STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PALM STATE BANK, )

)

Petitioner, )

)

vs. ) CASE NO. 78-1486

) FIRST BANK OF TREASURE ISLAND ) AND DIVISION OF BANKING, )

)

Respondent. )

)

REPORT

Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, on December 21, 1978, in Courtroom B of the Pinellas County Judicial Building, St. Petersburg, Florida. The purpose of the hearing was to receive evidence concerning the application of the First Bank of Treasure Island for authority to open a branch bank on the West side of U.S. Highway 19 just North of its intersection with Cypress Drive.

APPEARANCES

For Petitioner: Frank Weaner, President

Palm State Bank

1000 U.S. Highway 19 Post Office Box 840

Palm Harbor, Florida 33563

For Respondent: Kenneth E. Easley

Bank Gormin, Geoghegan, Easley and Granese 1212 South Highland Avenue Clearwater, Florida 33516

For Respondent: William L. Lyman

Division Assistant General Counsel Office of the Comptroller The Capitol

Tallahassee, Florida 32304

INTRODUCTION AND RULINGS ON EVIDENTIARY MATTERS

In July of 1978, the First Bank of Treasure Island, also referred to herein as the "applicant," filed its application with the Division of Banking, Office of the Comptroller, for authority to open a branch bank in Pinellas County on

U.S. Highway 19 at its intersection with Cypress Drive. The petitioner Palm State Bank, also referred to herein as "protestant," timely filed its request for a public hearing on the application. Mr. A. L. Ellis, Chairman of the Board of Directors of the Ellis First National Bank in Tarpon Springs, requested to be

represented if a public hearing were held. Notices of the prehearing conference and of the final hearing were issued to Mr. Ellis, but he made no appearance.

At the beginning of the hearing, it was ruled that the applicant would have the burden of going forward with its evidence and witnesses and proving that it met the statutory and regulatory criteria for approval of its application. In support of its application, the applicant put into evidence the testimony of Michael J. Badalich, the president of M. J. Badalich and Associates, Inc., economic and marketing consultants. Mr. Badalich prepared the "economic report" section of the subject application and was accepted as an expert in economics as it relates to the banking industry. Mr. H. "Mac" McMurry, president of the First Bank of Treasure Island, also testified on behalf of the applicant. The public and confidential files were received into evidence as Exhibits 1 and 3, the confidential portion being sealed.

The Division of Banking presented no witnesses, but it was stipulated that its economic and demographic materials would be received into evidence as Composite Exhibit 2.

A prehearing conference held on November 28, 1979, resulted in an Order entered by the undersigned that the parties would exchange and file witness and document lists on or before December 8, 1978, to be supplemented on or before December 15, 1978. Such lists were filed by the applicant and by the Division. No such list was filed by the protestant Palm State Bank. The protestant therefore was not permitted to call witnesses to testify at the hearing. The Hearing Officer did rule that Mr. Weaner himself could testify as to factual matters of which he had knowledge, but Mr. Weaner elected not to take the witness stand. Mr. Weaner, though not an attorney and over the objection of counsel for the applicant, was permitted to cross-examine the witnesses presented by the applicant. Mr. Weaner was also permitted to present opening and closing statements to the Hearing Officer.

FINDINGS OF FACT

Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found:

1. The First Bank of Treasure Island has its main office at 175 Treasure Island Causeway, Treasure Island, Pinellas County, Florida, and was established in 1971. The future growth potential of the main office is limited because Treasure Island has a population of 8,200 and the majority of the population is seasonal. The proposed branch site is situated approximately 25.6 road miles north of the main office. The applicant's liquidity ratio is being maintained at 25 percent or better. It has good established earnings and is presently retaining two-thirds of its dividends for the future expansion of the Bank and its branches. As of November 30, 1978, the applicant's adjusted capital to asset ratio was 11.94 percent. This figure was expected to decrease by a small degree over the following few months.

