New Haven-based HigherOne is providing identification cards that double as debit cards to college students and faculty around the country.

This year has proved a popular one for de novo banks. The Hartford-based Connecticut Bank and Trust opened in March, the first new bank the state has seen since 2002. Two more – the New London-based Bank of Southeastern Connecticut and the Darien Bank and Trust Co. – could open later this year.

An industry rife with mergers and acquisitions has made the present an opportune time to enter the banking market, but two coastal New Haven County banks have put on hold their plans for opening their doors.

The New Haven-based HigherOne has found success providing identification cards that double as debit cards to college students and faculty around the country. A Houston-based bank handles the company’s banking operations, but the executives at HigherOne decided two years ago that starting their own bank could prove more profitable. And although the state Department of Banking awarded the company’s executives preliminary approval for the bank, the company’s successful partnership with the Houston bank has put those plans on hold.

HigherOne has been in business for about four years. Yale alumnus Mark Volchek, who has a master’s degree in economics, and several associates founded the company when they saw a need for college identification cards that could also be used as bank cards.

The company forms partnerships with universities – so far, the list includes Pace University, Eastern Michigan University, the University of Houston and 10 others – and takes over the production of the school’s identification cards. The identification cards double as MasterCard-branded debit cards. Students, staff and faculty can make deposits online at HigherOne’s Web site.

Houston-based Horizon Capital Bank provides banking services for the cards that HigherOne provides to students.

The company’s partnership with Horizon Capital Bank has been successful, but for the past two years, Volchek and the other principals of the company have been working toward establishing HigherOne as its own bank.

“Having our own bank would give us a little more control,” he said.

The state Department of Banking awarded HigherOne Bank a temporary charter of authority in December 2001. A temporary charter means the Department of Banking has decided the proposed bank could be successful and allows the de novo bank to start raising capital. It is valid for a year and a half.

HigherOne Bank’s organizers have filed for extensions twice since then, first getting the deadline extended to March 31 of this year. In March, they applied to extend it to April of next year.

HigherOne’s organizers formed the partnership with Horizon Capital Bank because one of Volchek’s business partners once worked with an executive at Horizon. As HigherOne was looking for a bank to work with, Horizon was searching for more deposits, Volchek said.

Volchek and his partners intended to work with Horizon temporarily, but the partnership has been profitable and the business has grown successful, he said. Also, since Horizon is in Texas and any deposits are made online are received at the bank in Houston, the company and the bank don’t have to be chartered in every state where the universities that HigherOne serves are located.

The company has raised $10 million in capital so far, Volchek said.

“Our business is running very well now,” he said.

Because of the success of the partnership with Horizon, Volchek isn’t sure when HigherOne will begin to aggressively pursue its own charter.

“Our relationship with Horizon has worked out better than expected,” Volchek said. “We like working with them.”

HigherOne probably will keep its partnership with the Texas bank until the company outgrows the medium-sized bank, Volchek said. When HigherOne does outgrow the bank, its executives may use some of the capital they have raised through the success of their business to fund the new bank, Volchek said.

In addition to providing the cards for universities, HigherOne integrates the cards with the schools’ systems. The company also handles refunds for the universities. If a student drops a class or needs a refund for any other reason, the student can log onto HigherOne’s Web site to specify how they want to receive the refund and the company arranges for the transfer of the money. The university runs an on-campus office that deals with lost identifications or any other problems with the IDs.

Customers’ Uncertainty

Although HigherOne’s executives are moving closer to forming HigherOne Bank, organizers of a de novo bank in nearby West Haven are having difficulties finding the time to get the bank off the ground.

Customers’ Bank was intended to “serve small segments of the local community that are not targeted by larger financial institutions,” according to the bank’s Web site. The bank would focus on small, local businesses.

“The West Haven, Conn., banking market contains significant numbers of small to medium-sized businesses that require the kind of individualized attention that a hometown commercial bank can provide,” according to the Customers’ Web site.

The state Department of Banking awarded the bank a temporary charter of authority in May 2001. The organizers of the bank renewed it twice, but it expired last week.

“I’m not quite sure what I’m going to do,” said organizer Ceasar Anquillare.

The certified public accountant is “very busy,” he said, and is putting the organization on hold. Anquillare was reluctant to speak about his plans, but said he would talk to the Department of Banking about his next step.

The bank was intended to be a general commercial banking business, according to its Web site. Organizers originally had hoped to open its doors in September of last year, but that depended on the receipt of minimum equity capital of about $5.9 million.