A Foot in the Door

A Foot in the Door

By Jean Gruss

Editor/Lee-Collier

When Edward Lett makes presentations to Wall Street analysts, one slide on his power-point presentation shouts: "We have fun!!!"

While bankers are not known as a merry lot, Lett says good humor and friendliness is a key to winning new business for Naples-based TIB Financial Corp. and its principal subsidiary, TIB Bank. TIB's 59-year-old president and chief executive officer says the strategy has already helped the bank gain a foothold in Southwest Florida since moving into Lee and Collier counties from its base in the Keys just over three years ago.

Although TIB has attracted only about 1% of deposits in Collier and Lee counties since it arrived in 2001, it has grown them at a rapid pace by building five new branches. According to the latest figures from the Florida Bankers Association (FBA), TIB deposits in Lee County rose to $86 million in March from $33 million in March 2004, a 161% increase. In Collier, deposits in March were up to $87 million from $39 million in March 2004, a 123% jump.

Analysts who follow the bank's publicly traded holding company, TIB Financial (symbol TIBB), say the bank is poised to capture new customers who are disenchanted by recent mergers and acquisitions in the industry. In January, Cincinnati-based Fifth Third bought First National Bankshares of Florida, a dominant Naples-based bank. And in November, Wachovia acquired SouthTrust, which also had a large presence in Southwest Florida. Together, those two mergers put roughly a third of the area's $16.8 billion in deposits up for grabs, says Cory Shipman, an analyst with Stanford Group Co. in Houston.

TIB recently surpassed $1 billion in assets, which puts it in a league with local competitors such as Naples-based Orion Bank, with $1.4 billion in assets. TIB has more than doubled the $494 million in assets since it started operations in Southwest Florida in 2001.

The bank is profitable too and has started reaping the benefits of its costly expansion. Net income jumped to $2.18 million in the second quarter from $1.26 million in the same quarter last year. Its return on average equity of 12.6% is about four percentage points better than its Florida peers of the same size.

Service is the only advantage

Lett says friendly service is the bank's only lasting competitive advantage. That's because any of the dozens of competitors in Southwest Florida's crowded banking market can quickly match prices or branch locations.

"Going to the bank doesn't have to be like going to the dentist's office," Lett says.

It's a lesson Lett learned in the Florida Keys, where the bank grew from The Islamorada Bank in 1974 (its name was later shortened to TIB). Good or bad, a business' reputation spreads quickly up and down the island chain.

"On the islands," Lett says, "you're only as good as the last customer you served."

Lett joined TIB in 1991 after 20 years with Maryland National Bank in Annapolis and a short stint at a Jacksonville bank. He was instrumental in fine-tuning TIB's service-oriented culture, and the bank now has a dominant position in the Keys, with 23% market share of deposits in Monroe County as of March, according to FBA figures.

It all starts in the branches, Lett explains. When you walk into a TIB branch, you almost feel like you're on vacation in the Keys. They feature a relaxed Tommy Bahama-style ambiance, complete with tropical murals, exotic-wood paneling, overhead fans and giant potted palms.

The bank's executive offices are inviting too. There are no chairs in front of Lett's desk so that he has to stand to greet customers and invites them to sit around a coffee table.

"The hardest part of my job is to keep politics and bureaucracy out of the bank," he adds. He tries to keep loan-policy manuals from growing too thick because those will slow down the loan-approval process and take power away from his front-line loan officers.

Lett says the key to success is to let employees make decisions without needing to adhere to restrictive policies or fighting turf battles. "You trust people to use their judgment," he says.

Leap across the gulf

After Lett joined TIB in 1991, he realized that the bank would only grow modestly if it remained in the Keys. That was fine as long as the bank was privately held, but it went public in 1997 and shareholders demanded more growth.

While business in the Keys was lucrative, it wasn't growing much because the island chain had been built out. To test whether his strategy of island friendliness and service could be exported, Lett opened two branches in Homestead in the late 1990s.

It worked: After tripling deposits in a few years, Lett was sure his strategy could work elsewhere in Florida.

The bank looked at the east coast of Florida, but it didn't have the international experience that would have been required with Dade and Broward counties' clientele. Also, it didn't offer trust and wealth-management services that customers there demand.

"We're not a private bank," Lett says.

Instead, Lett felt the bank's strength in providing commercial loans to entrepreneurs was ideally suited to Southwest Florida's fast-growing business climate. So he sent two trusted lieutenants, Mill Younkers and Alma Schukhart, to start up TIB's operations in Collier and Lee counties.

In three years, the bank had built five new branches and moved its headquarters to Naples in 2002. Lett says he moved the headquarters to Naples because he felt it was important for top management to be in the heart of its fastest-growing operation.

Although the bank financed the new branches internally using profits from its lucrative Keys operations, it raised $5 million in a private placement in 2003 and another $20 million in a secondary offering of stock to support its growth.

TIB is scouting land for future branches in Lee and Collier counties in areas such as Bonita Beach Road and Alico Road. Because most of its loans are for owner-occupied commercial real estate, the bank prefers to locate branches near business parks where professionals and tradesmen are located. Lett points to three or four potential sites on a map but declined to say when branches might be built on those.

However, Lett says the bank's ambitions go beyond Lee's borders. "The vision is marching up the West Coast," Lett says. Next on the radar: Sarasota and Bradenton, though he wouldn't say when that would happen because he says he wants to build the Lee and Collier business first.

Mergers and acquisitions

In addition to its successful entrance into Southwest Florida, Lett acknowledges TIB benefited from some good fortune too. T

he acquisitions of First National and SouthTrust opened up opportunities for banks such as TIB to gain market share and hire away talented managers.

"It's great to be lucky," says Lett, grinning broadly.

On the talent side, Lett says more than half of the 37 new officers the bank has hired have come from two recent bank consolidations.

Meanwhile, TIB has the opportunity to land new customers that prefer to bank with a locally based financial institution. For example, Lett says TIB uses the same back-office software as First National, which some business customers prefer.

Also, Lett says TIB now has the chance to bid on banking work for municipalities that previously banked with First National and SouthTrust. He predicts many will request bids for their banking business because of the change in control.

But even without the disruption, Lett says the market is growing so much that business would still be great. "Thousands of people moving here," he says, "can't be bad for business."

Two FLORIDA KEYS Banks

Battle in SW Florida

TIB Bank and Orion Bank were both born in the Florida Keys and moved into Southwest Florida in search of growth. Here's how they compare (dollar amounts in thousands):

TIB Bank Orion Bank

Total assets $1,012,179 $1,421,207

Net loans and leases 768,746 1,151,660

Total deposits 871,908 1,092,732

Deposits in Collier Co.* 87,044 755,901

Deposits in Lee Co.* 85,932 75,457

Deposits in Monroe Co.* 509,998 190,602

Return on assets 0.94% 1.63%

Return on equity 10.26% 18.65%

*Data as of March 31 from Florida Bankers Association. All other data is as of June 30, FDIC.