STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
BANK OF INDIAN ROCKS, )
)
Petitioner, )
)
vs. ) CASE NO. 78-2425
) OFFICE OF THE COMPTROLLER and ) ATLANTIC BANK OF LARGO, )
)
Respondent. )
)
REPORT
Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, on June 12 and 13, 1979, in Courtroom C of the Pinellas County Judicial Building, and continuing on July 24, 1979, in Room 406 of the Judicial Building, St.
Petersburg, Florida. The purpose of this hearing was to receive evidence concerning the application of the Atlantic Bank of Largo for authority to open a branch in the vicinity of Indian Rocks and Walsingham Road in Largo, Florida.
APPEARANCES
For Petitioner Stephen D. Hughes Bank of Indian Rocks: 920 West Bay Drive
Largo, Florida
For Respondent Roger A. Larson Atlantic Bank of 2500 West Bay Drive Largo: Largo, Florida
For Respondent Karlyn Anne Loucks
Office of Comptroller: Assistant General Counsel
The Capitol Tallahassee, Florida
INTRODUCTION AND RULINGS ON EVIDENTIARY MATTERS
The Atlantic Bank of Largo, also referred to herein as the "applicant", filed its application with the Division of Banking in November of 1978 for authority to open a branch banking facility in Pinellas County, Florida. The petitioner Bank of Indian Rocks, also referred to herein as the "protestant", timely filed its petition for a public hearing on the application.
Numerous discovery matters were challenged by prehearing motions. With the exception of certain unavailable FDIC Reports, all confidential documents were made subject to an in camera inspection by the Hearing Officer and the attorneys for the parties. Those confidential items deemed relevant to this proceeding were received into evidence and were sealed as exhibits. The rule was invoked
and all witnesses, with the exception of each parties' representative, were excluded from the hearing room during the hearing proceedings. Over the objection of the applicant, it was ruled that Michael J. Badalich, who was listed as protestant's expert witness and who is not an officer or employee of the protestant, could remain as the protestant's representative. During the course of the hearing the applicant filed two revisions to its application due to its leasing arrangement and a change in gross income data caused by using 1975 as a base year in lieu of 1977. These revisions, along with testimony concerning their contents, were received into evidence over the objection of the protestant. The protestant's motion to terminate the hearing because of the revisions was denied.
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 demonstrating that it met the statutory and regulatory criteria for approval of its application for a branch banking facility. In support of its application, the applicant introduced into evidence Exhibits 1 through 15 and the testimony of seven witnesses. These witnesses included Steven Hellebusch, a senior project director with Burke Marketing Research, Inc., who was accepted as an expert in the gathering and presentation of statistical data; Paul Singleton, Jr., Chairman of the applicant's Board; David Lewis, an assistant vice president of marketing research for Atlantic Bancorporation; Stewart Williams, an assistant vice president and branching manager for Atlantic Bancorporation; Richard Kaden, vice president and treasurer of Atlantic Bancorporation; William Mauer, the applicant's president and chief executive officer; and Thomas Hampton, a real estate appraiser. The applicant also proffered an appraisal report which was marked as proffered Exhibit 16.
The protestant introduced into evidence Exhibits A through O and presented the testimony of five witnesses. These witnesses included Stanley K. Smith, chief of population research with the Bureau of Economic and Business Research, University of Florida, who was accepted as an expert witness in the areas of population studies and demography; Richard Salerno, a senior vice president and cashier for the First Bank of Treasure Island; William Livesay, the branch manager of the Clearwater Beach Bank; Charles R. Roberts, the protestant's president; and Lee Wasson, the protestant's executive vice president and cashier.
The Office of the Comptroller presented the testimony of Rick Marlin, the licensing and chartering administrator for the Division of Banking; and Adina Simmons, an economic analyst who was accepted as an expert in the areas of economics and demographics. Received on behalf of the Office of the Comptroller were Exhibits AA through EE. Exhibits BB and CC contained confidential information and were sealed.
