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Coffee Talk (Tampa)

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  • | 6:00 p.m. April 29, 2005
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Coffee Talk (Tampa)

Resistance is futile

Maybe community bankers should just give up now. Save themselves and their shareholders a lot of grief. Quit now, while they're ahead.

That seemed to be the free advice that John A. Allison IV was dispensing at the annual meeting of BB&T Corp. held April 26 in St. Petersburg.

Allison, chairman and chief executive of the Winston-Salem, N.C.-based holding company, doesn't see a bright future for community banks, even as they sprout up all over the Tampa Bay area. In another decade, Allison says the American financial services landscape will be dominated by 10 or 15 huge banks. A few mid-size banks might survive, but small community institutions are imperiled.

"There'll still be community banks," Allison generously allowed. "But we don't think it's going to be much fun to be a community bank."

The 123-year-old BB&T, which acquired Republic Bancshares Inc. of St. Petersburg in 2004, used to be one of those daft community banks.

"A farm bank," with just $250 million in assets, is how Allison describes the place when he arrived in 1972 with his business administration degree from the University of North Carolina at Chapel Hill. At the end of 2004, BB&T held more than $100 billion in assets and SNL Financial ranked it the 12th largest bank in the United States.

Allison confidently predicts that BB&T will be among those lucky mega-banks that by 2015 will have crushed community banking as we know it today.

Can't get enough Freedom

Another of those pesky community banks is almost up and running.

Freedom Bank, the latest creation of veteran Manatee County banker Gerald L. Anthony, is scheduled to open by the middle of May. The first office will be on Cortez Road West in Bradenton. Anthony sold more than $15.5 million worth of stock to local and institutional investors to get Freedom Bank off the drawing board. Anthony, who will serve as president and chief executive, is bringing in Dennis Holthaus as chief financial officer and Mark Williams to be senior lender.

Bradenton's Freedom Bank is not to be confused with another new institution in St. Petersburg called Freedom Bank of America, which was opened earlier this year by ex-Mercantile Bank CEO Bob Blakley.

Anthony founded Coast Bank and the former American Bank, both in Bradenton. He left when his aggressive growth strategy didn't generate sufficient profits fast enough.

Wells Fargo takes two hits

An advocacy group for low-income families picked an interesting time to go after Wells Fargo & Co. for its lending practices, including those in the Tampa Bay area.

The Association of Community Organizations for Reform Now, known as ACORN, released a national study of 42 metropolitan areas that found Wells Fargo's consumer finance arm confines most of its sub-prime rate lending to poor and minority neighborhoods.

In the Tampa metropolitan area, for example, ACORN says Wells Fargo Financial made 2.3 times as many loans in disadvantaged neighborhoods as did the company's conventional mortgage unit, which charges more competitive interest rates.

"This is a clear example of how Wells Fargo maintains two separate financial systems," Calvester Anderson said in an April 21 ACORN news release. "Folks in upper-income neighborhoods can get good loans with good interest rates, while the rest of us get ripped off."

Lynn Greenwood, senior vice president for communications at Wells Fargo, says ACORN's study should be dismissed out of hand.

"The allegation that we somehow target neighborhoods for non-prime loan products is totally false and 100 percent contrary to our ethical standards," Greenwood says in a statement from Wells Fargo. "We price for risk based on an assessment of the customer's financial situation and credit history, the property involved and the type of loan product the customer has selected."

ACORN timed the study's release to be just before Wells Fargo shareholders convened April 26 for their annual meeting in San Francisco.

Two days before the ACORN study became public, Wells Fargo reported first quarter earnings. If Wells Fargo is making a fortune off the poor, it took a breather during the first three months of this year. The company wrote off $163 million of bad debt accumulated by Wells Fargo Financial. That knocked down Wells Fargo Financial's net income by 80% compared to the year-earlier period, although the company's overall earnings still rose 5%.

Wells Fargo apparently hasn't lost faith in the sub-prime market. Mortgage originations at Wells Fargo Financial were up 50% from the first quarter of 2004.

Reflecting Actualities

For years, Fowler White Boggs Banker PA recruited heavily at the law schools for its summer associates program, which served primarily as a springboard into a full-time job as an associate lawyer. That's changing somewhat.

Instead, the Tampa firm has refocused a majority of its recruiting efforts on lateral hires, Rhea Law, president & CEO, says. She disclosed the firm's policy change while serving as a panelist at the Florida Bar's recent second annual diversity symposium.

The associates' program easily attracted some of the top young legal talent, Law says. It also gave the firm access to some of the brightest minority legal talents.

So the firm hires from the associates' program, the associates work there for a couple of years but then leave for advancement opportunities in markets such as Atlanta or Houston.

"They didn't see them as being successful here because they didn't see them reflected in the leadership of the firm," she says.

By switching to lateral hires, Law thinks the firm should be able to integrate its leadership with more minorities as time goes by.

First to the blocks

Belinda Noah has taken the lead among all candidates who want to topple U.S. Sen. Bill Nelson, R-Florida. The Tampa health care lawyer filed April 20 as a Republican candidate for the Senate seat. So far, she's the only candidate filed for the Nov. 7, 2006, election.

Others being mentioned as possible Republican candidates include U.S. Reps. Katherine Harris, Sarasota, Connie Mack IV, Orlando, Mark Foley, Palm Beach County, Cliff Stearns, Ocala, and Dave Weldon, Melbourne.

Some pundits suggest the office might appeal to Florida Lt. Gov. Toni Jennings, Attorney General Charlie Crist, Chief Financial Officer Tom Gallagher and state Sen. Daniel Webster, Winter Garden.



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