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'All About the People'
Banking by Janet Leiser | Senior Editor
Last year was a banner year for new community banks in Florida, with 25 de novo applications filed with state regulators. This year might come close.
Last year was a banner year for new community banks in Florida, with 25 de novo applications filed with state regulators. This year might come close.
The time is always right to start a local bank in Florida, if you have experienced, well-connected directors and a top executive management team, says a bank consultant who represents about half the applicants that sought state regulatory approval in the past two years.
After all, the state has one of the best economies in the nation (yes, even with a housing slowdown). And with about 1,100 new residents moving each day to the Sunshine State, someone needs to offer personalized service to all those new Floridians, who often bring a nest egg.
"You have to have a very good group of directors and you also have to have a quality executive officer slate," says John Greeley of Orlando-based Smith MacKinnon PA.
"Those are really key," Greeley says. "If you have those two combinations, you'll have a successful community bank."
Greeley represents 19 of the 38 groups that have filed de novo applications in Florida in the last two years, including Insignia Bank, Sarasota; American Momentum Bank, Tampa; National Bank of Southwest Florida, Port Charlotte; and CNL Bank, Southwest Florida, Bonita Springs, to name a few.
"The housing marketing is slowing a little bit, but on balance the business environment remains pretty healthy," Greeley says. "Good banks continue to grow an average of 10% per year in Florida."
And most community banks are acquired by a larger bank within eight to nine years, which brings investors an average return of 2.3 times book value, says Bob Calvert, a Southeastearn U.S. banking consultant that has helped start 86 banks.
"More and more people are seeing the value of owning stock in a small bank," Calvert says.
In Florida, 25 groups filed applications to start a community bank in 2005, up from eight in 2001, according to the Florida Office of Financial Regulation. This year, there have been only 13 applications so far, but six or nearly half are in the Gulf Coast region, between Pasco and Collier counties.
And de novo applications are expected to rise significantly in the last quarter of the year, Greeley says. He will file four more within a few months.
Mergers or acquisitions of smaller banks obviously spur community bank startups, Calvert says.
"When the megabanks start moving, they buy up the little banks, particularly in Florida," Calvert says. "The people in the local area feel they don't have a say, and they want their own bank in their own little town."
Calvert also says business is picking up. "We're working on seven applications right now and we have 11 pending," he adds. "The only thing slowing down is the real estate market."
Neither Greeley nor Calvert would disclose applications not yet accepted by state regulators.
But both consultants say that when it comes to community banking, it's all about the people.
Right combination
In January, Charles G. Brown III left Charlotte State Bank, where he was chief executive officer for 10 years, to start Insignia Bank.
"We had a unique opportunity from the timing standpoint," Brown says, referring to the Insignia directors and executive team.
Six of the eight directors had started a bank previously: Tim Clarke, Sam Norton and Mike Pender helped organize and run Sarasota Bank, which was acquired by The Colonial BancGroup Inc. Harvey Glick started and ran an Ohio bank. Don Shackelford is the current chairman of Fifth Third Bank, Central Ohio affiliate and was chairman and director at other banks. And Brown, CEO and chairman, ran Charlotte State, one of Florida's top performing banks.
As for Brown's management team, he says experienced managers were available because of shakeups at larger banks. Local investors have shown their faith in Brown: the bank raised a Sarasota record of $25 million in startup capital, and expects to open three locations within a year.
Tampa startup
The same holds true for a Hillsborough County-based startup. American Momentum Bank set a state record recently when it raised $100 million, says Greeley, who represents the investors. A Miami startup, Great Florida Bank, held the previous state record of $60 million.
American Momentum President/COO Sam Davis, an executive who formerly worked for Barnett Bank that later became NationsBank and Bank of America, says the bank expects to open its Tampa headquarters Oct. 25 in the West Shore area.
The bank's principal shareholder, Don Adam, built Texas-based First American Bank over 18 years to more than $3.5 billion in assets prior to selling it to Citigroup last year.
"We have a lot of high-powered staff," says Davis.
American Moment Chief Financial Officer William Falzone was previously with Republic Bancshares, which was acquired in 2004 by BB&T Corp.
Davis says American Momentum is considered an independent bank, not a community bank. It plans to open multiple locations in Tampa, Orlando and Naples fairly quickly.
The bank is one of about seven Florida-based financial institutions that have a capitalization of $100 million or more, Davis says. The bank can offer a $25 million loan from the day it opens.
"We felt that there was a need in that tier of largely capitalized, independent banks," Davis says. "We think this is a particularly good time to enter this market."
New Banks started in Florida
2001 2002 2003 2004 2005 2006 Total Percentage
De Novo
Applications 8 9 13 17 25 13* 85 n/a
Gulf Coast
startups** 2 7 2 7 8 6 34 40%
Source: Florida Office of Financial Regulation. *As of Sept. 8, 2006.
**Gulf Coast region includes Pasco, Hillsborough, Pinellas, Manatee,
Sarasota, Charlotte, Lee and Collier counties.
TIPS FOR WOULD-BE BANK OWNERS
North Florida bank consultant Bob Calvert has put together 86 banking applications in his 40-plus years as a banker. He offers these tips on starting a community bank:
YOU NEED a group of seven to 10 business leaders who
want their own community bank. The group must be of "one mind" to serve the community's needs.
FIND AN EXPERT who specializes in new community bank startups to guide the group through the process.
KNOW ENOUGH about the community to know if there's enough community support for an independent bank. The consultant can assist in a feasibility study.
THE PROJECT's success then depends on the skill of the expert, whom Calvert says should be a licensed certified management consultant.
AMERICAN MOMENTUM
The board of directors at Tampa-based startup American Momentum Bank reads like a list of who's who of Florida's business community.
Directors from Tampa Bay are Lee Arnold Jr., founder of Colliers Arnold; Dr. Judy Genshaft, president of the University of South Florida; and Mel Sembler, founder of The Sembler Co. and former U.S. ambassador to Italy.
From the Naples-Fort Myers area, there's Dr. Allen Weiss, president of the Naples Community Healthcare System.
Central Florida directors are Don Adam, chairman/CEO of The Adam Corp./Group; Dick Batchelor, former state legislator and founder of Dick Batchelor Management Group Inc.; John Mills, vice president and Florida regional manager of Brasfield & Gorrie; and James Pugh, founder of Epoch Properties Inc.
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