By Lewis Jackson
(Reuters) - When Republican campaigns want a banker, they don't go to New York or San Francisco, but to downtown McLean, Virginia - about a 20 minute drive from the White House, where a one-branch bank next to an auto repair shop has beaten bigger financial rivals to become a must-have partner for political work.
Chain Bridge Bank, privately owned and with some 70 employees, has worked with the campaign of every Republican Party presidential nominee since John McCain in 2008, including Donald Trump.
For almost two decades the bank founded by former Republican U.S. Senator Peter Fitzgerald has quietly built its position by catering to politics, where large sums shift at short notice and bankers are always on call. Its business model, and the group it serves, could face more scrutiny after the bank said in May it was considering going public.
"In the U.S., federal politics is a $20 billion dollar industry and a couple of financial institutions have appealed and marketed themselves to these entities," said Daniel Weiner, a director at the Brennan Center for Justice.
"Part of it is that the environment is a little Wild West but part of it is that it is a rather insular community, people work by word of mouth."
Reuters reviewed campaign documents filed with the Federal Election Commission going back to 2007 and spoke to Chain Bridge's management and customers before its initial public offering plans were announced, to learn how it came to dominate the market for Republican political campaigns.
As recently as 2016, top Republican presidential contenders Ted Cruz and Marco Rubio banked at BB&T - a sprawling North Carolina-based lender that was merged into Truist Financial.
But in the 2024 election cycle, where Republicans have already raised over $1 billion, every major Republican presidential candidate, including former South Carolina Governor Nikki Haley and Florida Governor Ron DeSantis, was a Chain Bridge customer.
The Republican National Committee, the party's main coordinating body, has been a customer since 2008, although it also has accounts with Truist Financial.
The bank has been so successful because it meets the oddball needs of political campaigns in a way no competitor does, according to Bradley Crate, treasurer for Trump's 2024 and 2020 campaigns and head of political consultancy Red Curve Solutions.
"We don't have time to wait for people's lunch breaks," he told Reuters. "If there's an issue at a large bank, I'm not going to be able to call the head of the bank to figure it out."
New accounts at Chain Bridge take minutes to open, even at short notice. Crate, who has opened more than 1,200 accounts at the bank for clients, once set up new accounts in 15 minutes on a Sunday.
All big depositors are assigned a representative and Crate has called his as late as 11:00 pm. If that doesn't work, he also has the chairman's number.
The bank has also lent money to campaigns. During Mitt Romney's 2012 campaign the bank made a loan against donations which had come in but could not be spent until after the Republican National Convention, when Romney officially became the party's nominee, according to Crate.
Campaigns rushing to pay for last-minute advertisements or events can rely on the bank processing transfers right up until the Federal Reserve stops accepting requests at 6:45 pm.
"When larger banks close their wire at 3:00 pm and someone contacts us at 4:30 pm and they need payment for an event tomorrow, we have to FedEx a check, which is silly," Crate said.
Chain Bridge's political customers extend beyond Republican circles. The pro-Israel United Democracy Project super PAC (political action committee) and tobacco company Altria's corporate PAC are customers, electoral filings show. The US Chamber of Commerce PAC is as well.
The 2024 election campaign for Republican Mike Johnson added Chain Bridge Bank to its paperwork for the first time within three weeks of his election as House speaker on Oct 25.
"We're like Tesla," Fitzgerald, who is also Chain Bridge's chairman, said in an interview with Reuters in January, referencing the electric vehicle maker that for years eschewed traditional advertising.
"We have a marketing budget that's essentially zero and we've grown by word of mouth."
FRIENDS WITH MCCAIN
Fitzgerald's own background in politics was integral to the bank's growth. A Republican from Illinois, he launched the bank in 2007, after retiring from the U.S. Senate two years earlier. His seat was won by former U.S. President Barack Obama.
Fitzgerald says Senator John McCain, who he called a close friend, became the bank's first major political client in 2008 when his campaign needed a new bank after pulling money from Wachovia, which was hit hard by the 2008 banking crisis.
"They were very nervous," Fitzgerald said. "They switched to us because we had the cleanest balance sheet."
Electoral filings show Chain Bridge joined the McCain campaign in April 2008 as one of four banks, including Wachovia.
Money has poured into politics since then, in large part due to the 2010 Supreme Court Citizens United decision which relaxed rules around campaign finance.
Republican candidates for president and Congress raised $2.6 billion in 2020, according to the Federal Election Commission, a two-thirds jump from 2016. Those figures do not include money raised by third party groups like super PACs.
Today, Chain Bridge wins a "substantial" portion of political campaign work, according to Fitzgerald, although it is no monopoly. Electoral filings show the Charles Koch-backed Americans for Prosperity PAC, which backed Haley's campaign, banked with Truist Financial.
Lobbying committees for oil giant Exxon Mobil and Pfizer bank with Citibank and Bank of America, respectively, while Google opts for Wells Fargo, according to electoral filings.
Democrats also have a favored bank. Biden's campaign banks with the partly union-owned and publicly-listed Amalgamated Bank, as did Obama and 2016 presidential nominee Hillary Clinton before him.
ROLLER COASTER BALANCE SHEET
Chain Bridge's balance sheet moves to a political rhythm. Deposits rise through the election campaign period and then crater as politicians spend furiously in the finishing stretch. Deposits fell 21% after the November 2020 election. After the mid terms in 2022 they dropped 25%.
Faced with the equivalent of a small bank run every two years, Chain Bridge is a conservative lender. It has had no non-performing loans in twelve years, according to its annual report. Roughly three quarters of its $1.2 billion in assets at the end of 2023 were investment grade securities or cash.
While it remains to be seen what sort of welcome the bank will get from the stock market, customers will keep coming as long as it maintains its customer service culture, says Crate.
"We've banked at larger banks - Bank of America, JP Morgan, things of that nature - and we just don't get the same experience," he said. "It makes it really hard to go anywhere else."
(Reporting by Lewis Jackson, additional reporting by Heather Timmons, editing by Heather Timmons and Deepa Babington)