With a strategy of buying troubled banks and propelled by a strong capital base, Florida Community Bank has quickly catapulted itself onto the state’s banking scene.
Since it was formed in 2009, the bank has expanded rapidly, making nine acquisitions to date. Reaching $5 billion in assets, Florida Community Bank has grown to become the fourth-largest independent Florida-based bank — and comes in fifth when including locally based banks owned by foreign parents.
Now, the Weston-based financial institution is poised to spread its name throughout Miami-Dade and Broward counties after its recent purchase of Miami Lakes-based Great Florida Bank. Last week, Florida Community completed integrating Great Florida’s loan and deposit systems and rebranding the interior of its locations.
“With the acquisition and conversion, we now have 30 offices in Miami-Dade and Broward counties, which gives us the kind of presence in Southeast Florida we believe is essential to our long-term growth,” said Kent Ellert, president and chief executive of Florida Community Bank.
Now stretching to more than 60 branches on both coasts of Florida and the Orlando area, the bank’s customers top 90,000 households, said Ellert, seated in his third-floor Weston office.
Driving the growth has been more than $700 billion in capital from private and institutional investors, which has bankrolled the bank’s strategic acquisitions of failed — or failing — banks, purchased at a discount, throughout the recession.
Yet, while its acquisitions have given it heft, the bank has continued to grow by adding new loans, totaling $1 billion last year, Ellert said. The bank is on track to generate $1.2 billion in new loans this year, said Michael Walker, FCB’s general banking executive. None of the loans made in 2013 are delinquent, he said.
Ellert credits the bank’s success in part to its “human capital.” He has assembled a team of seasoned bankers, many of whom hail from other Florida banks, have more than 20 years of experience, and are familiar with the commercial banking landscape.
Ellert himself began his banking career in 1985. He joined Wachovia in 1989, where he served as president of the North Florida, Broward and Gulf Coast regions and held a leadership role in the successful mergers of Wachovia, First Union, and RSB banks as well the merger of SouthTrust Bank.
In 2007, he joined Fifth Third Bank as South Florida president and chief executive, before joining in the formation of Bond Street Holdings, FCB’s parent company, in 2009. In 2010, he was named president, and a board member of FCB and Bond Street. Last year, he was named the bank’s chief executive.
“They have a very competent managerial staff, experienced bankers, top loan people, top [loan] work-out people,” said Miami-based independent bank consultant and economist Ken Thomas.
In fact, BauerFinancial, the Coral Gables-based bank rating agency, gives Florida Community Bank its highest ranking of five stars. The ratings are based on such factors as profitability, capital, level of delinquent loans, charge-offs, repossessed assets and liquidity.
Privately held, Florida Community Bank is owned by 65 investors, encompassing founding management, including Ellert, high net worth individuals — some of whom have homes in Florida, mutual funds, hedge funds and private equity groups. No one shareholder owns more than a 9.9 percent share of the bank. Due to the private ownership, the company does not disclose its individual shareholders, he said.
The bank’s formation began when two groups — one led by Ellert and another by the bank’s executive chairman, Vincent Tese, a New York investment banker who has a home in Palm Beach — forged a combination. Both were “looking to build a banking platform to use acquisitions of impaired banks as a point of entry to build an independent bank,” Ellert said.
It was 2009, and the real estate market was collapsing, leading to mounting bad loans and the downfall of many banks. Small banks were disappearing or consolidating while bigger banks were growing through acquisitions.
“We felt that Florida, in particular, lacked a significant presence by an independent bank,” said Ellert, who has lived throughout the state and now resides in Naples, where the bank also has an administrative office.
In late 2009, the combined group’s holding company, Bond Street, raised $440 million through a private placement and made its first two acquisitions in January 2010: Premier American Bank, based in Miami, and Florida Community Bank, based in Immokalee. That year, the holding company raised an additional $300 million through a second private placement — about 50 percent of which came from existing shareholders.
“The original business plan was to grow to $2 billion in assets in two years, and we got there in six months,” Ellert said. “And that opened the door to raise more capital.”
The bank’s third acquisition came in June 2010: Peninsula Bank, based in Englewood. Then, Sunshine State Community Bank, based in Port Orange, in February 2011; and both First National Bank of Central Florida, based in Winter Park and Cortez Community Bank, based in Brooksville, in April 2011. They were followed by Coastal Bank, based in Cocoa Beach, in May 2011 and First Peoples Bank, based in Port St. Lucie, in July 2011. That month, the bank rebranded itself from Premier American Bank to Florida Community Bank. The name had a rich history as the state’s oldest bank, founded in 1923. It also had the largest share of households at that time — 25,000, which allowed for less disruption for customers, Ellert said.
During 2012, the bank focused on integration and organic growth. And in July 2013, Florida Community Bank announced it would acquire troubled Great Florida Bank, which was completed Jan 31.
Ellert said talks with the Miami Lakes bank began three years, but the conversation became more serious in early 2013. With the integration of Great Florida now completed, six of Great Florida’s 25 branches have been identified to be closed. As many as half of Great Florida’s 150 employees will be laid off by the end of March, due to consolidation, particularly in the areas of accounting and other back office operations, he said. In all, the bank currently has 700 employees.
Florida Community Bank’s strategy of buying failing banks with help from the FDIC has allowed it to make the purchases at a discount. That’s to account for the typically large portion of bad loans.
“Job [No.] 1 in 2010 was to build a workout department of 75 people,” Ellert said. By effectively working out those loans, and with the aid of the improving economy, all the banks that FCB has bought have outperformed their original discounted values, he said.
The bank’s funded loan mix in December 2013 included 58.6 percent commercial and industrial loans, 21.1 percent commercial real estate loans, 19.4 percent residential and consumer loans and 0.9 percent other loans, according to materials from the bank’s year-end investor presentation. The bank’s earnings reached $18.1 million in 2013.
Those figures do not account for FCB’s purchase of Great Florida, which gives it a stronger foothold in the state’s most coveted loan and deposit market. According to FDIC figures, Miami-Dade banks hold 21.6 percent of the state’s deposits, while Broward institutions hold 9.5 percent.
“While we want to be Florida’s leading independent bank, we know a significant piece of that equation is having a significant presence in Southeast Florida,” Ellert said.
Ellert said the bank’s goal is to reach $6 billion in assets at the end of 2014, and to become an $8 billion to $10 billion bank in three years. That would involve making one more acquisition in Florida, he said. So far, FCB is not currently reviewing any potential purchases, Ellert said. “Ultimately, at some point” the company may envision going public, he acknowledged.
Thomas, the independent bank consultant, notes that Florida has lost many locally based banks, which have been bought by out-of-state banks, like BankAtlantic, which was absorbed by BB&T. Others end up being purchased by foreign banks, like City National Bank of Florida, or start expanding out of state, like BankUnited, which is opening offices in New York.
He considers Florida Community Bank one of the best names in the industry.
“The question is, are they going to live up to their name and become a true Florida community bank, or are they going to get to a certain size and sell out to make their investors happy?” Thomas said. “I hope to see them stay around for the long haul.”