Law Review

Entrepreneurs answer the need for community banks.

After the bank where he worked was bought out in a merger, banking executive Michael Kowalski decided to resign. He toyed with the idea of doing securities sales, financial planning or opening a CPA practice, but in the end, he decided to go where the money was. "I realized banking was in my blood," says Kowalski. So in April, he opened his own bank-TownBank, National Association, in Mesquite, Texas.

Kowalski is just one of a slew of displaced or disgruntled bankers who are opening small community banks that specialize in customer service and appeal to entrepreneurs, says Virginia Stafford of the American Bankers Association. "These are bankers who have been in business for years, and a lot of them take their customer relationships and their colleagues with them to start these banks," she explains. "They've got experience and know what they want to achieve."

Both Kowalski and Stafford believe the emergence of community banks has larger implications for the banking industry. Because the majority of the 10,000-some banks in existence are small, the competition is fierce. And when mergers take place, Stafford notes, the resulting flux causes local banks to go after the disenchanted customers left in the merger's wake.

To Kowalski, what's happening in the banking industry reflects the big picture of business. "Any time you have consolidation, you have rebirth at the same time," he says. "As [an industry] consolidates, it creates opportunities for other individuals-and I think that's part of the normal cycle of business."

Helping Kowalski see the opportunity open to him were the shareholders and customers of his former employer, who urged him to start his own bank. The buyout was tough on the small-business owners who banked there, says Kowalski. "They had to deal with more impersonal bankers and more regimented procedures. I came to see that there was a need for a small independent bank that caters to small businesses," he explains. "A lot of the big banks just treat you like a number."-Lynn Beresford

This article was originally published in the July 1996 print edition of Entrepreneur with the headline: Law Review.