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Business Observer Friday, Sep. 20, 2019 1 month ago

Urgent Undertaking

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Longtime community bankers, despite some obstacles, believe the timing is right to invest — significantly — in the industry’s future.
by: Mark Gordon Managing Editor

It wasn’t the grueling physical training, but Tampa area banker Robert Shaw craved something he grew to love while a West Point Cadet in the mid-1990s: a sense of community and camaraderie.

Shaw found that in banking, both with colleagues and customers. He has since held a handful of market president and senior leadership roles at several community banks in the region, including Seacoast, NorthStar and USAmeriBank, before its 2017 acquisition. “I really believe in servant leadership,” Shaw says. “If you want to be a good leader, then you eat last.”

Shaw will take that sense of pride and community into his latest gig, with West Florida Banking Corp. The startup bank holding company is new to the community-banking scene in the region, having formed — with about a $27 million capital raise — in May. Most of the capital came for networking with local investors, and it didn’t even hire an investment bank for outside funding. “It was a lot of breakfasts, lunches and dinners,” Shaw says.

West Florida Banking Corp. is using the capital to acquire Clearwater-based Flagship Community Bank. The deal, for $14.57 a share, for a total of $25 million, is expected to close by the end of the year. The purchase values Flagship, with $121 million in assets through June 30, at 1.6 times book.

The executive vice president of West Florida Banking Corp., Shaw will report to fellow area banking veterans Bob McGivney and Jim Nelson. McGivney, CEO and vice chairman of West Florida Banking, previously ran Oldsmar-based Jefferson Bank of Florida. Jefferson, which McGivney guided through the recession, was essentially acquired twice in nine months. First, in January 2017, Fort Pierce-based Harbor Community Bank’s parent, HCBF Holding Co., bought Jefferson Bank in a $40 million cash and stock deal. Then in August 2017, Winter Haven-based CenterState acquired HCBF for about $416 million. 

McGivney was named CenterState’s Pinellas County market president. Although he speaks highly of CenterState and its executives, McGivney is an uber-local banker at heart. He brought former Jefferson Bank executive Jim Nelson with him, recruited Shaw and formed West Florida Banking Corp. Nelson is president and COO of West Florida, while the board is also familiar from the Jefferson days, including chairman Paul Wikle, a Palm Harbor real estate broker and investor.

“We’re going to bring some new capital and new energy into the market,” McGivney says. “We don’t have any directors who aren’t type A. Everybody here is high energy.”

Beyond high energy and market opportunity, a key to the deal, West Florida Banking executives say, is speed to market. Rather than go through the grueling regulatory process of a de novo community bank, McGivney says Flagship presented a “turnkey” opportunity to have a bank with a defined market. “This gives us a two-year leg up,” he adds.

We don’t have any directors who aren’t type A. Everybody here is high energy.’ Bob McGivney, West Florida Banking Corp.

Flagship President and CEO Frank Burke, who founded the bank 2006, attempted to take the institution in an unusual direction in 2017. That’s when Flagship reached a potential $260 million deal to acquire BankMobile, the digital division of Pennsylvania-based Customers Bank, a $9.4 billion enterprise. In a nod toward banking’s future — digital first — Flagship would have changed its name to BankMobile and become a national caretaker of excess money from student loan accounts. But the deal fell apart in 2018, due to financing and other issues.

Flagship’s board remained on the lookout for an exit strategy after the failed BankMobile deal, and the timing was right in May, when McGivney’s CenterState non-compete agreement expired. “It’s a good deal for employees and shareholders,” Burke says. “And not losing a community bank is a good thing.”

Although Burke won’t be retained under the new owners, several other Flagship executives and most employees will remain. Shaw says one the areas of investment the bank will prioritize is IT. Outside that, the big thing the revamped Flagship will offer area business owners and entrepreneurs is “access to [loan] decision-makers,” Shaw says. “That’s one thing that separates us from regional and national banks.”

One obvious challenge West Florida Banking Corp faces is the market for small community banks is rough, given regulatory and compliance costs and shifts in the way customers bank. Executives counter that as bigger banks continue consolidating — the BB&T-SunTrust merger is one big example — opportunities will come their way. Then they need to execute.

“We do this because we have a passion for customer service,” Shaw says. “It just happens to be we do that in banking.”

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