   
   

2. The applicant's main office was staffed with the intention of establishing two branches. The applicant also has an application for another branch ban in mid-county, Pinellas County. This application has been approved by the State of Florida, but is currently awaiting approval by the Federal Deposit Insurance Corporation. The applicant has sixteen directors and non- director senior officers, and its main office is presently overstaffed. Five of its directors and officers have in excess of 14 years of banking experience.

   The applicant's president and chief executive officer has 23 years of banking

   experience. The manager of the proposed branch is currently on the applicant's staff, has 12 years of banking experience and has branch banking experience.

   
   

3. The owner of the land to be used for the subject proposed branch bank is a member of the applicant's Board of Directors and a 5 percent shareholder. There was a full disclosure of this fact both to the board of Directors and to the State. Two appraisals of the property were obtained, and the applicant's purchase price of the property is less than both appraisals.

   
   

4. The site for the proposed branch is located on the West side of U.S. Highway 19, approximately 200 feet north of its intersection with Cypress Drive. The building will be a two-story, 6,000 square foot structure. The branch will initially occupy the first floor and will lease the second floor to professional tenants on a short-term basis. Initially, the proposed branch will have six employees, with two inside teller stations and two drive-in stations. Some fifty parking spaces wilt be provided. The applicant plans to operate the proposed branch as a full service bank. Major decisions will be made on the premises and the branch will only receive bookkeeping support from the main office. In addition to normal banking services, the applicant intends to offer a club plan, a night depository and Saturday morning banking. The applicant projects that the proposed branch will be capable of supporting itself within eight months of operation. Prior to that time, the loss is estimated to be approximately $8,000.00 per month. The estimated volume of total deposits for the proposed branch bank are $2,000,000.00 at the end of the first year,

   $5,000,000.00 at the end of the second year, and $8,000,000.00 at the end of the third year of operation.

   
   

5. The primary service area of the proposed branch, from which it expects to draw 75 percent of its deposit volume, is depicted on the map attached to the application. The primary service area extends 1.1 air miles to the North, 0.6 miles to the East, 2.7 miles to the South and 1.3 miles to the West. This area was chosen by taking into consideration traffic flow, shopping and commercial activity centers in the area and other general characteristics of the area. Within the general trade area of the proposed branch are eight approved or existing commercial banking offices, and six savings and loan association offices. (The map legend was amended at the hearing to delete the black circle with the number 1, as this facility does not exist and has not been approved.) The protestant Palm State Bank is located one-tenth of a mile from the applicant's southern boundary, and 2.6 miles from the proposed branch site. The nearest banking facility to the north is located nine-tenths of a mile from the applicant's northern boundary.

   
   

6. The proposed branch will compete in an unincorporated area of Pinellas County. It was the prediction of the applicant's expert witness that the future growth of Pinellas County will occur in the Northern portion where land is available. The 1978 population of the primary service area was 7,200, representing a 300 percent increase from the 1970 population. This population is expected to increase to 10,000 by the year 1980. Nine active or planned housing projects are within the applicant's primary service area. The applicant revised the figures contained on page 20 of its "economic report" to show December, 1978, figures. These figures are 8,517 planned housing units, 1,336 completed units and 806 units under construction. The witness did not know the time frame contemplated for the 8,517 planned units.

   
   

7. The name of the proposed branch is to be First Bank of Treasure Island

- North County Office.

In accordance with the provisions of Florida Statutes, 120.57(1)(a)(12), conclusions of law and a recommendation are not included in this Report.

Respectfully submitted and entered this 29th day of January, 1979, in Tallahassee, Florida.

DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304

(904) 488-9675

COPIES FURNISHED:

Frank Weaner, President Palm State Bank

1000 U.S. Highway 19 Post Office Box 840

Palm Harbor, Florida 33563

Kenneth E. Easley

1212 South Highland Avenue Clearwater, Florida 33516

William L. Lyman Assistant General Counsel Office of the Comptroller The Capitol

Tallahassee, Florida 32304

A. L. Ellis

Chairman of the Board Ellis First National Bank

Tarpon Springs, Florida 33589

Comptroller Gerald Lewis State of Florida

The Capitol

Tallahassee, Florida 32304

Docket for Case No: 78-001486

Orders for Case No: 78-001486