A Seattle group has applied to open a bank built around a single idea: landlords shouldn’t have to find a new lender every five to ten years.
Organizers of Final Finance Bank filed its charter and deposit insurance application with the Federal Deposit Insurance Corp. and the Washington State Department of Financial Institutions on Oct. 7. It would be a state-chartered de novo bank operating from one branch in downtown Seattle, with no plans to branch in its first three years.
“Financing by housing providers, for housing providers,” the application says.
The core product would be a long-term, low loan-to-value mortgage on existing rental housing. Organizers expect about two-thirds of new mortgage production to be 5+ unit multifamily and about a third to be 1–4 unit rentals. The bank won’t make owner-occupied home loans.
The pitch is stability. In the current model, the application argues, owners refinance their buildings every five to 10 years even though they’re long-term investments. It calls that cycle “unnecessary and wasteful” and says it ties up owners who should be running their properties. The organizers also say traditional banks, “with higher leverage and other interests, have liquidity cycles which make them less than reliable partners.”
Around the mortgage, the bank would offer the operating accounts landlords need: business checking, rent and security-deposit accounts, savings and term deposits, lines of credit, and cash management. It would also offer two relationship products available only to existing mortgage borrowers. One, the Housing Sustainability Line, finances efficiency and building-system improvements. The other is redacted.
The mission statement is to “reduce the cost of housing by providing reliable, streamlined, economical funding to support a future of sustainable, affordable housing.” The logic is that cheaper, steadier financing lets owners keep rents lower and reinvest in buildings, and that matters most for affordable housing, which is usually existing stock rather than new construction.
Deposits are meant to come from borrower relationships: operating accounts, reserve accounts, and pledged deposits. They’re supplemented by five-year “Mission Driven CDs” with substantial early-withdrawal protection, a structure designed to avoid the hot-money funding that has sunk concentrated lenders before.
Organizers plan to raise at least $12 million, all in cash, and project reaching positive cash flow within about two years of opening. They say the bank will stay well capitalized for three years under both base and stress scenarios and won’t pay dividends during that time. Share pricing, ownership percentages, and the subscriber list are confidential.
The organizer is a landlord. Chairman Dave Rubens is the sole organizer and the only expected 10%-plus shareholder. He founded Pacific Properties Group, a Seattle multifamily owner and developer operating for more than 30 years, and previously founded and sold Avistar Aerospace.
Kevin Byrne would serve as president and CEO. He has more than 30 years in banking with a focus on real estate finance and CMBS.
The most interesting public exhibit was a two-page statement on the 21st Century ROAD to Housing Act, which became law July 11. The organizers argue their bank is exactly what the law was written to encourage: a new community bank, financing preservation of existing housing, funded by stable relationship deposits.
The law offers new banks a two-year capital phase-in, but Final Finance says it won’t use it. Rather, it will hold fully phased-in capital from day one, and its projections don’t depend on the funding sources the law opened up.
“The bank seeks no accommodation under it, relies on no provision of it, and presents an application that is conservative against both the prior framework and the new one,” the exhibit reads.