The parties in this proceeding have each submitted proposed findings of fact which have been fully considered by the undersigned. The protestant has also filed a brief in support of its opposition to the application. To the extent that the proposed findings of fact are not incorporated in this Report, they are rejected as being either not supported by the evidence adduced at the hearing, irrelevant and immaterial to the issues or as constituting conclusions of law as opposed to findings of fact.
FINDINGS OF FACT
Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found:
The applicant is a wholly-owned subsidiary of the Atlantic Bancorparation, which supplies the Atlantic Bank of Largo with expertise in branch applications, data processing, bookkeeping operations end bank investments. The main office of the applicant is located at 2550 East Bay Drive in Largo, Pinellas County, Florida. The applicant presently has two branch banking facilities in operation and two approved, but unopened branches. At the time of the hearing, it was anticipated that the two approved branches would open in June and August of 1979. In addition to the present application, an application is pending to establish another branch bank in northeast St. Petersburg.
The applicant's president and chief executive officer has been with the applicant since 1965 and has been in banking since 1956. Its three vice presidents have between eleven and eighteen years of banking experience. While the applicant has 55 employees, it does not have sufficient personnel at this time to staff all four of the unopened and pending branches and some employees would have to be recruited from outside. The applicant does not believe that the new branches will have a detrimental effect upon its management capabilities. The subject proposed branch banking facility is expected to initially have seven employees -- a manager, assistant manager secretary and four tellers. The proposed branch manager is James Arntz, who is presently managing another of the applicant's branches and is an assistant cashier with six years of banking experience.
Based upon the applicant's quarterly statement of condition dated March 31, 1979, its adjusted capitol to asset ratio was 7.35 percent. For the year ending December 31, 1978, the applicant's net profit to asset ratio was 0.44 percent, calculated by dividing the net income into the total assets. Using the averaging method, the applicant's net profit to asset ratio for 1978 was 0.5 percent and from year end to the date of hearing was 0.55 percent. The applicant's percentage of liquid assets to total liabilities ranged from 55 to
65 percent and its loan to deposit ratio has historically been in the 45 to 50 percent range. Its classified assets have been historically low.
The earnings of the applicant have turned upward since 1977. In past years, the applicant has shown a net operating loss from a tax standpoint. Its total average deposits grew 25 percent between 1977 and 1978. As of March 30, 1979, the applicant's total deposits amounted to $42,450,000.00.
The opening of the applicant's approved and pending branches will provide a drain upon the applicant's net income for a period of one to two years, and will not show a profit until the third year. The applicant is of the opinion that its capital adequacy will be maintained either through profits or by infused capital from the Atlantic Bancorporation.
For the proposed branch, the applicant has projected total year-end deposits of $3,329,000, $4,851,000 and $6,306,000 for the first, second and third years of operation respectively, calculated on the basis of 1.6 persons per household. Based upon 2.2 persons per household, these figures would be
$2,487,000; $3,641,000 and $4,694,000, respectively. The applicant projected a loss of $108,698 in the first year, a loss of $11,511 in the second year end a profit of 4 0(01.4 in the third year using the 1.6 persons per household figure. Based upon 2.2 persons per household, these figures could show losses in the first, second and third years of $126,863,000; $54,655,000 and $17,442, respectively. Profits in the amounts of $38,518 and $106,381 would be realized after the fourth and fifth years of operation. The greater weight of the
evidence indicates that the average number of persons per household in Pinellas County is 2.2.
The proposed branch bank will be housed in a 2,000 square foot, one- story concrete building, with the potential for five drive-in teller stations. The facility will open with three drive-ins, and will have 25 parking spaces. The land and building will be owned by the Atlantic Bancorporation and leased to the applicant. While no lease agreement had been executed as of the hearing dates, it was anticipated that the annual rent would be $56,000.00 per year, representing an approximate 12 percent return on assets. The cost of the land was $240,000.00 and the estimated building cost is $260,000.00. With respect to tin purchase of the land, there was no evidence that any insider transaction occurred.
