Hear from one of Avon Mutual's new board members
Dear followers, in addition to our most recent great news on general progress, we are delighted to be able to update you that we have had great interest in our current investment round and have raised more than half of our current £800k target. Those funds will take us safely to the key ‘Challenge’ stage with the regulators, a stage after which the vast majority of applicants gain a bank license and start trading.
As one of our newest investors, Whit Hanks, a successful regional bank founder has also recently joined our board and has such a unique and interesting story and background highly relevant to Avon Mutual, and we thought we would do a blog in conversation with him.
Whit is originally from Texas and is a serial entrepreneur and community bank co-founder who, having traced his ancestral roots to Wiltshire, has recently bought England's oldest hotel The Old Bell Hotel in Malmesbury as well as the next door Abbey House and Gardens. He now plans to build a growing portfolio of companies in the West Of England with his equally dynamic entrepreneur wife Kim.
Amongst his many businesses Whit co-founded Pioneer Bank a regional community bank in Texas, and when he heard about Avon Mutual, he could not help but get in touch and ask how he could help. That started a conversation which has now led to him joining our board.
Jules - Whit, you’ve got an amazingly eclectic background with JP Morgan, in real estate, antiques, hospitality and banking and I’m so glad you have decided to join our board. Can you tell me a bit about you and your business background and your journey to and experiences of, starting a community bank about the same size as Avon Mutual plans to be?
Whit – I started out buying rental houses when I was a student at the University of Texas in Austin while I was completing my undergraduate and graduate degrees there. I owned about 20 by the time I finished school. I bought run-down houses and remodeled them with my friends and then rented them out to fellow university students. After graduation, I worked in Washington DC for Democrat Senator Lloyd Bentsen of Texas, and then I moved to New York where I worked for JP Morgan in their real estate acquisitions division.
However, as they often say, all Texans eventually come home. On my way back home, I took a 6-month detour through Europe, living in Edinburgh as my home base. My goal was to bring back architectural antiques and incorporate them into newly built houses. I bought enough material for about 100 houses but only built one project. That’s when the 1985 recession temporarily ended my real estate career, so I had to start an architectural antiques business to sell all my extra materials. That business led eventually to starting what is now called an “antiques mall”, although that term didn’t exist at the time. In doing so, I returned to my academic training as a real estate developer, leasing to other antiques dealers. That in turn led to leasing to all kinds of tenants and eventually to being a commercial real estate developer, specializing in buying run-down buildings and renovating them for commercial businesses of all types.
I started developing properties in a nearby village called Dripping Springs. Eventually, as a by then key figure in the local community, I was approached to start a bank in the town. I partnered with a friend who knew how to do that, and we raised capital and hired employees much as Avon Mutual is doing now. We contacted investors, started our banking in a rented trailer, built our headquarters building, and began working with the community. We began as the 25th largest bank in our region but grew to the largest locally owned bank with $1.8 billion in assets. Recently, we have merged with a larger bank, called Sunflower Bank, which has branches in five States.
Simultaneously, I was fixing up my parents’ weekend place for a wedding venue. I didn’t really want to work directly with wedding groups, but I found a lady in town who did, so she helped us get started. I went to Vietnam and collected antique buildings which I brought back to that property which is now called Camp Lucy www.camplucy.com. After a while I fell in love with that lady, Kim, who became my wife. She’s the CEO of Whim Hospitality www.whimhospitality.com. We have about 250 employees in Texas working at Camp Lucy and serving the needs of other wedding and corporate venues in Central Texas. Kim would like to expand the company to a collection of unique hotels. By chance, we discovered that The Old Bell Hotel in Malmesbury and also Abbey House Gardens next door were available to purchase, so they are the current project. We have other somewhat related acquisitions in mind, but as you can see, mine is more of a migration in a general direction rather than an intentional strategy.
Jules - So how on earth did you end up here in the West of England? I know you dug into your ancestry and found that a Benjamin Hanks emigrated in 1699 to the US but that you can trace the Hanks back to 1500 in Malmesbury, or maybe even 1100 - and amazingly one of your more recent ancestors even used to lease The Old Bell Hotel, is that right?
Whit - That’s right. With one of many websites now available, it is easy to trace your family roots. Mine stretch back to Malmesbury, Wiltshire and also to Stow-on-the-Wold, Gloucestershire, and Buckland. So, as you can see, I have deep Cotswold roots on my father’s side of the family. I haven’t found out much yet about Benjamin Hanks, who is the one who came first to the US. However, those were tumultuous times in history. I hired a local researcher who discovered that the Hanks family (originally called Hand-Seax for hand sword) operated perhaps the first water-powered fulling mill in England which is used in wool production. He, Walter Hand-Seax, lived in Malmesbury in the late 1100’s and the mill was actually operated on the River Avon which adjoins the hotel. Henry Hand-Seax was named as a Burgess representing the community in a local dispute in time of Edward I. Much later, in the late 1800’s, Henry Hanks who was the postmaster and an Alderman for Malmesbury leased Castle House which is now part of The Old Bell for about 30 years from the Lord of the Manor of Malmesbury and Westbury.
