A Bank Failure

I typically do not see articles on banks failing unless the failure could lead to a system wide crash like that back in 2008 or it is a big name bank whose failure is as a result of malfeasance, like FTX (technically, that’s not a bank but a crypto exchange, a considerably different entity, but I just can’t think of any recent failures outside of 2008). Forbes did an article about a small bank in Texas because of some of its striking features.

One of its striking features is that the bank lasted only a few months. When reading the article, it sounded like it lasted maybe 4 months. (Further research dug up 3 months reported elsewhere, but I’ll stick with 4.)

Another of its striking features is that the bank was able to raise $50M. According to the article, that is a good chunk of money and therefore should have been able to last more than 4 months. So, the author asked, “Where did the money go?”

And finally, the bank had an interesting branding or affinity branding going on: that of a non-woke bank. Personally, I think it is this feature that is generating quite a few articles on the bank failure. The non-woke bank branding is probably in response to banks participating in the ESG reporting that has become popular in the last year. A couple of states are pushing back on ESG reporting and more specifically on pulling money out of fossil fuel companies.

Did the affinity branding push the bank into failure? No, instead I think this story is a good example of how branding alone or affinity programs are insufficient to build a successful company. A company needs experienced executives to run the company and there should be no malfeasance which the article kind of hinted at. It sounded like some of the founders were either political staffers or political commentators. But the biggest(?) founder was an investment banker so I’m kind of wondering what he was doing.

So, yeah, where did the money go?

Anyway, an interesting little story.