The proposed branch bank will offer a full range of services, including all services offered at the main bank and Saturday banking tours.
The site elected for the proposed branch bank is located in the vicinity of the northwest quadrant of the intersection of Indian Rocks Road and Walsingham Road, same 9.2 miles southwest of the main office. This intersection is a focal point for commercial activity in the area. The major east-west artery in the area is Ulmerton-Walsingham Road. There is no median cut directly in front of the site, so that traffic heading east from the beaches could not directly enter the facility. There is a stacking lane in front of the site for traffic heading west. A traffic count made by the Florida Department of Transportation illustrated that 25,000 cars per day drove past the intersection just east of the proposed site.
The applicant's proposed primary service area (PSA) is very densely populated, with approximately 2,400 people per square mile. In delineating its primary service area, the applicant considered population concentration, traffic flow and natural geographic barriers. As proposed, the primary service area will be bounded by Taylor Avenue on the north, the Seaboard Coastline Railroad track on the east, Park Boulevard up to 86th Avenue on the south, and the Gulf of Mexico on the west.
Official state population estimates for the PSA are not available. The applicant, however, estimates the population of the PSA to be 39,417. This is based, among other things, on updated estimates made by the Pinellas County
Planning Council of 1970 census data relating to census tracts and traffic zones within them. The PSA includes all of census tracts numbers 251.05 and 252.02, and part of tracts numbers 252.01, 253, 276, and 277. There are some twenty-six whole and two partial traffic zones in the area.
General trends in population changes in the county and in the areas included wholly or partially within the applicant's designated PSA show a pattern of uneven growth, as illustrated by the following population data:
1970 1976 1977 1975
Pinellas County | 522,329 | 673,603 | 687,204 | 708,068 |
Belleair Bluff | ||||
(partially) | 1,910 | 2,007 | 2,808 | 2,843 |
Belleair Shores | ||||
(partially) | 124 | 85 | 85 | 87 |
Indian Rocks Beach | 2,666 | 3,316 | 3,521 | 3,643 |
Indian Shores | 791 | 1,522 | 1,568 | 1,607 |
Seminole (Partially) | 2,121 | 5,216 | 5,218 | 5,194 |
Largo (partially) | 22,031 | 48,612 | 54,906 | 57,275 |
These figures illustrate that between 1970 and 1976, the average rate of annual growth for the county as a whole was 4.8 percent. The rate declined between 1976 end 1977 to 2.0 percent, but increased again between 1977-1978 to 3.0 percent. The population of Largo, the largest of the municipalities which are partially or wholly within the PSA, has been growing continuously at a faster rate than the population of the county as a whole, although its growth rate has been declining significantly since 1970. Between 1970 end 1976, the population of Largo showed an average annual increase of 20.1 percent between 1976 and 1977 an increase of 12.9 percent, and between 1977 and 1978 an increase of 4.3 percent. The populations of Seminole, a small incorporated area partially within the PSA, Indian Rocks Beach and Indian Shores, two smaller incorporated areas wholly within the PSA, also showed declining rates of growth in recent years.
Net migration into the county between 1970 and 1978 accounted for
119.82 percent of the population growth, offsetting the negative net balance in natural growth resulting from the rate of deaths being higher than the rate of births. Between 1970 and 1978, the weight of retirees (the 65+ age group) in the county's total population increased from 20.4 to 32 percent, but the weight of the labor force (ages 15-64) remained almost constant.
The latest monthly labor market indicators data for Pinellas County contained in the February 1979 issue of the Tampa-St. Petersburg SMSA Labor Market Trends, show an average unemployment rate of 6.2 percent for the 12-month period ending in January, 1979, as compared to 7.6 percent for the comparable 1975 period, thus indicating a 1.4 percent decrease in the rate of unemployment. The state average for the same periods were higher -- 6.6 and 8.1 percent, respectively. There has been a 3.9 percent increase in total nonagricultural employment in the area.
