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Coffee Talk
Business Observer Thursday, Nov. 6, 2008 11 years ago

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+ Riverside Bank feels regulator's pressureNow we know why a group of Brazilian investors is buying Riverside Bank of the Gulf Coast for $1.+ The sweetscent of victoryWinning baseball dramatically helped the Tampa Bay Rays this year, but so did atmosphere.+ Something old, something new: Homebuilder survivesA combination of old land deals and new pricing strategies has resulted in an odd occurrence for Lakewood Ranch-based Neal Communities, one of the leading homebuilders in Sarasota and Manatee counties: The company has increased year-to-date sales over 2007. Even more surprising, it plans on making a profit this year. + Economy-based humorlingers, even as bank expandsGrim jokes about the struggling financial-service industry were flying fast and furious recently as Northern Trust broke ground on a new two-story building in Fort Myers. + Franchise company hits YouTube for marketing pushAttention plumbers, electricians and air conditioning repairmen - or fans of anyone in those hard-labor professions: Get ready to tap into your inner Steven Spielberg.+ Another familyfeud at Alico?It was only a few years ago that the heirs of Ben Hill Griffin Jr. settled their feud over the future of LaBelle-based agribusiness giant Alico.+ Capital runs short for a second bank turnaroundFederal and state regulators have shut down another effort to save a troubled Bradenton-based bank.Going green goes the world o

Coffee Talk

+ Riverside Bank feels regulator's pressure

Now we know why a group of Brazilian investors is buying Riverside Bank of the Gulf Coast for $1.

The Federal Reserve and Riverside Bank signed a "written agreement" that was recently made public. It's an enforcement action that serves as a warning to the bank's management and board of directors. The agreement calls on the bank's board to strengthen oversight of management, improve credit-risk management, increase collections or charge off bad loans and maintain sufficient capital.

On that last point, the group of Brazilian investors who filed an application with the Florida Office of Financial Regulation says it will buy the bank for $1 and inject $23 million of fresh capital into it. That application and promise of new capital may save Riverside from a worse fate.

+ The sweet

scent of victory

Winning baseball dramatically helped the Tampa Bay Rays this year, but so did atmosphere. And the team wants to enhance that atmosphere in 2009.

This isn't a race with the New York Yankees or the Boston Red Sox to see who can spend the most money on free agents - a race the low-budget Rays would most certainly lose. Instead, this enhancement is about smells.

And for the Rays, that smell is a burst of orange to go along with their home stadium, Tropicana Field. Indeed, the 40,000-plus fans who walked into the Trop for the pair of World Series games against the Philadelphia Phillies last month were greeted to a scent called Citrus Burst, courtesy of Austin, Texas-based DMX Inc. The company bills itself as a "sensory services" firm.

DMX officials say they work with a broad range of businesses and companies to "harness the power of scent to enhance their brands and customer experience." The company hopes to work with the Rays next season and add new scents for the Trop, such as cotton candy for the carnival area and bubble gum for the baseball card alcove.

This is the first time the company has worked with a major league baseball team.

But like the Rays and the World Series, it hopes it's not the last.

+ Something old, something new: Homebuilder survives

A combination of old land deals and new pricing strategies has resulted in an odd occurrence for Lakewood Ranch-based Neal Communities, one of the leading homebuilders in Sarasota and Manatee counties: The company has increased year-to-date sales over 2007. Even more surprising, it plans on making a profit this year.

The news flies in the face of some solemn news coming out of the Gulf Coast homebuilding industry, as the market shakeout that began earlier this year marches on. The latest casualty was Tampa-based Tripp Trademark Homes, a high-end builder for several Hillsborough County communities that shut down operations in late October. Founder Doug Tripp said he could no longer afford to sell homes at a loss, and besides, he wasn't selling too many homes anyway.

Tripp joins a list of troubled Gulf Coast homebuilders that includes Bonita Springs-based WCI Communities and Tampa-based Smith Family Homes.

