After the Sweet Spot

After the Sweet Spot

Banks by Janet Leiser| Senior Editor

NorthStar Bank will target businesses with less than $50 million in annual revenue. It will be a full-service bank for business people and their families.

It's a good time to start a community bank in the Tampa Bay area - five national banks control between 71% and 75% of the market, as compared to an average of 55% in other Florida markets.

And that means there are plenty of small- and mid-sized businesses looking for personalized service that's not so easily found at the big banks, says H. Monty Weigel, president/CEO of NorthStar Bank, which plans to open in April in downtown Tampa.

"Tampa needs another independent bank," Weigel says. "People like choices."

NorthStar's sweet spot, a favorite for independent banks, will be companies with annual revenue between $5 million and $50 million.

Weigel, 52, spent more than 20 years with SunTrust in Florida in executive positions. This is the second bank he helped put together. He was an organizer and president of Gulf Atlantic Financial Group prior to selling his interest to Florida Capital Bank, where he was Tampa Bay president until last year.

The new bank is backed by several Tampa business stars, including Marty Traber, senior partner at Foley Lardner; John Sykes, the retired founder of Sykes Enterprise; Dr. Kiran Patel, founder of WellCare Health Systems; and Frank Sanchez, CEO of Renaissance Steel and a former Clinton Administration official.

Other organizers include Gene Marshall, retired senior vice president of JPMorganChase, and John Hashagen, former CEO of SunTrust Bank Miami and a Sarasota bank executive in the '90s. Robert T. Ernest, formerly of the Bank of Englewood, is the chief financial officer.

Last year, Weigel was introduced to a group of local investors by Alex Sanchez, president/CEO of the Florida Bankers Association. Weigel says that group didn't work out, but he met an ancillary group, led by Traber, a securities lawyer.

Members of that group and their families have agreed to invest $6 million to $8 million in NorthStar, Weigel says. The group plans to raise the remainder, for a total of $15 million to $18 million, through private placement.

"We're not worried about raising capital," Weigel says. "One-third to one-half is done by the people putting the bank together."

The largest shareholder is Patel, who will invest $1.45 million and own 10.2% of the stock, according to records with the Florida Office of Financial Regulation. Weigel says the paperwork is wrong; Patel's share is about 9.9%.

The next largest shareholders are Paresh Patel and Gregory Politis, who invested $500,000 each for about 3.5% of the stock

State regulators accepted NorthStar's application as complete Nov. 17, a big step in the approval process.

"Now we're working on nailing down commitments," Weigel says. "We feel pretty confident about it."

Standing out

NorthStar, like most independent banks, says it will focus on relationship banking. "We're going to have personal and retail," Weigel says. "We want to be the bank that handles everything as much as possible."

Not only will NorthStar service corporate owners, it plans to cater to spouses and families, as well.

It will focus on the Tampa-St. Petersburg-Clearwater MSA and doesn't plan to open offices in Manatee or Sarasota counties to the south, he says. Those counties are already well served by smaller banks. The Tampa Bay market, the second largest in Florida after Miami-Dade, offers plenty of opportunities.

NorthStar plans to open five locations within five years in Hillsborough, Pinellas and Pasco counties, Weigel says, adding: "We need to be where people live, work and shop."

NorthStar's biggest competitors will be the Bank of Tampa and Citrus Bank, Weigel says. Both banks' business models are close to what NorthStar plans.

Five banks have filed denovo applications in the Tampa Bay area in the past two years. But Weigel says many of the newer banks have focused on real estate lending.

"We're going to focus on commercial and industrial lending," he says. "We're going to be a little broader based."

NorthStar plans to offer cash management services for companies that allow businesses to invest deposits nightly to earn interest.

In addition, the bank plans to expand its online banking services beyond the basic service now offered by most banks. "We're developing more detail on those products and services that businesses would demand or command," he says.

Even though the economy is slowing down, Weigel says NorthStar is entering the market at a good time.

"Will things grow as quickly as before? Probably not," he says. "Will they grow? Yes."

The bank's directors are: Simone Gans Barefield, president of an executive search firm; Paresh Patel, (not related to Kiran), an investor; Gregory Politis, a Safety Harbor developer; Pablo Cruz, an investor; as well as Weigel, Traber, Marshall and Hashagen.

"We are a bank that is very inclusive. We're not exclusive. We have a very broad board, that's one of the reasons we feel we're going to have a substantial opportunity to do very well," Weigel says.

Choosing a name

So how does a Florida bank choose a name like NorthStar?

Bank organizers developed about 40 names to choose from, says NorthStar Bank President/CEO H. Monty Weigel. "We narrowed it down to Security Bank, Guardian Bank, Florida Commerce and NorthStar."

The first three names sounded too traditional or like an insurance company, he says.

The group liked NorthStar, he says, but "we were concerned about NorthStar because we are in the South."

A marketing study, however, showed that people associate the North Star with guidance and always being there. It has pleasant connotations.

"It took us almost three months at three different board meetings," he says. "And there was still some concern about North vs. South."

After more discussion and e-mails, NorthStar it was.

Bank startup costs

Much is said about the amount shareholders of small Florida banks make when a larger organization gobbles them up - banks sell for three or four times book value.

But what does it cost a bank to organize? According to NorthStar's recent application with state financial regulators, the price tag is about $1.6 million.

For starters, state regulators charge an application fee of $15,000.

NorthStar's attorneys, Igler & Dougherty PA, receive $100,000. The consultant, Aasys Group Inc., gets $72,000.

In NorthStar's case, the most money goes toward salaries, a total of $560,000. The lease on NorthStar's first location at Rivergate Tower, 400 N. Ashley Drive, Tampa, cost $97,000.

Another $362,750 is budgeted for advertising, postage, telephones, computers and various other routine business expenses.