The per capita personal income for Pinellas County increased from 86,364.00 in 1976 to $6,966.00 in 1977, representing a 9.5 percent increase. Even though this growth was somewhat lower than the state average of 9.8 percent, the county's average personal income remained above the state averages of $6,101.00 and $6,697.00 respectively for the same years.
Within the applicant's designated PSA, there is one main full-service bank -- the protestant Bank of Indian Rocks, and four branch banking facilities, one of which has been approved but is not yet opened. There are also five branch savings and loan associations. Approximately fourteen different banking offices, thirteen different savings and loan offices and ten different credit unions in the general area draw customers from the applicant's designated PSA. One of the branch banks within the PSA which opened in November of 1977 realized actual deposits amounting to one-half of that projected in its application. The commercial banking offices within the PSA are located at a distance from 0.1 mile (the protestant) to 1.5 miles from the proposed site. The PSA of the applicant's own Belleair branch overlaps to some degree the PSA designated for the subject branch. Based upon a zip code analysis of its customers, the applicant presently has approximately 140 deposit customers and 65 loan customers residing within the designated PSA.
According to a study prepared by Burke Marketing Research, Inc., based on a telephone sample survey of 399 persons, 49 percent of the households in the PSA have their primary checking account at the Bank of Indian Rocks and 37
percent of the households strongly or moderately agree that there is a need for another full-service banking office in the area. The validity of some of the facts used in the interviews was brought into question at the hearing.
According to year end 1978 data from the Comparative Figures Reports of the Florida Bankers Association, the Bank of Indian Rocks had $61.3 million in total deposits, representing an increase of 9.6 percent over the previous year, and a 23.3 percent growth rate in loans. As to the two branches located within or near the PSA which opened during 1977 and for which data as of June 30, 1978, was available, the Clearwater Beach Bank branch (located 1.8 miles south of the proposed site) reported $1.17 million in deposits after 7 1/2 months of operation and the Community Bank of Pinellas branch (located 2.5 miles south) reported $1.61 million in deposits after 18 months of operation. All but one of the savings and loan offices experienced above average rates of growth (between 42.5 and 78.5 percent) for the 1977 and 1978 reporting periods.
The name selected for the proposed branch banking facility is Atlantic Bank of Largo - Indian Rocks Branch. The president of the protestant Bank of Indian Rocks stated that he felt that the proposed name would be confusing because his bank is commonly referred to as the "Indian Rocks Bank".
There was no testimony adduced at the hearing that the applicant was not in substantial compliance with all state and federal laws affecting its operations.
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 12th day of September, 1979, in Tallahassee, Florida.
DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32301
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 12th day of September, 1979.
COPIES FURNISHED:
Stephen D. Hughes 920 West Bay Drive Largo, Florida
Roger A. Larson 2500 West Bay Drive Largo, Florida
Karlyn Anne Loucks Assistant General Counsel Office of the Comptroller The Capitol
Tallahassee, Florida 32301
Comptroller Gerald A. Lewis State of Florida
The Capitol
Tallahassee, Florida 32301
=================================================================
AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA DEPARTMENT OF BANKING AND FINANCE
DIVISION OF BANKING
BANK OF INDIAN ROCKS,
Petitioner,
vs. CASE NO. 78-2425
OFFICE OF THE COMPTROLLER and ATLANTIC BANK OF LARGO,
Respondent.
/
FINDINGS OF FACT, CONCLUSIONS OF LAW AND FINAL ORDER
Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, on June 12 and 13, 1979, in Courtroom C of the Pinellas County Judicial Building, and continuing on July 24, 1979, in Room 406 of the Judicial Building, St.
Petersburg, Florida. The purpose of the hearing was to receive evidence concerning the application of the Atlantic Bank of Largo for authority to open a branch in the vicinity of Indian Rocks Road and Walsingham Road in Largo, Florida.
