Apollo Bank, Banesco USA and Stonegate Bank epitomize successful, growing community banks in South Florida.
BY INA PAIVA CORDLE
South Florida is a haven for community banks — homegrown institutions that zero in on local businesses and residents, building their portfolios here.
Community banks have come and gone over the years, lost to mergers, buyouts or failure. And several new ones have moved in to take their place.
Across the nation, there are more than 7,000 community banks, with assets ranging from less than $10 million to $10 billion or more. As a segment of the industry, they constitute 96.4 percent of all banks, according to the Independent Bankers of America. And even though they are just 21 percent of the banking industry by assets, community banks made 58 percent of outstanding bank loans to small businesses last year, the trade group said.
For a sample of community banking in South Florida, The Miami Herald took a look at three relatively new banks that are thriving — raking in profits as they boost their assets. Each has been rated four stars (on a zero-to-five rating) from Coral Gables-based BauerFinancial, which bases its ratings on such factors as capital, profitability, loan quality and liquidity.
“Four stars is great, especially in the South Florida market,” said Karen Dorway, president and director of research at BauerFinancial.
“The South Florida market has been improving over the last several quarters, but it is still one of the most challenging banking markets, primarily because of the real estate market. But since that is starting to pick up, we’re seeing improvement,” she said. “Overall, things are definitely doing better, and the four-star rating is just outstanding.”
Apollo Bank is based on South Miami Avenue in the Brickell Avenue area of Miami.
“Small businesses, entrepreneurs and professional local people — that is our focus,” said Eddy Arriola, the bank’s chairman.
To reach its market, Apollo greets clients in its impressive courtyard atrium, holds luncheons in its marble-laid dining room, and invites prospects to cocktail parties on its patio.
“We try to position our bank as the connecting bank for entrepreneurs and small businesses,” Arriola said.
Apollo Bank’s history dates to March 2010 when Arriola and President and Chief Executive Richard Dailey raised $22 million from a group of 125 local investors to buy majority control of Union Credit Bank.
That bank, with $140 million in assets and an international clientele, was started by Odde Rishmague, a Chilean, in 2001. He now owns a 25 percent share in Apollo.
For Arriola, 40, veteran banker Dailey, 71, and the other investors, the purchase ended a nearly two-year effort that had begun with a business plan to start a bank, and then morphed into a search for a bank to buy.
Since then, the bank has built its employee team from 33 to 53, cleaned up its assets, reengineered itself by changing its corporate culture and business model and added new technology, Dailey said.
It changed its name to Apollo Bank in June 2011, choosing the Apollo space program as its inspiration for the challenge it was taking on, Arriola said.
During its transformation, Apollo phased out $40 million in non-relationship loans, while growing to $220 million in total assets as of June 30.
What’s more, Apollo took a bank that had been unprofitable for nine years and turned its first profit within six months, Arriola said.
Since then, it has been profitable each quarter, most recently earning $457,483 in the second quarter.
Apollo is also increasing its branch presence, and now has locations in Doral and Coral Gables. It is interested in expanding to the Miami Lakes and Hialeah area, Arriola said.
“Our primary market is Miami-Dade — that’s where our focus is,” he said, “and we have done some lending in Broward and Palm Beach counties.”
His priority, he said, is to “build a great bank, build it organically, focus on service, and focus on the local market. And if the right opportunity comes up [to make an acquisition], we would consider it.”
To support Apollo’s growth, the bank is expecting to raise an additional $10 million in capital from shareholders this year.
Apollo’s aim is “to be a domestic bank,” focused on relationships, with a diverse loan portfolio, Arriola said. Since taking over, it has flipped its emphasis, and is now 70 percent domestic and 30 percent international.
The goal, now, is to grow by 25 percent per year, adding a new branch each year for the next few years, he said.
Based in Coral Gables, Banesco USA is growing — both organically and through acquisitions.
Founded in 2006, the bank has been on a buying spree of late. It acquired North Lauderdale-based Security Bank from the Federal Deposit Insurance Corp. in May, which gave it three branches and $101 million in assets. Also in May, Banesco USA purchased a Weston branch and deposits from Great Florida Bank. Most recently, it agreed to buy a branch in Pompano Beach from Flagler Bank, and expects to complete the purchase in September, said Rafael F. Saldaña, president and chief executive of Banesco USA.
In all, the bank has 153 employees and six branches in Miami-Dade and Broward counties, and one in San Juan, which it opened last year.
Loan growth has been significant: up 47 percent in 2011, 42 percent in 2010 and 37 percent in 2009.
“This is the time to grow prudently, but surely,” Saldaña said.
Miami Gardens-based chocolate factory Tierra Nueva Fine Cocoa has expanded its relationship with Banesco USA, borrowing a total of about $5.5 million within the past two years to buy its facility and equipment, said Tierra Nueva Fine Cocoa Chief Financial Officer Ignacio Martinez.
“We have a very strong relationship with the bank,” Martinez said. “This is a relationship that even the president came into our operation — you don’t see that in a large bank.”
That’s one of the reasons clients cite for preferring a community bank.
“We need service,” Martinez said. “We need a bank that understands our business, and we believe that Banesco really understood our business and our business model.”
Banesco USA is independently owned by three individuals who have ties to Venezuela and have common ownership in Banesco Group banks in Venezuela, Panama, Colombia and the Dominican Republic.
“We’re a Miami bank,” said Saldaña, 52, who was born in Aguadilla, Puerto Rico, and worked in banking for 31 years before joining Banesco in 2008.
The bank’s plan is to expand in Miami-Dade, Broward and Puerto Rico, and continue to build its diversified loan portfolio and network, he said.
Banesco USA earned $1.7 million in the second quarter and reported $667.3 million in assets June 30. It is rated B+ by Fitch Ratings.
The bank’s corporate strategic mantra: “the Banesco USA Way: diversified, prudent growth for sustainable profitability.”
Based in Fort Lauderdale, Stonegate also epitomizes a growing, thriving community bank.
It was President and Chief Executive Dave Seleski’s idea to create a new bank, raising $40 million in capital from about 200 investors to start the bank in 2005.
Today, Stonegate has 2,300 investors, and has grown to $906 million in assets as of June 30.
“The goal is to be the primary bank for business — to be a business lender,” Seleski, 47, said. “We are a niche bank.”
Stonegate has made several acquisitions, including some from the FDIC, and expanded its branch network to nine locations, including one in Coral Gables. A 10th branch is scheduled to open in Doral next month. Overall, the bank has 117 employees and operates in Broward, Miami-Dade, Palm Beach, Collier, Lee and Hillsborough counties.
“Our model is not to have a lot of retail locations,” Seleski said. “Our goal is to invest in technology and people.”
Clients don’t need to visit the bank; they can do their banking online and through remote deposit capture.
The bank’s loan portfolio is diversified, and it added wealth management to its services last year, he said.
Each of its markets is headed by a market president who creates a business plan.
“We have more latitude at the local level,” Seleski said. “We try to be partners with clients to meet their financial goals.”
Stonegate has reported profits for the past 26 quarters. For the second quarter, the bank earned $2.25 million.
“The model does work. We make a lot of money and we plow a lot into growth,” Seleski said.
The bank plans to continue to expand, and will hire about eight more people this year, as it further penetrates its markets. Its goal is to reach $1.5 billion in assets in four years.
“We focused on acquisitions for the last two to three years, because the economy was such that there was not as much opportunity to grow organically,” Seleski said. “Now we’re going back to our roots, and doing it the old-fashioned way: one customer at a time.”