10,000 investors through what is, in part, a social networking campaign, trying to reach more people who understand and believe in the idea of a bank with a triple bottom line.

In fact, according to Wiggins that triple bottom line (enterprise, environment, and social equity) is the single greatest distinguishing factor for e3bank. They will couple that with world-class online banking service that "will be unlike any online banking experience on offer in the US," Wiggins says. "Think about it as Web 2.0 for the banking industry."

E3bank will have a limited building-based footprint. "It won't be your traditional branch bank, more like a resource center," reports Wiggins. "A place for public discourse and information about sustainability. A cross between a comfy living room or local cafe and an Apple store."

They will be few in number and location because, as Wiggins says, "The greenest building you can build is the one you don't build."

E3bank won't just be about atmosphere, Wiggins relates. The bank will offer a range of financial services designed to increase their customer's returns while reducing their customer's environmental footprint. They will also focus on what Wiggins calls "values-based financial incentives," such as interest rates to encourage sustainability choices and providing feedback on customer spending habits.

For instance, the bank will attempt to categorize expenses automatically online and recommend energy efficiency options for customers who have consistently high gas or electric bills.

Their "Green Assist" program is perhaps their most exciting innovation. Designed for residential and small business customers, e3bank will provide an energy audit, fund energy efficient and renewable energy projects, and automatically process all available subsidies, rebates, and tax incentives, as well as connect them with pre-screened contractors in their community.

One goal of the bank is to be a community bank, says Wiggins, "but a community bank of like-minded individuals rather than geography." They'll be coming together around the value system the bank espouses rather than proximity to some branch office.

It's an experiment worth watching. Can a bank tow the triple-bottom line? Other banks, such as Chicago's ShoreBank, San Francisco's New Resource Bank, and some community development corporations among them, have tried for a double bottom line approach. And only one, Triodus Bank in the Netherlands, has experimented with a third dimension, although ShoreBank is attempting to enter the green market as well.

E3bank has the potential to revolutionize the banking industry at a time when the banking industry is in dire need of an extreme makeover.

Ultimately, the goal of e3bank is to support the new green economy and a more sustainable economy and, as Wiggins puts it, his will be the bank for "everyone who cares about a sustainable world."

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