Climate First expands digital services with fintech start-up • St Pete Catalyst

Just one year after operations, St. Petersburg-based Climate First Bank capitalizes on its early success and launches a fintech startup that will offer banking as a service (BaaS) solutions.

June marks the first anniversary of Climate First Bank – a full-service community bank focusing on environmental sustainability. In addition to the St. Petersburg flagship, the bank expanded to Central Florida with a Winter Park location, and a Lake County branch in Eustis is awaiting regulatory approval.

Despite opening during the pandemic, the bank has reached $ 211 million in assets, $ 142 million in loans and $ 171 million in deposits. In light of that success, CEO and founder Ken LaRoe is now raising capital for OneEthos, Climate First’s fintech spinoff.

“When we started, we knew we had to be very technology-centric,” LaRoe said. “But I’m a baby boomer, so it has to be super-user-friendly, technology-centric.”

Community banks are at a disadvantage in the technological field, said LaRoe, as they are “viewed” as a core treatment system. He added that there are only about five in the United States, and most “are just bad” because they use old technology.

He explained that operators know that the shrinking amount of smaller institutions is dependent on their products, so they are reluctant to invest money in updating the systems.

Despite these limitations, LaRoe said the bank’s management knew that Climate First needed robust mobile banking applications, including the ability for customers to open an account within three minutes by phone. He said that account holders also need full deposit opportunities from their homes or businesses – without setting foot in the bank.

“But the problem is how do you get there?” in LaRoe. “We were looking for the right person, and our CTO (chief technology officer) somehow fell into our lap.”

Ken LaRoe, founder and CEO of Climate First, celebrates the environmentally conscious bank’s one-year anniversary.

This CTO is Marcio DeOliveira, also an executive vice president and head of digital banking. LaRoe said that he reached out to Climate First after reading about the value-based and environmentally conscientious social bank. According to LaRoe, DeOliveira said he needed to add some meaning to his life, “and you are.”

After joining Climate First almost a year ago, LaRoe said that DeOliveira has already written several proprietary codes and hires coders and engineers to “deepen” the bank’s technical aspects.

“But in that process, we decided to spin the division into a wholly owned subsidiary of a holding company,” LaRoe said. “And that’s OneEthos.

“And what we are doing there is that we are going to offer banking services as a service through proprietary software as a service (SaaS) technology.”

According to a publication, OneEthos will initially offer solutions to Climate First and eventually to other financial companies that want a transition to sustainable finance. LaRoe said the fintech startup will be launched “very, very soon.”

“We are basically ready to go,” he added. “We just have to finance it in the holding company.”

LaRoe said that financing OneEthos through the holding company is a bit complicated. He explained that when he raised capital for Climate First, he only had the bank charter, as it would have taken more time to establish a holding company.

According to the release, LaRoe raised $ 44 million in capital before opening the bank, but said the regulations prevent him from moving the money into the holding company. Therefore, he must now obtain new financing for the holding company, an assignment he undertakes through the exercise of subscription by current shareholders.

“I think I have about $ 1.1 million in the holding company,” LaRoe said. “I would like to get to $ 1.5 (million) before we actually spin it off.”

LaRoe said that OneEthos differs from other fintech companies that refer to themselves as banks. He noted that people sometimes refer to them as “neobanks.”

Only businesses with access to the Federal Reserve are considered banks, LaRoe said. He explained that when companies offer checking accounts, they only send customers’ money to federally recognized financial institutions. He said that OneEthos would offer that service – along with everyone else who needs white label banking solutions.

White label banking and BaaS allow third parties to build their own financial products using existing infrastructure.

“We want to be able to offer things like our solar lending platform as a white label to other banks,” said LaRoe. “Especially value-adjusted banks, as members of the Global Alliance for Banking on Values.”

Climate First, also a member of mission-oriented networks such as the Net-Zero Banking Alliance and 1% For The Planet, launched a Digital Solar Lending Platform in May to dramatically streamline the process of borrowing money to install solar panels.

LaRoe said DeOliveira developed proprietary code to simplify the lending process, and consumers can now complete the application “in three minutes” via a mobile device.

“In three seconds you will have an answer, and in a day you will have the final documents ready to sign,” he said.

During the first 11 months of operation, LaRoe said Climate First ordered around $ 500,000 in mortgages for solar energy, “which is nothing.” In the first month of the new platform, the bank received $ 1.5 million approved.

“So, it just has a huge action,” LaRoe said. “We are confident that it will be a change agent.”

As part of the business plan, LaRoe said officials approved Climate First for four locations during the first three years of operation. After St. Pete, the Orlando area and Lake County, he said that next on the list is Tampa.

As much as he looks forward to opening a branch across the bay, LaRoe said he is hesitant until he finds the right person. He also noted that Climate First is not “location-based”, and of 43 employees, only five work in masonry and mortar buildings.

“We opened under Covid and had these realities right from the start,” he said. “It just turned out to be perfect … random timing.”

To learn more about Climate First Bank, visit the website here.