This first question is a pretty obvious one. You have already built and sold two banks. Now we’re in the midst of a pandemic, interest rates are low, the economy is fragile and unemployment is high. Why in the world do you think this is a good time to start a bank in the St. Petersburg/Tampa Bay region?
When I started planning Climate First, we didn’t have a pandemic. But I was fully convinced we would have a substantial economic meltdown because the bubble economy couldn’t continue. We opened First Green in 2009 at the trough of the recession and people asked the same question. We were one of the only banks in Florida loaning money. There were deals all over the place because banks were running customers off. Trust me — it’s the perfect time to get in the banking business. Buy low, sell high. The low-rate environment definitely impacts earnings, but I want more fee-based businesses that aren’t as reliant on NIM and we will provide good deposit products. I want to look at everything from an ESG perspective. I’d like to have a factoring division that does civilized, not predatory, factoring. I would like to pursue commercial loan brokerage, which isn’t common in banking. If we can’t get the commercial loans, we can broker them and get the fees. I think a recession is the perfect time to start. That said, I wouldn’t be jazzed about running an existing bank with an existing portfolio in a recession.
I am tapping into new investors in the ESG space, which is really exciting.
Where do things stand with Climate First in terms of charters and other regulatory approvals?
We have filed all the applications and are starting to get questions back. We will be state chartered. We don’t have the 30-day letter yet. We will have our offering circular this week. We have already been getting written commitment letters. I am tapping into new investors in the ESG space, which is really exciting. As of this morning, I had more than $10 million in commitments and my goal had been $10 million by the end of October. I want to try to be at $17 million by the end of November. I know I can sleep at night then.
What are your goals for Climate First in terms of size?
I want to take this to the next level with a goal of $5 billion in assets before I hang up my coat and tie. The plan is to get through the de novo period, do a capital raise, do an acquisition that puts the bank at a size that is interesting to an investment bank, go public and start paying dividends. I don’t want to follow the typical de novo model in Florida, which is you start, you build and you sell. We will have physical locations, but not many and not big. The teachings from COVID-19 are that you need a drive-through, but I may not need an office. We will have one branch when we open in May 2021, a couple by October and then a fourth and a fifth. That’s as far as we’ve gone right now.
This is your third de novo bank. What are some of the differences between starting a bank today and when you founded Florida Choice Bank in 1999?
It’s a lot harder. At First Green, it was almost impossible — we got what was the last charter in Florida for nine years. The capital requirements are more stringent and the de novo expectations are a lot higher. I think the regulators will really have their thumb on us. I have experience with the regulators. They know me so it is a lot better and nicer for me than it would be for someone who was doing their first bank. I have proven myself and I work well with the regulators and I value them. They are another set of eyes and they know what they’re doing. So, it’s a little more burdensome now, but that’s OK.
What have you been doing since selling First Green Bank to Seacoast Banking Corp. in 2018?
The first thing I did was take a cross-country trip with my wife. We took a mini-motor home, went up the east coast to Maine and across to Washington state and across the country. It was transformative. I was in the emotional space of seller’s remorse, thinking “I’m 60 years old and is this it?” I did a lot of soul searching and a lot of hiking to try to get my head on straight and figure out what I wanted to do. And it just came to me that I’ve got to do it again. I also have been restoring a historical family property and I am writing a book. It’s definitely not a business book. It’s fiction. It might have legs at some point.
How does the mission of Climate First Bank differ from that of First Green Bank, which also had an environmental focus?
Climate First will be a lot deeper than First Green, which was a journey in which you don’t know what you don’t know. At Climate First, the environment is my gig. All the other stuff is important, but the tagline for Climate First is “because nothing else matters.” By that, I mean social equity doesn’t matter if you don’t have a planet. Financial inclusion doesn’t matter if the planet is uninhabitable. Climate First can have an impact on everything from rooftop solar to renewable energy to building retrofits. It’s all stuff we can do, but nobody really pursues it. I want to put a nice package together for building upgrades. And you don’t have to be a liberal Democrat to want to save money. It’s a non-partisan issue. At First Green, we did a lot of solar loans for commercial buildings for people who absolutely didn’t care about the environment, but it saved them a lot of money. The bigger we are, the more people we can touch. It’s a mission to me. I’d like to change a lot of lives and reverse the damage to the planet.
What was the genesis of your devotion to environmental efforts?
I guess it was an epiphany that came to me when I was 14. I grew up in a rural area of Florida hunting and fishing in Lake County, where there are more than 1,000 lakes. Many of them got deeply polluted. My grandparents lived near one of those lakes and I would go there and fish, but as I got older you couldn’t catch any fish. Then we started catching fish that had fins or tails that were necrotic and they had lesions and ulcers on their sides and I thought, “What in the heck is going on here?” Then I started hearing about all the herbicides and pesticides in the lakes. It defies logic why everyone isn’t concerned about the environment. It’s common sense.
You are also seeking for Climate First to be the first bank in Florida that qualifies as a benefit corporation. What does that mean and why is it important?
A B-corp requires certain standards that are memorialized into law. You state a public purpose or general social purpose and everything you do has to be in the interest of the corporation — from shareholders to suppliers. There’s never been a Florida bank that is a B-corp. It’s a great banner that says we’re not only talking the talk, we’re walking the walk. It’s built into our corporate DNA. This is very important to me because if I get hit by a bus, I want Climate First to continue this way.
The pandemic has propelled the banking industry’s race to develop more digital capabilities. How important will the role of digital be for Climate First?
It has to be. I’m a baby boomer and I don’t have a digital cell in my body, but I am tired of getting beat up by millennials over it. We have to have a seamless quality customer experience in the customer realm. We have to have really good mobile banking, online banking, online account opening. You still have to have branches and the quality of the customer who comes through the branch is probably higher. We never had decent online account opening at First Green — we had signature cards. I don’t want to have four branches in every community. My daughter and son-in-law are millennials and they would not consider a bank unless they could have a seamless digital experience. And we need AI for decisioning. I can’t do a solar loan program on a large-scale basis unless I can get a much quicker decisioning. We are in the process of vetting our core processor and we are spending hours going through product demos.
You have participated in the industry’s consolidation, selling your two previous banks to larger banks. Does the industry really need another bank from you?
We have fewer than 100 charters in the state of Florida. Small banks are the backbone of small business and small business is the backbone of the country. The giant banks are getting bigger. I don’t think that’s healthy.
Small banks are the backbone of small business and small business is the backbone of the country. The giant banks are getting bigger. I don't think that's healthy.
Tell me a little about your banking habits. Is your primary bank a national bank, regional bank or a community bank? When is the last time you went to a branch?
I’m a dinosaur. I like paper. I still like to go to the bank and deposit checks. When I worked at a bank, I walked downstairs and went to the teller. I bank with a local community bank and a regional bank. I still go to the bank, but they won’t let me in because of COVID-19 so I go to the drive-through. I go to the bank once a week — guaranteed.
You have described yourself as being pretty rabid about conservation and recycling. What is the strangest thing you do in your effort to be environmentally conscious?
We try not to throw anything away. We compost all of our food stuff. We recycle everything. We cut out the plastic windows of envelopes and recycle the paper and plastic. We literally put one garbage can by the road every two months.