'Heart and Soul'

'Heart and Soul'

BANKING by Mark Gordon | Managing Editor

A banking career that started as a teller in Palmetto 25 years ago has led Anne Lee to running the bank at the epicenter of the current real estate slowdown.

When Coast Bank's board of directors offered the job of acting president and chief executive officer to Anne Lee three months ago, her initial reaction was to freeze.

While it was only a fleeting moment of pause, the hesitation had merit: The job would be running Bradenton-based Coast, still reeling from five months of fallout from a residential loan crisis. Its stock was battered, customers were scared, investors were angry and federal and state regulators were looming.

What's more, Lee knew she would be replacing her close friend and mentor, Brian Grimes, who was fired as president and CEO as a result of a federal cease and desist order that required the bank to have someone more experienced in the top spot.

This isn't how Lee, 49, envisioned getting the Big Promotion. Indeed, she hadn't really envisioned the day at all. "I had no aspirations of being CEO," says Lee. "I loved being in retail banking and being the chief operating officer."

But the moment of hesitation, Lee says, was quickly replaced with a sense of loyalty and duty - to the branch and regional managers she recruited from her past jobs, to the other employees, down to the janitors and truck drivers who preceded her, and finally, to the shareholders, investors and customers who put their money behind and into the bank.

Lee took the job.

Three months later, it's if she never left - sometimes literally. A few bank executives and board members have played Beat the Boss to work the past few months, vying to pull into the parking garage at the bank's downtown Bradenton headquarters before Lee. With only a few sporadic exceptions, Lee has been on first-to-enter, last-to-leave watch since she took the job May 24.

The long hours are a metaphor for the job, for which Lee will earn about $208,000 in salary and bonuses this year, according to SEC documents. With the exception of the actual decision to take the position, Lee has faced few, if any, monumental, bank-defying decisions the past three months. Instead, it has been more of a methodical, grinding, hour-by-hour kind of gig.

That is where Lee has come through most for Coast, according to employees, executives, board members and even customers. One of Lee's high points, many in the bank say, is that when they go to her office with a question, they leave with an answer, good or bad. Every e-mail gets a reply, too.

"She's just the glue that binds this place together," says Steve Herda, Coast's facilities manager and one of several people who followed Lee from her previous job at St. Petersburg-based Republic Bank to Coast. "She has endless energy."

Lee will need it, as the bank still faces several challenges, even after its Aug. 3 announcement that it found a buyer in St. Louis-based First Banks; shareholder approval of the deal could come by the end of the year.

"I always want to do whatever I can to help a situation," she says. "I wanted to put all my heart and soul into this."

Improved communications

Turns out Lee's heart, soul and even her time were the least of her concerns.

In just her first few weeks after officially taking over the bank May 25, Lee's immediate challenges included: Working with outside investment bankers and lawyers to prepare the bank to be sold; dealing with lawsuits filed by plaintiffs who claim to have been duped or otherwise misled by both the bank and the construction company responsible for building the homes under the collapsed loans; and simply running a publicly traded, $830 million asset bank with 20 branches and 200 employees.

On the latter, only a handful of Coast employees have left the bank since the loan problems were initially disclosed Jan. 18, Coast officials say. Plus, only one of the bank's 20 branch managers has quit, and even that departure was based on family reasons, not the bank's problems.

Finally, there was the cease and desist letter that led to Lee getting the job in the first place, jointly issued May 24 by the Federal Deposit Insurance Corp. and the Florida Office of Financial Regulation. In addition to stating that Grimes wasn't experienced enough to run the bank, the order against Coast included the following problems:

• Operating with inadequate equity capital in relation to the volume and quality of assets held;

• Operating with inadequate allowance for loan lease losses;

• Operating with ineffective audit programs;

• Operating with inadequate strategic planning;

• Operating with inadequate IT audit plans and inadequate disaster recovery plans.

So what started out as a residential loan problem Jan. 18, when the bank filed a report with the SEC that $110 million of mortgages were in jeopardy due to a builder not completing the homes, was now a full-throttle crisis, multiplying to nearly every level and department of the bank. It was up to Lee to lead the turnaround, or at least stop things from getting worse.

Since becoming acting president and CEO, Lee's days have been a juggling combination of fighting those fires, actual bank work - reports for directors, spreadsheets and balance portfolios - and communicating what's happening. The latter includes talking to employees, customers, regulators, the board and sometimes journalists.

And even though Grimes wasn't fired because of a lack strong communication skills, insiders at the bank have noticed a dramatic improvement between him and Lee. Lee has a more confident and commanding presence and her tone of voice is authoritative and decisive.

"I've been very impressed with how she's been able to keep things moving and keep everything together," says Terry McCarthy, chief executive of First Banks, the $10 billion holding company that agreed to buy Coast earlier this month. "I'm wondering how she's been able to do it."

McCarthy says there's a place for Lee in the bank after the sale, likely running the bank's retail division in Florida. Lee says she'd like to stay with the bank, too.

Jim Toomey, the chairman of the board of Coast's holding company, Coast Financial, also has high praise for Lee. The board initially debated going outside the bank for a new leader after firing Grimes, says Toomey, but quickly decided to stay in-house. Finding someone with Lee's drive and ambition, as well as her internal knowledge of the bank, would be impossible, the board decided.

"She's extremely organized," says Toomey. "She can multi-task to the highest degree."

'Baby steps'

Lee was born and raised in Bradenton and she graduated from Manatee Community College. He first job in banking was as a teller with Palmetto Federal Savings Bank.