APPEARANCES
For Petitioner Stephen D. Hughes Bank of Indian Rocks: 920 West Bay Drive
Largo, Florida
For Respondent Roger A. Larson Atlantic Bank of Largo: 2500 West Bay Drive
Largo, Florida
For Respondent Karlyn Anne Loucks
Office of Comptroller: Assistant General Counsel
Office of the Comptroller The Capitol
Tallahassee, Florida
Upon consideration of the oral and documentary evidence adduced at the hearing, the Report of the Hearing Officer, containing an Introduction and Rulings on Evidentiary Matters and Findings of Facts as paragraphs 1-20, submitted on September 12, 1979, is hereby adopted and incorporated herein with the following exceptions:
Paragraph 5 is modified to reflect the fact that the Applicant will not show a profit until the fourth year. Paragraph 8 is modified to reflect that the Applicant will probably have Saturday hours, but that the exact hours have not been determined.
The proposed findings submitted by the parties and accepted by the Department, as set forth in the Department's Rulings on Proposed Findings, are also adopted and incorporated by reference.
The pertinent provisions of Chapter 659, Florida Statutes, which governs the approval of branch banks is as follows:
659.06(1)1. Any bank . . . incorporated pursuant to this chapter shall
have one principal place of doing business as designated in its articles of
incorporation; in addition, with the approval of the Department and upon such conditions as the
Department shall prescribe, including a satisfactory showing by the bank that public convenience
and necessity will be served thereby, any bank may establish up to two (2) branches per calendar
year within the limits of the county . . .
The Department has fully complied with Chapter 120, Florida Statutes, in enacting Rule 3C-13.041(2), Florida Administrative Code, which provides in its entirety as follows:
3C-13.041 - Regulatory Standards for Evaluating Applications.
Standards. In making its determination the department shall consider the following criteria, to wit:
The applicant has or agrees to provide sufficient capital accounts to support the bank's deposit base and the additional fixed asset proposal for such branch and its operations, without undue exposure to its depositors or shareholders. Generally, an adjusted capital (All capital accounts plus reserves minus all assets classified loss and 50.0 percent of total assets classified doubtful) to asset ratio of 7.0 percent shall be considered adequate to support expansion for a branch. It should be noted, however, that other facts, including earnings, managerial capacity, asset condition, past performance, and degree of liquidity, among others, are important in assessing
the overall capacity of a bank to establish a branch and may, therefore, have an impact on the adequacy of the capital to asset ratio.
The applicant has sufficient earnings and earning prospects to support the anticipated expenses of such branch, without jeopardizing the profitable position of the bank, its retained earnings, or the dividend return to its shareholders. A net profit to asset ratio of 0.5 percent or above during the last calendar year is generally considered adequate to support the expansion for a branch. It should be noted, however, that factors such as liquidity, asset condition, managerial capacity, past performance among others are important in assessing the overall capacity of a bank to establish a branch and may, therefore, have an impact on the relativesignificance of a net profit to asset ration above or below 0.5 percent.
The applicant has sufficient depth and quality of management to operate the branch without reducing its current level of services, or exceeding its managerial or operational capacity.
The name of the proposed branch reasonably identifies the branch as such, and is not likely to unduly confuse the public.
The applicant is in substantial compliance with all state and federal laws affecting its operations.
INTRODUCTION AND RULINGS ON EVIDENTIARY MATTERS
The Atlantic Bank of Largo, also referred to herein as the "Applicant", filed its application with the Division of Banking in November of 1978 for authority to open a branch banking facility in Pinellas County, Florida. the Petitioner Bank of Indian Rocks, also referred to herein as the "Protestant", timely filed its petition for a public hearing on the application.
