Going for Growth

Going for Growth

By Francis X. Gilpin

Associate Editor

For Pinellas County banker Kenneth P. Cherven, getting First Community Bank of America bigger will make it better.

"We, quite frankly, think it's a race for market share," says the chief executive of the federally chartered Pinellas Park savings bank.

First Community Bank of America plans this year to add three new offices, including the first two in Hillsborough County, to an existing network of five locations split between Pinellas and Charlotte counties.

The hectic bank merger activity along the Gulf Coast in the past two years invites expansion by the community financial institutions that are still standing, says Cherven.

Cherven rattles off a few recent takeovers that could send unhappy customers his way. Colonial BancGroup Inc. gobbled up Clearwater-based PCB Bancorp Inc. Whitney Holdings Inc. added Palm Harbor-based Madison BancShares Inc. BB&T Corp. grabbed St. Petersburg-based Republic Bancshares Inc.

Then there are the bigger marriages: Wachovia Corp. acquired SouthTrust Corp., and Fifth Third Bancorp swallowed First National Bankshares of Florida Inc.

"For them, we're a couple hundred million dollars in size," says Cherven, speaking in terms of assets. "That's a rounding error for a regional bank. For us, we can make a nice living at it and take care of a lot of customers."

The chances to grab market share are everywhere. "When you see those opportunities, big companies merging like that, there's a lot of disorientation for customers," says Cherven. "We have to be opportunistic and run a little faster than we normally would like."

Expansion has been on First Community Bank of America's agenda since its holding company, First Community Bank Corp. of America, went public two years ago. The offering raised $7.45 million and Cherven says there is still $4.5 million left to continue the growth spurt.

And growing is what First Community Bank of America has been doing.

From $79 million in assets when Cherven came aboard in 2000, the thrift was up to $239 million by the close of 2004. Deposits were just over $205 million, an almost threefold increase since Cherven became CEO.

First Community Bank of America targets an upscale customer that needs to borrow at least $250,000 or a business looking for up to $5 million. Despite a goal of operating five offices in each of First Community Bank of America's soon-to-be three Gulf Coast counties, Cherven insists: "We're not a retail bank. We don't have enough locations. We're not open Saturdays. We're not open 7 to 7. It's not our strategy."

The pickiness about clientele may be one reason why First Community Bank of America's profitability has been respectable, despite the increasing cost of attracting new deposits.

The thrift's net income for 2004 topped $2 million. First Community Bank of America was just breaking even four years ago, when Cherven showed up, following a 1999 loss of $284,000.

Return on assets rose from 0.92% in 2003 to 0.97% last year. Return on equity moved up to 12.01% from 10.78%. The latter improvement placed First Community Bank of America in the top third of banks and thrifts with local headquarters.

Non-performing loans were one-sixth of the 2003 total. Net charge-offs dropped to one-tenth of the bad debt in 2003.

The holding company reported 2004 earnings of 84 cents a diluted share, up from 76 cents for 2003.

Cherven declined to discuss with GCBR how his 2005 expansion plan will impact earnings for this year, citing U.S. Securities and Exchange Commission rules.

"We don't ever like to see earnings decline," says Cherven. "But we're trying to build franchise value. To do that, I think you need to have more locations and you need to spread out geographically."

First Community Bank Corp. of America stock, traded on the Nasdaq SmallCap Market, reached nearly $30 a share during last fall's post-election rally. So far this year, however, the stock has settled back to around $25, about the midpoint of its 52-week trading range.

The biggest holder is Robert M. Menke, chairman of First Community Bank Corp. of America's board of directors, who owned almost 36% of the holding company last year.

Menke founded Bankers Insurance Group Inc. in 1976 and the St. Petersburg insurer has a strong presence on the First Community Bank Corp. board. Bankers Insurance Vice Chairman David K. Meehan, Chief Financial Officer Edwin C. Hussemann, and Menke's son, a consultant to the insurer, all sit on the board of the thrift's holding company.

Cherven says the St. Petersburg flavor won't hamper his incursion into Tampa, where the thrift is readying an office in the Sunset Park neighborhood. "South Tampa was our main area," Cherven says of his top geographic targets for expansion. "We wanted to get there because we deal with high net-worth individuals."

Although community institutions such as First Citrus Bank, First Commercial Bank of Tampa Bay and Palm Bank are already thriving in South Tampa, Cherven says his thrift is better capitalized and can do more lending than any of that trio.

First Community Bank of America, which has boards in both Pinellas and Charlotte, is assembling another for Hillsborough, where the thrift will also open an office in Apollo Beach. Cherven says the county boards and executives have full authority to price products to local market conditions.

"So, if they give us a chance, I think we'll be fine," he says. "We'll do it how we do it in all our markets: speed. We kind of believe in the law of the jungle. The fast eat the slow and not the large eat the small."

Quick Facts

First Community

Bank of America

Headquarters: Pinellas Park

Efficiency ratio in 2004: 58.98%

Opened: 1985

CEO: Kenneth P. Cherven, 45, was born and raised in Pinellas County. A graduate of Florida Southern College in Lakeland, he holds a master's degree in business administration from the University of Tampa. He became president and CEO of the former Gulf Bank in Dunedin at the age of 29.

Basic 2003 CEO compensation: $160,509 salary; $75,000 bonus; and $21,589 for automobile, club membership and other expenses.

CEO's ownership stake in holding company: 2.7% (December 2003)