Home base: With focus on local lending, community bank raises its profile

The effects of banking industry consolidation have been keenly felt in communities around Florida, probably none more so than Pinellas County, where, in the past few years, C1 Bank, USAmeriBank and Freedom Bank have been absorbed by larger institutions.

Amid the tumult, St. Petersburg-based First Home Bank, established in 1999, has emerged as a leading locally owned community bank. Since 2013, the bank has been led by CEO Anthony Leo, 61, who’s presided over nearly a decade of substantial growth.

“We were a very small bank when I started here,” Leo says. “We had maybe $16 million in assets. We didn’t have the capital base.”

In June 2020, FHB surpassed $1 billion in total assets for the first time in its history. As of the third quarter of 2021, total assets had declined to $943.74 million — a drop the the bank attributes to a decrease in Paycheck Protection Program loan balances, as the SBA has forgiven many PPP loans. PPP was a huge success for the bank, already a highly active SBA lender, and with more than $1.2 billion in loans originated, it became one of the largest lenders in the federal program, relative to asset size.

The bank's next act, in a post-PPP world, will require some deft management and moves. For one, how will it follow up the runaway success of its PPP lending efforts? And with local consolidation and competition heating up — Climate First Bank, also headquartered in St. Pete, launched in June this year and recently announced plans to expand to Winter Park — how will it maintain and grow its market share while fending off acquisition attempts?

HIGH PROFILE

Leo says there’s been a concerted effort on FHB’s part to raise awareness of the bank’s strong presence as a support of local businesses and homebuyers. SBA lending and residential mortgages are two of its specialties, and it’s spreading the word via a jazzed-up marketing program, including a sponsorship of the Tampa Bay Rowdies soccer club.  

“A few years back,” Leo says, “our greatest challenge was lack of awareness of our organization. That was our greatest marketing challenge. We have invested substantial dollars and by expanding our banking network and growing our team of employees, we are overcoming that challenge, but it has required a substantial investment, not just in marketing, but in technology, people, facilities and overall infrastructure.”

‘When it comes to individuals, families and small businesses — the heart of our community — we compete effectively and we never cede the field.’ Anthony Leo, CEO of First Home Bank

So, if it seems as though you’re reading, seeing and hearing more about FHB, that’s no coincidence. On Nov. 30, BayFirst Financial Corp., the bank’s holding company, was approved for listing on the Nasdaq stock exchange, under ticker symbol BAFN. That makes it the only Nasdaq-listed bank holding company headquartered on the west coast of Florida and one of only seven in the state.

That same day, FHB opened its newest branch in Belleair Bluffs, giving it seven locations spread across Hillsborough, Pinellas and Sarasota counties, with another branch on the way in Carrollwood, north of downtown Tampa. It also recently acquired a former BB&T branch on State Road 70 in east Manatee County, just outside Lakewood Ranch, for $1.85 million. 

“We expect to continue to grow over the term of our strategic plan through a number of means, including opening new banking centers,” Leo says, “while we continue to expand all other elements of our business, including SBA and conventional commercial lending, residential lending and consumer lending.”

FHB’s payroll has grown in tandem with its financials. Leo says the bank had around 20 employees when he took the reins; today, its workforce tops 650. But the CEO doesn’t seem surprised by the rapid transformation.

“When we were small and insignificant and not very profitable, I said, ‘We are going to become the bank of Tampa Bay,’” Leo says. “And I emphasized the word ‘the.’ We’ve trademarked that. I didn’t think it was trademark-able, but now we are officially recognized by the U.S. Patent and Trademark Office as ‘the bank of Tampa Bay.’” (With an actual bank named the Bank of Tampa being one FHB's prime competitors in the region, that designation carries heavy bragging rights.)

Obviously, some external factors — such as PPP and the winnowing of locally owned competitors — have also broken in FHB’s favor. But Leo says the biggest reason for the bank’s surge is a relentless focus on what it does well, namely, being a community bank that doesn’t reach beyond its grasp.

“We're not set up to serve large, publicly traded companies,” he says. "We're more of middle-class kind of kind of organization, but we can serve an affluent person. We have a broad business model, but we're probably not as competitive in the very affluent, trust company world. But outside of that, when it comes to individuals, families and small businesses — the heart of our community — we compete effectively and we never cede the field.”

LEND A HAND

In addition to PPP loans, non-emergency lending to local minority- and women-owned businesses has been a priority, and a strength, for FHB. In late 2020, the bank set a goal of lending $50 million to such businesses by 2023. Ten months later, it had already blown past that mark and was approaching $90 million.

The drive to better serve minority-owned businesses comes from a sense of corporate responsibility and social justice, says Leo, who notes the most recent edition of the annual Federal Reserve Banks' Small Business Credit Survey contained some shocking revelations. The survey revealed that Black- and Latino-owned companies that applied for non-emergency financing were less than half as likely as white-owned firms to be fully approved, even when Black-owned, Latino-owned and white-owned firms were all categorized as presenting a low credit risk.

“What are the reasons why that’s the case?” Leo asks. “ The easy answer is maybe there’s institutional prejudice, but there are much more profound, yet subtle barriers … cultural barriers and financial literacy barriers. That’s what we’re working on.”

Leo says FHB bankers are encouraged to go deeper and further to help business banking customers improve their preparation of financial statements and other important documents needed to secure a loan. “Reach out, make yourself available, provide resources, provide financial education and training … that’s what this is all about,” he says.

J.J. Miniello, a Dunedin entrepreneur who originally hails from Argentina, has benefited greatly from FHB’s overtures to small business owners — particularly those of Black and Latino heritage. Miniello owns the Meranova Inn, a bed-and-breakfast in Dunedin; Eve’s Florist, a flower shop with locations in Oldsmar and Clearwater; and Austral Investments LLC, a real estate development company. He says he was an IberiaBank customer until about five years ago, when his account manager left for FHB.

Miniello, who moved to the United States in 1999 but didn’t know English at the time, proved to be a quick study and graduated from the University of South Florida in 2004 with a degree in economics and finance. He then went to work for Wachovia Bank, until it collapsed during the 2008 financial crisis and was acquired by Wells Fargo — so he knows a thing or two about banking practices, both good and bad.

“Traditional banks see things in the traditional way, which basically comes down to ratios and math done by a computer,” he says. “The big banks, they have so many clients, they just push a button and it’s like, ‘Yes, you’re qualified,’ or ‘No, you don’t qualify.’ First Home Bank is more open-minded: They listen to your story, especially if you have a small business. They like to be involved in the community, and they’re proud of helping small local businesses.”

Miniello says FHB helped him refinance the Meranova Inn, which was struggling at the time he bought it, with an occupancy rate hovering around 40% and net, after-tax revenue of around $20,000 per year.

“The tax returns were really, really bad,” he says. “The people who owned, they started it as a hobby and were ready to retire, so they didn’t put much effort or much marketing into it.”

Miniello says he went to seven banks for refinancing help. Each one turned him down. FHB, however, saw the potential in what he was trying to do.

“They look into into future projections and they look into your background as a person, as a businessperson; they believe in you,” he says. “They believed in me, and I brought the occupancy rate up from the 40s to the 80s, and now it's a very successful business. We are going to have our best year this year, even with [the effects of] COVID-19.”

With the lower mortgage interest rate and extra cash he was able to secure from refinancing with FHB, Miniello plans to add wedding services to the Meranova Inn’s services, which in turn will drive more business to his flower shops.

“Weddings, after COVID," he says, "will be a big thing."