Young but Tested

Young but Tested

By FRANCIS X. GILPIN

Associate Editor

Starting a bank seems to be the thing to do in Florida these days.

There are charter applications pending with state regulators for four new banks on the Gulf Coast, including two in Fort Myers. Last year, seven state charters were approved in the area.

Considering the trouble and expense of starting a bank, that's a lot of new charters for the eight-county Gulf Coast region, stretching from Pasco County south to Collier County.

But how many of these new institutions perform as their organizers hopefully forecast in their pro formas, especially in the first three to five years?

The Gulf Coast Business Review checked the records of the 20 local banks, thrifts and trust companies chartered between 2000 and 2004 for possible answers.

Typically, the longer a young bank has been in business, the better its results. The high startup costs give way to deposit growth that fuels loans and brings profitability to a community bank.

But the best performer among these 20 banks wasn't even three years old. Sanibel Captiva Community Bank, which opened in January 2003, was first in return on assets and equity, while sporting the lowest efficiency ratio.

Edward H. "Chip" Black, chief executive of the $117 million-asset Sanibel Captiva Community, points to several reasons for the statistics, which are based on what the bank did in the first half of 2005.

Sanibel Captiva Community sold stock in small blocs and local residents who are loyal to the bank snatched it up, says Black. They were rewarded by the Lee County bank's 15.4% return on equity during the first six months of this year.

But Black says the most important factor is president and senior loan officer, Craig L. Albert.

"He's a younger guy," Black says of the 45-year-old Albert. "But he's been on the island for 20 years and has a great, great following."

The corporate structure behind Sanibel Captiva Community gives the bank another advantage, Black says. The bank is one of three owned by Southwest Florida Community Bancorp Inc. The other two are in Cape Coral and Fort Myers.

"Lots of the back office support services we've combined and we've saved some money," says Black, who is president and CEO of the holding company.

The Bank of Commerce shown brightly, too. While gathering $236 million in assets, the Sarasota bank was second among the 20 Gulf Coast peers with an ROE of 14.9%.

Like Black, the president and CEO at Bank of Commerce credits personnel for the fast start out of the blocks. "We were able to hire very, very over-qualified people for a startup bank," says Charles O. Murphy. "But we needed them because we thought we would do as well as we did."

While acknowledging a generally strong economy has helped his 5-year-old bank's profitability, Murphy says the homework he did before opening his bank has paid dividends.

"We decided we couldn't be all things to all people," says Murphy. The bank caters to small business owners and high net-worth real estate investors. Murphy says he hired employees who had served that type of clientele at other banks.

First Kensington Bank is the lone Tampa Bay area bank in the group with an ROE in double digits. Yet the Tampa unit of Kensington Bankshares Inc. did that while attracting nearly $280 million in deposits over five years.

That placed First Kensington a distant second among the group in the asset category, behind only Coast Bank of Florida, which has suffered earnings setbacks as a consequence of its rapid expansion. First Kensington, which was chartered in February 2000, has opened three of its 10 full-service branches in just the past year.

Gerald K. Archibald, the chairman, president and CEO of Kensington Bankshares, didn't respond to a request from the Review for comment.

The 2-year-old Marco Community Bank has fared well, spending about 51 cents for every dollar of revenue through the first six months of 2005. More remarkable, the $138.5 million-asset Marco Community's stellar efficiency ratio came despite a personnel change at the top over the summer.

Michael A. Micallef Jr., the bank's founding president and CEO, resigned in July to move from Marco Island to Lakeland to start another new bank. He cited a desire to live closer to his children in Central Florida as the reason for his move.

Micallef, 55, steered Marco Community to profitability in just nine months. He previously ran another community bank on Marco Island in the 1990s.

"We don't have a magic ball or a voodoo stick," says Stephen A. McLaughlin, the bank's vice chairman who is acting CEO. "We're hard workers. We know the market. We're really a community bank."

McLaughlin says Marco Community has considerable banking experience on its board and in the executive suites. In his case, the 58-year-old McLaughlin, an engineer by training, was a founding director at the other Marco Island bank that Micallef earlier headed. McLaughlin also served as vice president for administration there for two years.

"I'm not saying that if you packed us all up in a box and moved us to Tampa that we'd do as well," says McLaughlin.

But Marco Community's leaders know Marco Island, according to McLaughlin.

"Service," he says, "is the only thing that distinguishes one bank from another."

Top of the Class

There were 20 banks, thrifts and trust companies that began operations on the Gulf Coast from 2000 to 2004.

Name City Opened Assets (000s) ROA ROE Efficiency ratio

Sanibel Captiva Community Bank Sanibel January 21, 2003 $117,087 1.22% 15.37% 46.74%

Bank of Commerce Sarasota September 1, 2000 $236,219 0.96% 14.90% 53.68%

Bank of Naples Naples May 8, 2000 $75,805 1.18% 14.09% 61.75%

LandMark Bank of Florida Sarasota February 4, 2000 $219,416 0.86% 11.92% 58.87%

Marco Community Bank Marco Island August 18, 2003 $138,547 1.07% 11.71% 50.94%

First Kensington Bank Tampa February 28, 2000 $279,879 1.10% 11.03% 48.82%

Century Bank of Florida Tampa September 11, 2000 $83,514 0.96% 9.25% 67.56%

Florida Gulf Bank Fort Myers February 5, 2001 $276,379 0.51% 7.20% 69.47%

Royal Palm Bank of Florida Naples December 17, 2001 $114,879 0.61% 5.08% 67.13%

Bank of Venice Venice January 13, 2003 $48,288 0.79% 4.58% 67.96%

GulfStream Community Bank Port Richey October 11, 2000 $57,695 0.68% 4.28% 66.53%

Community Bank of Cape Coral Cape Coral August 11, 2004 $73,834 0.32% 2.62% 65.32%

Palm Bank Tampa February 11, 2003 $105,043 0.18% 1.61% 81.34%

Old Harbor Bank Clearwater July 14, 2003 $107,975 -0.15% -1.03% 85.96%

First Priority Bank Bradenton December 8, 2003 $101,798 -0.37% -2.47% 92.11%

Members Trust Co Tampa October 30, 2003 $24,217 -2.64% -2.77% 134.03%

Coast Bank of Florida Bradenton April 7, 2000 $468,039 -0.39% -5.30% 92.25%

Patriot Bank Trinity October 22, 2004 $26,066 -2.96% -6.15% 170.97%

First America Bank Bradenton June 1, 2004 $47,938 -1.56% -7.64% 179.41%

Bank of Florida - Tampa Bay Tampa November 5, 2004 $52,540 -2.77% -16.30% 154.67%

Source: FDIC, as of June 30, 2005