Jules - So turning to local banking, unlike places like the US where your bank is based, it's striking how unusual the UK banking landscape is compared to most other OECD countries. While there are over 5,000 banks in the US, the UK has an oligopoly of 5 major banks which control the majority of the market. This is very atypical because in most other countries there is a diversity of hundreds of much smaller banks like the Pioneer Bank you chair, many of which are not profit-first banks but are what is known as ‘values-based’ or ‘stakeholder banks’ and are often also regionally focused. As the Founder and Chairman of a bank can you talk a bit about what attracts you to get involved in our model of bank based on relationship banking, being embedded in community, and particularly lending to the kinds of small businesses and community groups the bigger banks are less interested in?
Whit - In the US, there are both types of banks. There are large national banks which are ubiquitous just as your large banks are here. Those banks have less autonomy locally, so they are good for basic services. They also serve the needs of huge corporations very well. However, we do have several thousand community banks, too. Those are generally founded by local business people who are members of the community. Some of our community banks are more than a hundred years old; others are quite young like Pioneer Bank. The primary advantage of the community banks is that all decision making is done at the local level, and the local banker knows his customer. We call it relationship banking because the banker is in a relationship with his customer. Before being a banker, I was a businessperson, and I found it much easier to work with community banks rather than national banks because those banks got to know and trust me, so I built up a track record with them.
I think Avon Mutual’s year ten projections anticipate a bank of about half the size that Pioneer Bank is now, which we founded in 2006. The ex[ected growth rate is quite similar. I understand that Avon Mutual plans to serve more than 15,400 SMEs, including sole traders, urban independents, and 3,300 charities and other mission driven businesses in those first ten years. I think that focus on smaller businesses is so important these days because big distant banks are just under-serving these enterprises.
Regional and local banks like Pioneer Bank and Avon Mutual are also far better at keeping local money flowing in the local economy and where they exist there is a far better regional distribution of economic development compared to the norm in the UK, where wealth concentrates in London and the SE. Pioneer is headquartered in Austin, which is not our country’s or our state’s most important financial area, although we are growing rapidly. I think you’ve told me that currently approaching half of SME deposits in the West of England flow out of our region. With a regional bank like Avon Mutual that money would stay in the region being lent to develop a more vibrant economy and revive our High Streets - thats a key role local banks can play that big banks just can’t.
Jules - As you know, Whit, our bank will have a mission around financial inclusion, sustainability and relationship banking. Can you tell me a bit about why you feel this is so important?
Whit - US banks are heavily regulated, so we also incorporate a commitment to supporting all members of the community. That’s because it is a privilege and a responsibility to be a banker. The public is giving the bank most of its lending capital in the form of deposits, and in exchange the bank is being trusted to lend back to the community that has provided that capital. Ironically, it is often more difficult to borrow funds or to receive services when a customer is more vulnerable and can least afford these services although still being an important member of the community
I know that one thing the stakeholder banking model supports is a focus on financial inclusion and supporting those who suffer from the poverty premium of not having access to basic banking facilities such as direct debit. I’ve seen that according to work carried out by Bristol University, this costs the very poorest households many hundreds, and in some cases, thousands of pounds a year to access their basic services. We live in a wealthy region here, but at the same time we have communities across the West of England, in Bristol, Gloucestershire and very near here in Wiltshire which have some of the highest multiple-deprivation figures in England.
So, I’m so pleased to see that according to your projections, of the 66,800 individual customers Avon Mutual plans to have by year ten, more than 10,300 will be financially vulnerable and that 2,200 previously unbanked people across the West of England will be brought into the financial system with their own current account, producing at least £700,000 saving per year on the Poverty Premium. Also, that £0.9m will be saved in interest for vulnerable customers not using high cost credit. I think that’s wonderful and it shows how powerful banking can be when done right.
I’m also excited about the wider local multiplier economic impact Avon Mutual plans along the lines of LM3, with £740m-£1.7bn local multiplier impact in the first 10 years of operation, excluding those economic impacts from financial inclusion. I know the bank also aims to create or protect 115,000 jobs through its lending and operations.