From there, Lee worked her way through the several banks and promotions, in addition to attending dozens of training and banking education seminars. One of her senior executive stops included Goldome Bank, where she was with the bank in the mid-1980s and early 1990s, as it navigated its way through the savings and loan crisis and then a sale to First of America Bank.

That experience, says Lee, was the closest thing that prepared her for what she's dong now at Coast, although she admits it wasn't of the same magnitude. She attributes her ability to hold Coast together the last three months mostly to just sheer determination, mixed with a healthy dose of fear of failure.

Lee says her supporting cast and sounding boards have been a big help, too. The list includes her husband, Bill Lee, who runs an auto-repair and body shop in Bradenton as well as some of the bank's senior executives, such as Justin Locke, the chief financial officer.

One of Lee's mantras she's refined over the last three months is to celebrate every success, even the little ones that might not show up on a bank filing or a press release. "As long as I'm making baby steps forward," she says, "I'm happy."

Lee practices that whenever possible in person, as another one of her mottos is to see and be seen - she refuses to hunker down in the corner office.

Lee celebrated Coast's biggest recent success - its sale to First Banks - in just that manner, going through the bank's headquarters to personally tell each employee about the sale.

Susan Kruse, a Coast senior vice president and regional manager who has known Lee since the mid-1990s when they both worked for Republic Bank, appreciates Lee's up-front communication style. The rank-and-file bank employees do, too, Kruse says, as her weekly company-wide conference call updates have become must-hear chats.

"She works so hard, we all try just has hard to please her," Kruse says. "We don't want to let her down."

Chairman of the Board

Jim Toomey has been all over the world, to basically everywhere but Antarctica and the North Pole, he says, all in the name of archaeology and paleontology. He's dug holes in China and he's poked around dirt in Guantanamo Bay, Cuba.

In 2007, though, he's been taking a yearlong trip though a new region: Banking purgatory.

Toomey is the chairman of the board of Coast Financial Holding Corp., parent of Coast Bank, which has been on a downward spiral since a Jan. 18 filing with the SEC that $110 million of mortgages were in jeopardy due to a builder not completing the homes. Toomey has tried to remain as private as possible since then, especially as the cloud of negative news regarding Coast thickened.

For Toomey personally, that includes being hospitalized in February for heart problems initially thought to be brought on by Coast-related stress. He later learned those problems were caused by an allergy to an anti-cholesterol drug, not stress.

Then there's the matter of money. Toomey stands to lose about $4.1 million if shareholders approve Coast's sale to St. Louis-based First Banks later this year. While that stings, Toomey says he's just as disappointed at the losses his friends and family members who invested in Coast over the years will be taking.

"This has been an extremely personal ordeal for myself and all the board members," says Toomey, 41. "To say 'it's just business,' I would be lying."

Toomey essentially co-founded Coast in 2000 after a series of conversations with Gerald Anthony, his banker with what was then American Bank in Bradenton. At the time, Toomey was investing in commercial real estate, mostly small strip malls on several of Bradenton's barriers islands, and Anthony was a longtime community banker in the area.

Toomey had no banking experience back then, but he wasn't a business novice, either. For starters, he was born into business, as he's the grandson of James Knight, one of two Knight brothers that ran the Knight Ridder newspaper company from the 1930s through the 1980s, building the company into one of the biggest media conglomerates in the country.

And even though Toomey says his family never forced him into the newspaper industry, that's exactly where he ended up after earning an MBA from Rollins College. First he spent two years working for Knight Ridder in Charlotte, in a marketing/publishing trainee program run by the Charlotte Observer.

Toomey, who was born and raised on Sanibel Island, then moved to Bradenton, to work for the Bradenton Herald, another Knight Ridder-owned newspaper. Toomey's positions there included circulation manager.

Toomey left newspapers in 1997, to focus on his commercial real estate holdings, which included an ice cream shop and a T-shirt store on Anna Maria Island that he still owns and operates.

He also formed a foundation, the Toomey Foundation for the Natural Sciences, to support his hobby: archaeology and paleontology. The gist of the foundation has been education, both for children and teachers. He set up an endowment with the Manatee County School District, for example, and last summer, he led a group of Manatee County teachers on a foundation-paid trip to Nebraska for a working tour of the Badlands.

Toomey's biggest task this year, though, has been helping Coast Bank survive. He says he's immersed himself in data and information, as he monitors the bank's progress toward what he hopes is the completed sale. He doesn't know if there will be a role for him or the other board members with the bank after the sale, and even if there is, he's not sure he wants it.

"My interest in banking," Toomey says, "has seriously waned."

CEO TIPS

Crisis Management

Anne Lee has spent the past three months running a Coast Bank through a residential loan crisis. Here are some of Lee's tips for any executive managing through turbulence:

• Thank employees for their efforts, outside consultants for their dedication and customers for their loyalty - in person whenever possible. And for employees who take on extra work and responsibilities, be sure to recognize them in front of other employees;

• Stay involved in the community and continue doing charity work. It also helps to be seen in the office by the employees - walk around, talk to them and give them a chance to ask questions and voice their concerns. Don't hide behind the desk and office.

• Set a regular communications schedule, so employees know when they can expect more information. Only break that rule for negative news, which should be reported immediately. And if the negative news only affects certain employees, communicate that news to the affected employees first;

• Stay calm – inwardly and outwardly;

• Celebrate small and large victories;

• Handle issues as they come up;

• Don't underestimate the power of the press.

REVIEW SUMMARY

Industry. Banking

Business. Coast Bank, Bradenton

Key. Anne Lee has led the bank through a loan crisis and pending sale.