Numerous discovery matters were challenged by prehearing motions. With the exception of certain available FDIC Reports, all confidential documents were made subject to an in camera inspection by the Hearing Officer and the attorneys for the parties. Those confidential items deemed relevant to this proceeding were received into evidence and were sealed as exhibits. The rule was invoked and all witnesses, with the exception of each party's representative, were excluded from the hearing room during the hearing proceedings. Over the objection of the Applicant, it was ruled that Michael J. Badalich, who was listed as Protestant's expert witness and who is not an officer or employee of the Protestant, could remain as the Protestant's representative. During the course of the hearing, the Applicant filed two revisions to its application due to its leasing arrangement and a change in gross income data caused by using 1978 as a base year in lieu of 1977. These revisions, along with testimony concerning their contents, were received into evidence over the objection of the Protestant. The Protestant's motion to terminate the hearing because of the revisions was denied.
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 demonstrating that it met the statutory and regulatory criteria for approval of its application for a branch bank facility. In support of its application, the Applicant introduced into evidence Exhibit 1 through 15 and the testimony of seven witnesses. These witnesses included Steven Hellebusch, a senior project director with Burke Marketing Research, Inc., who was accepted as an expert in
the gathering and presentation of statistical data; Paul G. Singleton, Jr., Chairman of the Applicant's Board; David Lewis, an assistant vice president of marketing research for Atlantic Bancorporation; Stewart Williams, an assistant vice president and brancH manager for Atlantic Bancorporation; Richard Kaden, vice president and treasurer of Atlantic Bancorporation; William Mauer, the Applicant's president and chief executive officer; and Thomas Hampton, a real estate appraiser. The applicant also proferred an appraisal report which was marked as proferred Exhibit 16.
The Protestant introduced into evidence Exhibits A through O and presented the testimony of five witnesses. These witnesses included Stanley K. Smith, chief of population research with the Bureau of Economic and business Research, University of Florida, who was accepted as an expert witness in the areas of population studies and demography; Richard Salerno, a senior vice president and cashier for the First Bank of Treasure Island; WilLiam Livesay, the branch manager of the Clearwater Beach Bank; Charles R. Roberts, the Protestant's president; and Lee Wasson, the Protestant's executive vice president and cashier.
The Office of the Comptroller presented the testimony of Rick Marlin, the licensing and chartering administrator for the Division of Banking; and Adina Simmons, an economic analyst who was accepted as an expert in the areas of economics and demographics. Received on behalf of the Office of the Comptroller were Exhibits AA through EE. Exhibits BB and CC contained confidential information and were sealed.
The parties in this proceeding have each submitted proposed findings of fact which have been fully considered by the Hearing Officer. The Protestant has also filed a brief in support of its opposition to the application. To the extent that the proposed findings of fact were not incorporated in the Hearing Officer's Report, they were rejected as being either not supported by the evidence adduced at the hearing, irrelevant and immaterial to the issues or as constituting conclusions of law as opposed to findings of fact.
FINDINGS OF FACT
Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found:
The Applicant is a wholly-owned subsidiary of the Atlantic Bancorporation, which supplies the Atlantic Bank of Largo with expertise in branch applications, data processing bookkeeping operations and bank investments. The main office of the Applicant is located at 2550 East Bay Drive in Largo, Pinellas County, Florida. The Applicant presently has two branch banking facilities in operation and two approved, but unopened branches. At the time of the hearing, it was anticipated that the two approved branches would open in June and August of 1979. In addition to the present application, an application is pending to establish another branch bank in northeast St. Petersburg.
The Applicant's president and chief executive officer has been with the Applicant since 1969 and has been in banking since 1956. Its three vice presidents have been eleven and eighteen years of banking experience. While the Applicant has 55 employees, it does not have sufficient personnel at this time to staff all four of the unopened and pending branches and some employees would have to be recruited from outside. The Applicant does not believe that the new branches will have a detrimental effect upon its management capabilities. The
subject proposed branch banking facility is expected to initially have seven employees -- a manage,r assistant manage,r secretary and four tellers. the proposed branch manager is James Arntz, who is presently managing another of the Applicant's branches and is an assistant cashier with six years of banking experience.
