Affording it: C1 Bank's ‘living wage' pays off
At Florida Trend, we report frequently on successful entrepreneurs and companies. What increasingly interests me, however, is how those successful people and firms define success for themselves — whether they go beyond simply counting jobs, revenue, profits and the toys they can afford.
By any measure, Trevor Burgess is successful. Now in his early 40s, he spent 10 years at Morgan Stanley in New York, where he raised more than $50 billion for more than 100 deals, including the IPO for Chipotle, and became a managing director. While at Morgan Stanley, he met a Brazilian businessman, Marcelo Faria de Lima, and eventually joined Lima’s investment firm, Artesia.
In 2009, Burgess, Lima and two other investors formed a holding company that bought Community Bank of Manatee, then headquartered in Manatee County. Burgess took over as CEO, changed the bank’s name to C1 and moved its headquarters to St. Petersburg. The bank is growing rapidly outside its southwest Florida base. Moving into Miami last year with just a loan production office, the bank originated $154 million in loans there — more than a third of its overall new loan production of $419 million. In January, C1 opened a branch in the Wynwood district in Miami that already has attracted $30 million in deposits. A Coral Gables branch is to open in September, with two other branches slated to open elsewhere in the state this year, for a total of 29.
The bank has grown both by building branches and by acquiring other banks and putting them in the hands of seasoned bankers. The bank markets itself well — its offer of a Mercedes to anyone who opened a $1 million CD didn’t draw many offers but got plenty of media attention. C1 also gets attention for the stylish design of its branches, but Burgess says “we’re pretty conservative lenders. When it’s your money, you don’t want to lose it.” Burgess, meanwhile, has enjoyed the bank’s success, living in an upscale condo, married with a young daughter. He drives a nice car.
C1 made about $12 million last year. Late last year, Burgess says, he saw how well he and the bank were doing, looked at C1’s employee rolls and considered the fact that 26 of his 220 workers made less than $30,000 a year. About two-thirds of the bank’s employees are female, but all of the lowest-paid workers were women, he says — tellers and a few operations workers.
Burgess, who grew up in New Hampshire raised by a single mother on a secretary’s salary, went to an MIT website with a “living wage” calculator. He ran numbers and decided that the bank would no longer pay any of its employees less than $14 an hour.
Among the 26 workers who got raises, one was already making $13.97 an hour. Three saw their salaries jump from around $22,000 to $30,000. As the bank’s owner, he says, he wanted “the people who are on the front lines serving our customers to Prosper and not just get by. We felt we could affect people’s lives in a really big way that wouldn’t harm my company. It was just sort of the right thing to do.”
Burgess won’t say how much the move cost C1 overall. He and his partners believed the bank might gain a few new customers and be able to better retain its employees in the long run, but “we were comfortable with the owners making a little less. We could afford it.” Would he have thought differently if the bank had more than a couple hundred employees, I asked him. “First and foremost, I have to ensure the safety and soundness of the bank,” he says, “but I decided that if you work for me, you’re going to make at least 30 grand.”
As it turns out, the $14-an-hour floor has probably already paid for itself. Burgess says it’s brought in a “large number of new customers” who liked the move and are shifting their business to the bank. Non-affected employees also have responded with pride, he says, and he’s gotten calls from other banks asking about the move.
Meanwhile, other things C1 has done to differentiate itself are paying off. Three years ago, C1 entered into a partnership with the business school at USF St. Petersburg. Bank executives and USF professors developed a training program for aspiring young bankers, who took courses in the morning and rotated through various bank departments in the afternoon. In three years, the number of applications for the program has risen from a dozen or so to more than 400 who applied for nine slots in 2014; those accepted included two with law degrees and two with MBAs. The bank is now attracting the kind of entrepreneurial, innovation-minded employees who best fit the company’s culture, Burgess says.
Let’s stop for a minute to be cynical. Trimming somewhere between $50,000 to $100,000 off a $12-million bottom line to give 26 people raises shouldn’t qualify Burgess for sainthood. And if you’d like, go ahead and discount Burgess’ claims of just wanting to do the right thing — assume if you’d like that the raises were just another way to keep the bank in the public eye.
But I’m sure that there are quite a few workers at young, entrepreneur-run companies in Florida who would be happy to get a raise to $14 an hour in the interest of publicity. I’ll bet those workers would probably even be willing to fake higher morale and more loyalty to their companies in the bargain.
There are plenty of other Burgesses out there in Florida. Economics being what they are, it should be only a matter of time before other entrepreneurs and even big companies follow suit to keep their wages competitive — and their companies looking progressive — by emulating Burgess.
Let’s see how they decide to define success.