But Neal Communities has been able to flip such dour news. The latest is that with 132 sales in 2008, the homebuilder has already bested its 2007 year-to-date output by a dozen sales. Plus, 124 of those 2008 sales have turned into closings, with seven more pending. The company even sold eight homes from mid-September to mid-October - high season for national economic chaos.

"Some smart people realize this is the time to buy," Neal tells Coffee Talk, echoing the mantra of the Gulf Coast real estate industry. "It might even be time to get out of the stock market and buy something tangible."

Neal Communities, however, hasn't been able to completely escape the tough times. Overall, the company is down to about 60 employees, from a high of 140 in the summer of 2005. And in another cost-cutting move, Neal has said the company could move to a four-day workweek early next year.

Neal says the company has survived the slump primarily for two reasons. For starters, the bulk of the land it's building homes on these days, in northern Manatee County, was bought as far back as the early 1990s for prices that would be rock bottom low today. That has allowed Neal to sell homes for as low as $129,000 and still profit on each house.

Like other business owners and executives, Neal has also focused on keeping costs down. That promises to be a challenge in the coming months, as he says low labor costs are balanced out with an expected increase in material costs.

"I've been around a long time, and I have been through down cycles before," Neal says. "Yes, circumstances are discouraging right now. The important thing is, don't panic. But don't be afraid to take a hard look at the way you operate and change things up as necessary."

+ Economy-based humor

lingers, even as bank expands

Grim jokes about the struggling financial-service industry were flying fast and furious recently as Northern Trust broke ground on a new two-story building in Fort Myers. These days, you'd be hard-pressed to find any financial institution building anything, especially in Lee County, where the construction-led downturn has hit the economy hard.

Of course, Northern Trust isn't your typical bank. It's a wealth-management company that hasn't suffered nearly as much as rivals with a lesser clientele. Although the Chicago-based company reported a third-quarter loss of $129 million, it has largely avoided many of the toxic securities that have bedeviled its competitors.

Still, the mood improved when State Sen. Burt Saunders, R-Naples, applauded the company for keeping speeches to 15 minutes - and for keeping the bar open for an hour and a half. It's a strategy that might help everyone get through 2009.

+ Franchise company hits YouTube for marketing push

Attention plumbers, electricians and air conditioning repairmen - or fans of anyone in those hard-labor professions: Get ready to tap into your inner Steven Spielberg.

Clockwork Home Services, a Sarasota-based franchise operator of nationwide one-hour plumbing, electrician and air conditioning and heating repair companies, is looking for the best short commercial-style video promoting its three major brands. The company is running a contest, with $26,000 going to the most watched YouTube video that supports Benjamin Franklin Plumbing, One Hour Heating & Air Conditioning or Mister Sparky, America's On-time Electrician.

The contest is more than just a Hollywood play, too. "A slow economy is exactly the right opportunity to launch a major push to support our brands and our franchises," says Clockwork's chief executive Jim Abrams, the Review's 2008 Entrepreneur of the Year for the Sarasota/Manatee region. Abrams introduced the contest to franchisees at the company's annual Clockwork Congress in Washington D.C. a few weeks ago.

Clockwork is promoting its first-ever contest online and in some major daily newspapers, including a full-page ad that ran in USA Today last month. Go to www.win26k.com for more information.

+ Another family

feud at Alico?

It was only a few years ago that the heirs of Ben Hill Griffin Jr. settled their feud over the future of LaBelle-based agribusiness giant Alico.

Now comes Baxter Troutman, who Alico says has filed a complaint against cousin J.D. Alexander and uncle John. R. Alexander. In the lawsuit, Troutman contends that the two men committed breaches of fiduciary duty when they proposed to merge Atlanticblue Inc. with Alico in 2004. Atlanticblue is the majority shareholder of Alico and is controlled by the Griffin heirs. The merger proposal was subsequently withdrawn in 2005.

Troutman is also a shareholder in Atlanticblue, which controls 50.6% of Alico. And he was a director of Alico until January 2008.