Based upon the Applicant's quarterly statement of condition dated March 31, 1979, its adjusted capital to asset ratio was 7.35 percent. For the year ending December 31, 1978, the Applicant's net profit to asset ratio was 0.44 percent, calculated by dividing the net income into the total assets. Using the average method, the Applicant's net profit to asset ratio for 1978 was 0.5 percent and from year-end to the date of the hearing was 0.55 percent. The Applicant's percentage of liquid assets to total liabilities ranged from 55 to
65 percent and its loan to deposit ratio has historically been in the 45 to 50 percent range. Its classified assets have been historically low.
The earnings of the Applicant have turned upward since 1977. In past years, the Applicant has shown a net operating loss from a tax standpoint. Its total average deposits grew 25 percent between 1977 and 1978. As of March 30, 1979, the Applicant's total deposits amounted to $42,450,000.00.
The opening of the Applicant's approved and pending branches will provide a drain upon the Applicant's net income for a period of one to three years, and will not show a profit until the fourth year. The Applicant is of the opinion that its capital adequacy will be maintained either through profits or by infused capital from the Atlantic Bancorporation.
For the proposed branch, the Applicant has projected total year-end deposits of $3,329,000, $4,851,000 and $6,306,000 for the first, second and third years of operation, respectively, calculated on the basis of 1.6 persons per household. Based upon 2.2 persons per household, thee figures would be
$2,487,000; $3,641,000 and $4,694,000, respectively. The Applicant projected
a loss of $108,698 in the first year, a loss of $11,511 in the second year and a profit of $40,014 in the third year using the 1.6 persons pre household figure. Based upon 2.2 persons per household, these figures would show losses in the first, second and third year of $126,863,000; $54,655,000 and $17,442, respectively. Profits in the amounts of $38,518 and $106,381 would be realized after the fourth and fifth years of operation. The greater weight of the evidence indicates that the average number of persons per household in Pinellas County is 2.2.
The proposed branch bank will be housed in a 2,000 square foot, one- story concrete building, with the potential for five drive-in teller stations. The facility will open with three drive- ins and will have 25 parking spaces. The land and building will be owned by the Atlantic Bancorporation and leased to the Applicant. While no lease agreement had been executed as of the hearing dates, it was anticipated that the annual rent would be $56,000.00 per year, representing approximately 12 percent return on assets. The cost of the land was $240,000.00 and the estimated building cost os $260,000.00. With respect to the purchase of the land, there was no evidence that any insider transaction occurred.
The proposed branch bank will offer a full range of services, including all services offered at the main bank and probably Saturday banking hours, however, the exact hours have not been determined.
The site selected for the proposed branch bank is located in the vicinity of the northwest quadrant of the intersection of Indian Rocks Road and Walsingham Road, some 9.2 miles southwest of the main office. This intersection is a focal point for commercial activity in the area. The major east-west artery in the area is Ulmerton-Walsingham Road. There is no median cut directly in front of the site, so that traffic heading east from the beaches could not directly enter the facility. There is a stacking lane in front of the site for traffic heading west. A traffic count made by the Florida Department of Transportation illustrated that 25,000 cars per day drove past the intersection just east of the proposed site.
The Applicant's proposed primary service area (PSA) is very densely populated, with approximately 2,400 people pre square mile. In delineating its primary service area, the Applicant considered population concentration, traffic flow and natural geographic barriers. As proposed, the primary service area will be bounded by Taylor Avenue on the north, the Seaboard Coastline Railroad track on the east, Park Boulevard up to 86th Avenue on the south, and the Gulf of Mexico on the west.
Official state population estimates for the PSA are not available. The Applicant, however, estimates the population of the PSA to be 39,417. This is based, among other things, on updated estimates made by the Pinellas County
Planning Council of 1970 census data relating to census tracts and traffic zones within them. The PSA includes all of census tracts numbers 251.05 and 252.02, and part of tracts number 252.01, 253, 276 and 277. There are some twenty-six whole and two partial traffic zones in the area.
