Laying Down the Law

Laying Down the Law

By Francis X. Gilpin

Associate Editor

Until three years ago, Albert M. Salem Jr. spent his professional life trying lawsuits. Then, at age 63, Salem took a pay cut and changed professions. He went from commercial litigator to First Commercial Bank of Tampa Bay.

"I didn't know a whole lot about banking," admits the chairman, president and chief executive at First Commercial. "I'd been a borrower my whole life."

But Salem wasn't fazed. He began what turned into a housecleaning at First Commercial, which had accumulated just $75 million in assets at a single office in 11 years.

At a staff meeting, Salem announced that employees could work half a day from now on - as in 12 out of 24 hours. "The mouths just dropped to their chins," he recalls.

Salem preferred they pick their 12 hours to coincide with daylight - say, 7 a.m. to 7 p.m. - when customers were awake. Neither his brand of humor nor work ethic went over well.

"Quite frankly, there aren't a whole lot of people still here who were here the day I walked in the door," says Salem. "A few, and they're working hard. They enjoy it. They bought into the program, and they've done a heck of a job."

First Commercial, a unit of Tampa-based FCB Financial Inc., does appear to have emerged from a long slumber. It might not be a moment too soon.

The Tampa bank, which had $155 million in assets as of Sept. 30, caters to the affluent neighborhoods south of Kennedy Boulevard, where it is headquartered. South Tampa is also being targeted by rivals such as First Citrus, Palm and Pilot banks.

But profitability and efficiency have improved. And, at long last, First Commercial is expanding and living up to the "Tampa Bay" that was added to the bank's name in 2002.

Less stress

Salem grew up in a military family and came to Tampa in the early 1960s as a judge advocate at MacDill Air Force Base. With a University of North Carolina law degree, Salem says he did all right.

"Started as a defense counsel, got too many acquittals, so I was moved up to trial counsel," he says. "They wanted to be sure there were more wins for them than there was on the other side."

Salem thought he would be a federal prosecutor in Raleigh when he left the Air Force. But the appointment was delayed. With a wife and three children at the time, Salem settled into a private law practice in Tampa instead.

Trying cases, mostly for medical malpractice, thrilled Salem from 1965 to 2002.

Since then, he has liked banking better. "It's non-stressful fun," he says of going to the bank rather than a courthouse.

Salem was a founding director of First Commercial. He later became chairman after a group of New Orleans investors, who had opened the bank in his building, decided to pull back to Louisiana.

During the 1990s, First Commercial directors weren't displeased with the bank's progress. "We were growing slowly but safely," Salem says. "It was nothing to write home about, but we weren't losing any money."

Nevertheless, First Commercial entered the world in 1989, the same year as Southern Exchange Bank. That other Tampa bank grew to $782 million in assets by 2003, when it sold out to a Naples bank that was eventually absorbed into Fifth Third Bank.

With a retiring First Commercial president as an adviser, Salem thought he could pick up the pace if he put himself in charge of the whole operation.

The banking rookie committed a boo-boo or two at the beginning. Nervous loan officers got him to advertise an absurdly high interest rate of almost 4% on certificates of deposit. The bank was inundated with between $12 million and $14 million in a matter of days, more money than the loan officers needed.

"That was a lesson I learned the hard way, and it took 14 months to get rid of them," Salem says of the costly CDs. He did manage to roll over about $8 million into other less-generous deposits.

Crazy growth

Salem says his best move was instilling a sales mindset in First Commercial employees.

"For the most part, our staff people were satisfied to just sit there and watch people come in and out of the lobby," he says of their old ways. "I don't know whether they didn't want to be bothered by somebody talking to them. But they sure didn't bother themselves to get up and go visit with these people."

As employee turnover subsided, the new hires were encouraged to get to know customers and how the bank could help with their financial needs.

"From the day we started doing that, we grew like crazy," says Salem. He didn't exempt himself. Salem moved his desk to just off the lobby at bank headquarters.

The Kennedy Boulevard office isn't First Commercial's only one anymore. In February, the bank finished converting a Gandy Boulevard flower shop into a second office.

Salem hopes to open a third branch in Carrollwood in 2006. First Commercial is looking at the northwest Hillsborough County communities of Citrus Park and Westchase after that.

Some of the other community banks in South Tampa are eyeing the same territory. They are the main competition, according to Salem, not the super-regionals or even the Bank of Tampa, Hillsborough's biggest locally owned bank.

"They've almost reached the size of a regional bank," Salem says of the Bank of Tampa. "We get a number of customers from them, from time to time, who feel like they're not being treated in the style they want to be treated because Bank of Tampa has grown so large. But that's not Bank of Tampa's fault. That's just what happens when you grow so large."

As First Commercial gets bigger, Salem, who is the largest shareholder in the bank's holding company, says it can fund expansion from earnings and the recent issuance of some trust-preferred securities.

Salem says there are no plans to take the holding company public or to sell it anytime soon.

"Our investors, for the most part, don't need the money they've invested with us to eat," he says. "They're willing to keep pushing their money back on the table and saying: 'Let's roll it again.'"

First Commercial at a Glance Dollars in thousands.

12/31/00 12/31/03 12/31/04 9/30/05*

Assets $75,200 $111,635 $145,244 $155,347

Net income $761 $600 $898 $1,108

Net charge-offs $59 $10 $57 $8

Return on assets 1.07% 0.59% 0.68% 0.98%

Return on equity 14.88% 7.87% 9.30% 13.03%

Efficiency ratio 62.73% 73.92% 67.47% 62.09%

Total risk-based capital ratio 11.07% 10.16% 10.37% 10.98%

*Year-to-date figures Source: FDIC