I first met Chip Mahan in 1995 when he was at the helm of Cardinal Bancshares and about to launch the first Internet-only bank in the world, Security First Network Bank. That effort eventually spawned S1 Corporation, now a leading banking tech company, with a half-billion market cap.
Unfortunately, the Internet bank was sold off and eventually shuttered by Royal Bank, in a move I've never quite understood. Why would you take the pioneering brand name in one of the hottest sectors of the last 25 years and just close it down? Royal didn't even bother spending the $9/yr to keep the domain name <sfnb.com>, now a generic link site.
After his stint at the helm of S1 ended in October, Chip is back in the banking business taking the reins of startup Live Oak Banking Company. The Wilmington, NC-based company is still in formation. But it recently passed a regulatory milestone, raising $8 million in capital from fewer than 10 investors (see note 1, 2). David Lucht, who worked with Mahan as a credit officer for Cardinal Bancshares, is the Live Oak's President.
Live Oak was recently profiled in the local business press (here), and will apparently specialize in lending to veterinarian practices and kennels.
While a number of banks target health care practices including veterinarians, none appear to be aggressive online marketers with the possible exception of Bank of America, which is the only mainstream financial institutions using Google to market vet practice loans (note 3). Also, BB&T's Vine Street Financial lists vet practices on its menu of commercial health care lending services (see inset).
With Mahan at the helm, its almost certain their will be a web-based component to the bank's strategy. This is the long-tail of lending at work, targeting a highly specific area that needs a national focus in order to create enough volume to survive. Eventually, we expect to see national lenders targeting hundreds, if not thousands, of business niches online.
For more information on small business strategies, refer to Online Banking Report #107/108 (here).
1. It looks like the company may have registered the URL <liveoakbanking.com> as their URL, but its not currently live and the registration info is unlisted.
2. Here's what the North Carolina banking commission has listed for the company:
- Required capitalization: $8 million
- Prospective employees: 15
- Address: 2605 Iron Gate Dr., Wilmington
- Principals: James "Chip" Mahan, CEO; David Lucht, president
- Focus: Business lending to vets, kennels and children's day care operations
3. Source: Google search, 14 June 2007, from Seattle IP address, 2 PM PDT