A Florida de novo group has cleared its final regulatory hurdle and expects to open early next year. Another Florida group isn’t far behind.
Organizers of Locality Bank in Fort Lauderdale said the Federal Deposit Insurance Corp. has approved their application for deposit insurance and that they’re planning a Jan. 3 soft launch.
Meanwhile, Gulf Coast Business Bank in Fort Myers is eyeing April 18 as the date it opens its doors. CEO Bill Blevins said his group has “soft commitments” for about $18 million from local investors and has hired Detroit-area investment bank Donnelly Penman to help it raise the rest of the $20.5 million it needs to start.
Locality and Gulf Coast would be the seventh and eighth banks to open in Florida since 2017 — the most of any state in that span. OUR Community Bank in Hialeah has also had its deposit insurance application approved by the Federal Deposit Insurance Corp., but it has yet to set an opening date.
Nationwide, a total of 10 new banks have opened thus far in 2021, more than in the pandemic year of 2020, but three fewer than in 2019.
“You look at what’s going on in Florida, you’ve got a lot of de novo activity, a lot of people filing and banks being opened,” Keith Costello, Locality’s CEO said. “I think it’s a really good sign.”
Yet others are concerned that the de novo bounce back hasn’t been stronger. Federal Reserve Gov. Michelle Bowman noted in a speech In October that fewer than 50 de novo banks have opened in the U.S. in the past decade, well below the average of 100 per year before the financial crisis.
Alex Sanchez, President and CEO of the Florida Bankers Association, says the current trend is a possible impediment to economic growth.
“Florida has a very bright future,” Sanchez said. “We have 800 to 1,000 people moving here a day … but with all that, we still have just a handful of new community banks.”
According to Sanchez, banks’ role is “to help people fulfill the American Dream, and make homeowners and business owners out of everyone.” That can’t happen without community banks, Sanchez said.
Organizers of the Locality and Gulf Coast say de novos offer a chance to build an operation from scratch and avoid some of the challenges of buying and modernizing legacy banks.
Costello, who served as CEO at Orlando-based First Green Bank between May 2016 and October 2018, said his initial plan was to buy an existing Florida bank, but he opted to pivot to the de novo route to form Locality when it proved too tough to strike a deal.
“After two years, I had nothing,” Costello said. “I figured, `Let’s start the de novo process. At least in a year, we know we’ll have a bank.’”
“Now, we’re glad we did that,” Costello added.
Locality will operate as a digital-first bank with a focus on serving South Florida small businesses. According to Corey LeBlanc, its chief operating officer and its chief technology officer, there are no plans for additional physical locations beyond the main office on South Andrews Avenue in Fort Lauderdale.
“The idea is to limit the traditional footprint,” LeBlanc said.
Initially, Locality intends to concentrate on filling a void left by rapid consolidation of locally headquartered community banks. According to June 30, 2021, Federal Deposit Insurance Corp. statistics, just two community banks, both with less than $300 million of assets, are based in Broward, which has a population of approximately 2 million. As recently as 2015, there were more than a dozen community banks headquartered in Broward, Costello said.
“I was shocked when I researched the numbers,” Costello said. “We’ve lost a lot of community banks.”
Expansion is possible in the longer term. “We see there are a lot of other places around the country like Fort Lauderdale, Florida, like the Broward County area, where there are no more community banks,” Costello said. “We feel this is something we could bring to other communities.”
The Southwest Florida markets that Gulf Coast has been targeting have seen high levels of community bank consolidation, too. According to Blevins, there are a total of three locally headquartered community banks in Lee and Collier counties. That number is set to drop to two, as soon as the $2.3 billion asset, Naples-based First Florida Integrity Bank completes its sale to Dallas-based First Foundation.
“We’ve been out there having conversations with people since January,” Blevins said. “Almost everyone we’ve talked to is receptive to a new community bank.”
Like Locality, Gulf Coast plans to employ a branch-light, digital first model as it seeks to serve small-business clients in Lee and Collier counties. Gulf Coast will start with its headquarters in Fort Myers and eventually expand in Naples, Blevins said.
“We don’t need a bunch of branches,” Blevins said. “We’re not going after the consumer market.”