Key to being able to deliver such impacts is the way stakeholder banks invest their assets and their lending into the “real economy” of the small business community as opposed to the speculative economy the big banks put most of their assets into. This means far more lending to SMEs and start-ups and to things like sustainable solutions to climate change, green mortgages and so forth. So, it’s truly impressive that Avon Mutual plans for £533m of its assets to be based in the “real economy” and to be deriving £155m (75%) of its revenues from activities in the local economy. And I know its estimated that by Year 10, £390m of the bank’s assets should be with projects that create a positive social, economic impact, as well. All this just goes to show how banks can be a force for good in society. We would say: “Doing well by doing good”; meaning, we can reward our investors at the same time that we are serving our local communities.
Jules - Of course COVID has had a huge impact on the UK and our local economy and we are proud that Avon Mutual has been recognised by Wiltshire MP Danny Kruger as having an important role on ‘levelling up’ and by the RSA as being key to ‘building back better and fairer’. Perhaps you have thoughts on the impact COVID has had on your businesses and on Texas?
Whit - Similarly, community banks in the US played an instrumental role in helping businesses recover from the pandemic. The US government asked our banking system to distribute a huge amount of Small Business Administration (SBA) funding through the “Paycheck Protection Program” (PPP). Each banking customer worked with his or her local bank to apply for the funds to help recover from the devastating impact that COVID had on the business. The banks used their extensive skills to vet applications and protect the government from fraudulent loan applications so that funds made were to legitimate businesses. That was made much easier by using our community banks, and I know in other places like Germany its been the ‘stakeholder’ regional banks not the big commercial banks that have been key to the German COVID business bounce-back.
Jules - I believe you are also purchasing the neighboring property to The Old Bell called Abbey House Gardens, made infamous as a naturist retreat by an Alan Titchmarsh TV episode. Can you tell us a bit more about your vision for the two properties?
Whit - With pleasure! First, both The Old Bell Hotel and Abbey House are Grade I listed buildings, which are quite rare, there are only 295 in all of Wiltshire. The two properties adjoin each other and Malmesbury Abbey itself. The properties we’ve purchased were originally separated from the Church with the Dissolution of the Monasteries in 1539 when George Hanks, my 11th great grandfather, was living in the town. They were sold to William Stumpe and to successive owners after that. The Old Bell and Abbey House were themselves separated 125 years ago when the Lady of the Manor of Malmesbury and Westbury sold them to separate owners. So, we are having the fun of reuniting these two properties. So far, we’ve upgraded the interiors and services offered at The Old Bell. Once we receive planning authority permissions, we plan to fully renovate the property next door which we now call Abbey House Manor with 21st century conveniences so that it can be opened up for public use as a hotel while maintaining some public’s access to the gardens.
Jules - I know you are an active Christian as are many of our other investors and supporters and I know you feel strongly that Christian values are crucial in business - do you want to say anything about that?
Whit Hanks - On that topic, I would just say that values expressed by Christianity or, really, any of the major religions, express many of the same good intentions and aspirations expressed by Avon Mutual. At the core of just about all religions, expressed one way or another, is the desire to love one’s neighbour, take care of the less fortunate, strive for the greater good. We don’t have many organizations at home that so clearly express these values as does your organization.
Jules - Malmesbury is no doubt a long way culturally and geographically from the evocatively named Dripping Springs in Texas. Can you tell me how you are getting along with connecting with the community here - I hope the locals are friendly and welcoming?
Whit - Wow! What a warm embrace we have received. Our reception in Malmesbury has really been fantastic, exceeding our expectations by a mile. To be honest, I think Brits in general like Texans or at least the Texas persona. Maybe opposites attract! Both my wife Kim, who runs our hospitality business, and I have really enjoyed the experience in every way possible. Once our neighbours discovered that we really love the town and want to bring it more prosperity, they were all in. As Kim is apt to say, we see ourselves as a river, not a reservoir, so we like to see prosperity flow through us, not holding on to it for our own exclusive enjoyment.
Jules - Final (maybe slightly tongue in cheek) question. I’m sure the Hanks diaspora are spread far and wide since the pioneering days of the first US colonies but any idea if you are related to Tom Hanks?
Whit - Yes I am. Or at least, I’m claiming him. His family was also originally from Malmesbury, so that means we must be related somehow, right? We are cousins although perhaps many times removed. I have in mind organizing a Hanks reunion to allow all of us Hanks who have strayed across the world to return home to Malmesbury. I’ll know that project is a success when my favorite celebrity of all time, Tom Hanks, puts in an appearance!
Well thats all for now. As we speed up our progress towards licensing we promise to update you regularly over the next key months. Please do get in touch if you’d like to support us, ask questions or get involved in our growing community.