In a statement, Dan Gunter, president and chief executive officer of Alico, says he's surprised Troutman filed the suit more than three years after the merger proposal was withdrawn. Still, Gunter says the company's independent board of directors will review the allegations.

+ Capital runs short for a second bank turnaround

Federal and state regulators have shut down another effort to save a troubled Bradenton-based bank.

David Zuern, the onetime top banking official for the state of Pennsylvania, had been tasked with correcting non-performing loan and capital issues plaguing Freedom Bank, a four-branch institution. The bank's board hired Zuern in April.

But the Federal Deposit Insurance Corp. and the Florida Office of Financial Regulation shut down the bank Oct. 31, citing its $15 million-plus annual loss and low capital levels. The bank's $254 million in deposits were assumed by Grand Rapids, Mich.-based Fifth-Third Bank, one of the largest regional banks in Florida. Fifth-Third paid a premium of 1.16% for the deposits and also bought $36 million of the bank's $287 million in assets.

Zuern, just like Kevin Hale at Bradenton-based First Priority, ran into a pair of obstacles that were too difficult to overcome in the bank's recovery efforts: Time and the economy. On the former, regulators had increased capital requirements throughout the six-month process. And the slumping economic conditions were the second whammy.

"The market for investors in banks has just about completely dried up," says Frank Knautz, a Freedom Bank spokesman and consultant who has worked with several other troubled Gulf Coast banks recently. "No amount of hard work is a substitute for hard dollars in capital."

Zuern declined to comment, referring all questions to Knautz.

Both Zuern and Hale came to their respective banks with a hefty resume - one that would have been enhanced significantly if they could have pulled off a turnaround.

Hale, who once ran the $9 billion operations for Fifth-Third Bank out of its Naples office, was hired by First Priority in February. Regulators closed down that bank Aug. 1, however, after they determined it couldn't overcome its noncurrent loan and low-capitalization issues.

Zuern, meanwhile, held executive roles with community banks and regional powers in his native Pennsylvania, including running a division of Pittsburgh-based PNC Bank. He served as the state's banking secretary for two years, after being appointed by then-Gov. Tom Ridge in 1999.

Going green goes the world of Google

Just when you thought you'd heard everything that Gulf Coast businesses are doing to "go green," including building energy-efficient hotels and offices, there's another application.

Silicon Advantage Inc., a seven-year-old Tampa Web development company, is now offering green Web hosting.

To do its part for energy-savings, Silicon offers clients the ability to host the sites it designs for them in a secure, out-of-state, weather-friendly data center that is 100% powered by renewable solar and wind energy.

And the hosting fee is actually less going green. Silicon's dedicated site costs clients $20 a month. The green hosting starts at $8 a month.

Junior Achievement dinner draws big crowd

With the Gulf Coast's economy weakening, it was a pleasant surprise to see more than 650 people attend Junior Achievement of Southwest Florida's induction of Todd Gates and Paul Marinelli to its business hall of fame.

Gates is chairman of Gates, a Naples-based development company and the Review's Entrepreneur of the Year in 2007. Marinelli was president and chief executive officer of Barron Collier Companies until his death on April 10.

Junior Achievement leads volunteers in schools to teach children about economics, financial literacy and sound business practices. With the economic challenges ahead, most would agree it's more important than ever to teach children this often-ignored subject.

Waiting in the wings

For bottom box of P. 5 if it fits

The softer economy has touched just about every Gulf Coast business. Count Strictly Entertainment, a talent-booking business in Tampa, as one hit pretty hard.

"We used to get two to three calls a week from musicians and artists looking for work," says Pat Fenda, the founder and chief executive of the company that's been booking gigs for 25 years. "Now we get two or three a day."

Unfortunately, the bulk of the calls are for people looking for work, not potential clients.

Businesses still book entertainment for events, to be sure, but some have cut the amount of entertainment in half. Others have opted for a disc jockey instead of a live band. Plus, some law firms have said music and parties are politically incorrect these days, so they have been giving their annual party money to charities, Fenda says.

