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The recession and relatively quick shrinkage it fostered on community banking in Florida scarred many business owners — a fact Kent Ellert considers nearly every day.
The tightening of loan requirements and a clamp down on credit lines has led many an entrepreneur to distrust or even shun banks. The 24 Gulf Coast bank failures since August 2008 only further exacerbate the ill will. Ellert, who has worked in Florida banking for more than 25 years, says he feels and hears the pain.
“Customers will have a much longer memory than at any other time in the past,” says Ellert, now president and CEO of Weston-based Florida Community Bank. “To this day they are more careful in choosing a financial provider.”
A former executive with Fifth Third Bank and Wachovia, Ellert has no choice but to think hard about that, given his mission at Florida Community Bank: To build a statewide community lender that grows organically in dozens of cities and towns through banking basics of local loan decision making, responsive customer service and heavy community involvement. 
FCB, the fifth-largest independent bank in Florida, is a unit of Miami-based Bond Street Holdings, which was founded in April 2009. The entity, which raised $440 million in its first six months, is led by a group of prominent business leaders, some from New York, who banded together to acquire failed or underperforming Florida banks. The founders list includes Vincent Tesse, state superintendent of banks in New York for two years in the 1980s under Gov. Mario Cuomo; Daniel Healy, former chief financial officer of North Fork Bancorp; and Les Lieberman, former head of Drexel Burnham Lambert's financial services mergers and acquisitions group.
Bond Street picked Ellert to oversee the strategy and reposition and recapitalize the banks. Bond Street, in total, has acquired nine institutions, eight of which regulators shuttered in 2010 and 2011.
Two of the acquired banks were based on the Gulf Coast, while the others are spread from Volusia County to Miami. The firm acquired Immokalee-based Florida Community Bank when regulators shut it down Jan. 29, 2010. Bond Street adopted the FCB name for all its banks in July 2011. FCB now has 41 full-service locations statewide.
No surprise then, that FCB motto's is Florida Based, Florida Focused. “We have a fundamental belief in Florida,” says Ellert, who lives in Naples but spends many days crisscrossing the state, “and we believe there is a huge vacuum for Florida community banking.”
Statewide success
A statewide vision like that is something many bankers chat about, but few banks have pulled off.
On the not-pulled-it-off side, for example, are a trio of banks under the Bank of Florida name, including Bank of Florida-Tampa Bay and Bank of Florida-Southwest in Naples. Those two institutions, combined with Bank of Florida-Southeast, based in Fort Lauderdale, held nearly $1.5 billion in assets on May 28, 2010, when regulators shut down the entire operation. Jacksonville-based EverBank bought the assets of the three banks, which had 13 branches statewide, including two in the Tampa area.
Jacksonville-based Florida Capital Bank, with 11 locations spread through six Florida markets, is attempting to pull it off — though it's somewhat struggled of late, and is significantly smaller than FCB. Assets fell 21%, from $770.8 million through March 31, 2012 to $609 million through this past March. The bank also lost $2 million in the 2013 first quarter, according to Federal Deposit Insurance Corp. data, when it had a -23.92% return on equity. Florida Capital has four Tampa-area offices and other locations in Daytona Beach, Gainesville and Winter Park.
Tampa-based Florida Bank Group, with 14 branches across the state, including locations in Tampa, St. Petersburg, Sarasota, Jacksonville and Tallahassee, has also struggled a bit. Assets there fell 18%, from $695.3 million through March 2012 to $570.7 million this past March. The bank, formerly the Bank of St. Petersburg, lost $1.5 million in the 2013 first quarter, according to FDIC data. The bank also received $20 million in federal funds in 2009 under the Troubled Asset Relief Program.
Ben Bishop, chairman of Jacksonville-based investment banking firm Allen C. Ewing, says a blanket Florida strategy is a smart move given the discounts with which troubled banks can be acquired. That's one reason Bond Street isn't alone in its mission. Says Bishop: “We will see more transactions like these in the future.”
Strategy components
But Ellert is confident FCB has the right long-term strategy to outdo any competitors. “Banking is a business of inches every day,” says Ellert. “It's not about a slick billboard.”
Indeed, Ellert says the FCB strategy is wrapped around three primary points. The first is the employee side, to staff every FCB branch with bankers who have the same passion to build a Florida-focused community bank. FCB has about 540 employees, including 200 or so recruited to various locations in the past two years. The employees, in total, serve more than 67,000 customers.
Ellert strives to provide autonomy for local bank leaders. “Florida is a very large collection of submarkets,” says Ellert. “It's not practical to manage a market like that remotely.”
A second leg to the strategy is having, and properly using, the right amount of capital. The bank, with $3.25 billion in assets through March 31, has $700 million in capital to lend, expand geography and add services. One recent service announcement, for instance, is a partnership with Raymond James Financial Services, which now provides asset management to FCB clients.
On the loan side, the bank has been busy, with a portfolio that consists of a broad mix of clients. That mix, however, is less focused on commercial real estate, says Ellert, and more focused on owner-occupied buildings and commercial and industrial loans.
A third key to FCB's approach is the bank's board of directors, a group Ellert says has “immense business knowledge.” That's important because several community banks that failed or hit trouble spots in the downturn had boards with limited experience in difficult banking cycles.
Top shelf
The short history of the bank, starting with the $440 million Bond Street raised in the spring and summer of 2009, is also an important piece of the bank's strategy. In addition to the capital, the federal Office of Comptroller of the Currency approved the bank to operate under shelf charter status. That allows investors to apply for a national bank charter from federal regulators, but the charter could remain inactive, or “on the shelf,” until the group makes an actual acquisition.
The charter is an important aspect of Bond Street's strategy because it lessens the risk in buying a troubled or failed bank, which, despite the price, isn't always a cinch. The business of buying an impaired bank, says Ellert, is an opportunity to get into a new market quickly, but that doesn't mean basic business principles can be ignored.
Ellert says the next year or two could include some more acquisitions, though he's coy about where FCB will go next. “We want to be in all the major metropolitan markets in Florida,” Ellert says. “We very much want to be in Tampa. We'd like to be more significant in Orlando.”
To get to those places, and to carry out the Florida focus mission, Ellert says he realizes the bank, and its employees, must remain disciplined and hungry. Staying ahead of the unknowns, especially future economic conditions is an on-going challenge. “Rapid growth,” Ellert says, “is a seven-day-a-week job.”
Loans on the Upswing
Florida Community Bank executives who say they really are lending — in contrast to business owners who say they can't get a loan — have some powerful data to back up their claim.
The proof: The bank, based in Weston with 41 locations statewide, has one of the highest lending capacities in the country, according to a May 30 report from SNL Financial. The Charlottesville, Va.-based research and analysis firm reports that FCB's loans total 44.12% of its assets, which provides it “plenty of powder to deploy.”
FCB, which, according to SNL, reported annualized quarter-over-quarter loan growth of 35.31% in the 2013 first quarter, outperformed many of the largest banks in the country in the report.
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