In the mid-1990s, bank acquisitions proceeded at a frenzied pace, peaking at 36 in 1996. A glut of out-of-work bank executives eagerly teamed with investors, flush with cash from the high-flying economy, to start their own banks. Meanwhile, regulators encouraged startups as a way to restock the marketplace.
Today, mega-banks control the broader market, but community banks continue to find a growing niche offering greater service at a slightly higher price. "With all the takeovers and mergers by the mega-banks, the public is demanding smaller, community-based banks," says Florida Comptroller Robert Milligan. "What happened in the late '90s was a healthy event, helping to fill a void."
Deep pockets plus banking expertise hasn't always assured success. "Being a good banker and starting your own bank are like apples and oranges," says Ben Bishop, president of investment bank Allen C. Ewing & Co. in Jacksonville. "You need to have an entrepreneurial spirit to make it work."
As some recent de novos have struggled, regulators have raised capitalization requirements and better scrutinized charter applications. Regulators also hope to discourage "flipping" -- startups that quickly sell out to larger banks. Some states require de novos to wait five years before changing ownership. Florida is considering a similar law.
But with bank stocks growing and with another round of consolidation on the horizon, most analysts expect community banks to remain an attractive investment option. "Most community bankers will tell you that the best thing that can happen to them is for a great big bank to come in and buy up the other independent banks," says Bishop. "They know they'll have plenty of new customers."
A COMMUNITY SAMPLER
Florida's community banks are big and small, with both veterans and recent startups.
BankUnited
Headquarters: Coral Gables
Founded: 1984
Ownership: Public (Nasdaq-BKUNA)
CEO: Alfred R. Camner
Assets: $5.6 billion
2001 earnings: $18.4 million
Growth: Opened with one office. Now with 38 branches in Miami-Dade, Broward, Palm Beach and Collier counties. Plans for 10 more within the coming year. Since 1996, assets have increased ninefold, from $600 million.
Niche: Midsized to large commercial customers
Comment: "We provide a large array of products that a community bank does not typically offer," says Camner. "But we're also offering a level of service that the nationals and super-regionals don't provide. We've done well with that. Our growth has been phenomenal over the last six years."
Continental National Bank
Headquarters: Miami
Founded: 1974
Ownership: Private (1 shareholder owns 50%; 100 others own the other half)
CEO: Athan Buster Castiglia
Assets: $180 million
2001 earnings: $980,100
Growth: Miami's first Cuban-American national bank has six branches in Miami-Dade's Hispanic neighborhoods.
Niche: Low- to moderate-income immigrants
Comment: "The bank was founded to serve Cuban immigrants, but as their needs have matured and mainstreamed, causing them to move on to larger institutions, we've begun catering to other immigrant groups here in Miami-Dade," says Castiglia.
First National Bank of Nassau County
Headquarters: Fernandina Beach
Founded: 1999
Ownership: Private(approximately 600 shareholders)
CEO: Michael G. Sanchez
Assets: $75 million
2001 earnings: $576,000
Growth: $10 million in startup capital. Maintains one location.
Niche: SBA-guaranteed lending and other small-business loans under $1 million.
Comment: "We're filling a void created when Barnett Bank was acquired by NationsBank, which in turn was acquired by Bank of America," says Sanchez. "The larger banks just don't want to write the smaller loans that our customers need."
Hillsboro Bank
Headquarters: Plant City
Founded: 1998
Ownership: Private(approximately 265 shareholders)
CEO: Ron Daniel
Assets: $54 million
2001 earnings: $491,000
Growth: $6 million in startup capital. Maintains one location.
Niche: Farmers and other small-business owners in the "winter strawberry capital of the world."
Comment: "Ninety-five percent of our shareholders are from Hillsborough County, the majority of them from Plant City. So we have a lot of people right here who want to help us grow," says Daniel. "We are truly a community bank in every aspect."
The Jacksonville Bank
Headquarters: Jacksonville
Founded: 1999
Ownership: Public (Nasdaq-JAXB)
CEO: Gilbert J. Pomar III
Assets: $95.5 million
2001 earnings: Loss of $53,000
Growth: Opened with two locations and just over $10 million capitalization; added third branch in January 2000; hopes to add one more by end of 2003.
Niche: Small- to medium-sized "emerging businesses" doing less than $20 million in sales.
Comment: "First Union is pretty dominant in this market with an awful lot of branches, so beating them on convenience is going to be tough," says Pomar. "But if we can offer the same banking products along with a high level of service, then we can compete. Customers are more comfortable with a community bank -- where they know the people making the decisions and where those people know the customers."
The TIB Bank of the Keys
Headquarters: Key Largo
Founded: 1974
Ownership: Public (Nasdaq-TIBB)
CEO: Edward V. Lett
Assets: $525 million
2001 earnings: $3.9 million
Growth: Began with a single location in Islamorada and $750,000 in capital. Now with nine branches in Monroe County, two in Miami-Dade and two in southwest Florida. A third Naples office will open in the fall.
Niche: Personal financial services and tourism industry lending. The bank also processes $200 million annually in credit-card transactions, mostly from commercial customers servicing the tourism trade.
Comment: "Monroe County has a moratorium on commercial as well as residential development, and as a result deposits are not going up," explains Lett. "So the challenge is to grow our bank in a slow-growth market. We're doing that by expanding into new areas and by adding new products and services for our existing customers."