Business wasn't too bad as recently as the summer, but it began heading down in August and has nearly dried up in the past three months.

Fenda has been proactive. She's partnered with an event photographer and acting coaches and teachers. She's done smaller events, responded quicker to last-minute requests and hired an outside sales person.

After posting one of its best years ever as recently as 2006, when it reached $750,000 in revenue, this year will be one of its worst ever: Sales are not likely to surpass $500,000.

"We are praying that at least the attention after the election will now go to Christmas," Fenda says. "Everybody's got their makeup in a jar, waiting."

Florida pulls a

surprise among site relocation gurus

Here's a head scratcher: With jobs fleeing the state at breakneck speeds and the housing market still mired in its statewide slump, just how did Florida end up as the state with the sixth best business climate in the country, according to a recent survey of corporate real estate executives?

More stunning: Florida moved up three spots from 2007 in the annual survey from Site Selection magazine, a publication catering to corporate real estate executives and economic development officials.

But what has to be the final shocker to many business owners and senior executives, a group that has weathered many local and state government inflicted challenges over the years, are the reasons survey respondents liked Florida's business climate. The list includes the state's ease of permitting and regulatory procedures; its transportation infrastructure; its existing workforce skills; and its state and local tax scheme.

With reasons such as those, Coffee Talk knows more than a few people who might not put Florida in the top 10.

Site Selection's

2008 Top 10

State 2007 ranking

1. North Carolina 4

2. Tennessee 3

3. Alabama 13

4. Texas 5

5. Indiana 11

6. Florida 9

7. Ohio 1

8. Virginia 8

9. Illinois 2

10. Georgia 18

July sales of consumer nondurables

What the data shows: July taxable sales of consumer nondurables include food and convenience stores, department and clothing stores, drug stores, antique dealers, bookstores, florists, print shops, nurseries, vending machines and utilities.

What it means: Residents on the Gulf Coast in July cut back on some of the more essential purchases, a sign that the slowing economy is forcing some people to pare their household budgets. The trend appears to worsen the further south you move from Tampa. Counties on the southern end of the Gulf Coast have suffered the most from the construction-led downturn because the economies there are not as well diversified as Tampa's economy is. Also, their unemployment rates are higher. Every area except Tampa had bigger drops in spending on consumer nondurables than the state on a percentage basis.

Forecast: Until recently, the big drops in consumer spending have affected big-ticket items such as cars and appliances. But as the downturn continues, consumer confidence is eroding and Gulf Coast residents are starting to cut spending on groceries and apparel. Spending in that category may recover when tourists and part-time residents return this winter, though annual comparisons will continue to be challenging as the nation enters a recession.

NONDURABLE TAXABLE SALES

($ in millions)

Area Taxable sales July %Annual Chg.

Tampa $967.3 ‑1.9%

Sarasota $237.9 ‑3.8%

Punta Gorda $50.1 ‑4%

Fort Myers $228.4 ‑5.2%

Naples $116.2 ‑5.6%

Florida $7,544 ‑2.7%

Source: Florida Legislature Office of Economic & Demographic Research

Adding a Spark to Tampa advertising

After adding television production equipment this year, Tampa-based Spark is now a full-service advertising agency, able to produce all of its work in-house.

Besides engaging clients and producing some unique work, which included a 50-foot dentist's pick for a sedation dentist's billboard, Spark is known for another thing: Many of its executives were born in Tampa, left town, and moved back to continue their careers.

The firm, started in 2001, used to be known as Spark Branding House. Now it is just Spark.

"For us, we bring a 360-degree experience," says Lindsey Nickel-de la O, the firm's public relations director, who came back to town from PR work in London. "From concept to execution, that's our approach. We look at core value of the brand."

Spark serves a variety of national and local clients, including Bayfront Medical Center, Home Shopping Network and DeBartolo Holdings. Despite the sluggish economy, the firm expects to see about a 40% rise in revenue this year, de la O says.

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