General trends in population changes in the county and in the areas included wholly or partially within the Applicant's designated PSA show a pattern of uneven growth, as illustrated by the following population data:
1970 | 1976 | 1977 | 1978 |
Pinellas County 522,329 | 673,603 | 687,204 | 708,068 |
Belleair Bluffs 1,910 (partially) | 2,807 | 2,808 | 2,843 |
Belleair Shores 124 (partially) | 85 | 85 | 87 |
Indian Rocks Beach 2,666 | 3,316 | 3,521 | 3,643 |
Indian Shores 791 | 1,522 | 1,569 | 1,607 |
Seminole 2,121 (partially) | 5,126 | 5,128 | 5,194 |
Largo 22,031 (partially) | 48,612 | 54,906 | 57,275 |
These figures illustrate that | between | 1970 and | 1976, the average rate of annual |
growth for the county as a whole was 4.8 percent. The rate declined between 1976 and 1977 to 2.0 percent, but increased again between 1977-1978 to 3.0 percent.
The population of Largo, the largest of municipalities which are partially or wholly within the PSA, has been growing continuously at a faster rate than the population of the county as a whole, although its growth rate has been declining
significantly since 1976. Between 1970 and 1976, the population of Largo showed an average annual increase of 20.1 percent, between 1976 and 1977 an increase of
12.9 percent, and between 1977 and 1978 an increase of 4.3 percent. The populations of Seminole, a small incorporated area partially within the PSA, Indian Rocks Beach and Indian River Shores, two smaller incorporated areas wholly within the PSA, also showed declining rates of growth in recent years.
Net migration into the county between 1970 and 1978 accounted for
119.82 percent of the population growth, offsetting the negative net balance in natural growth resulting from the rate of deaths being higher than the rate of births. Between 1970 and 1978, the weight of retirees (the 65+ age group) in the county's total population increased from 20.4 to 32 percent, but the weight of the labor force (ages 15-64) remained almost constant.
The latest monthly labor market indicators for Pinellas
County contained in the February 1979 issue of the Tampa-St. Petersburg SMSA Labor Market Trends, show an average unemployment rate of 6.2 percent for the 12-month period ending in January, 1979, as compared to 7.6 percent for the comparable 1978 period, thus indicating a 1.4 percent decrease in the rate of unemployment. The state average for the same periods were higher -- 6.6 and 8.1 percent, respectively. There has been a 3.9 percent increase in total nonagricultural employment in the area.
The per capita personal income for Pinellas County increased from
$6,364.00 in 1976 to $6,966.00 in 1977, representing a 9.5 percent increase. Even though this growth was somewhat lower than the state average of 9.8 percent, the county's average personal income remained above the state averages of $6,101.00 and $6,697.00, respectively, for the same years.
Within the Applicant's designated PSA, there is one main full-service bank -- The Protestant Bank of Indian Rocks, and four branch banking facilities, one of which has been approved but is not yet opened. There are also four branch savings and loan associations. Approximately fourteen different banking offices, thirteen different savings and loan offices and ten different credit unions in the general area draw customers from the Applicant's designated PSA. One of the branch banks within the PSA which opened in November of 1977 realized actual deposits amounting to one-half of that projected in its application. The commercial banking offices within the PSA are located at a distance from 0.1 mile (the Protestant) to 1.8 miles from the proposed site. The PSA of the Applicant's own Belleair branch overlaps to some degree the PSA designated for the subject branch. Based upon a zip code analysis of its customers, the Applicant presently has approximately 140 deposit customers and 65 loan customers residing within the designated PSA.
According to a study prepared by Burke Marketing Research, Inc., based on a telephone sample survey of 399 persons, 49 percent of the households in the PSA have their primary checking account at the Bank of Indian Rocks and 37 percent of the households strongly or moderately agree that there is a need for another full-service banking office in the area. The validity of some of the facts used in the interviews was brought into question at the hearing.
According to year end 1978 data from the Comparative Figures Reports of the Florida Bankers Association, the Bank of Indian Rocks had $61.3 million in total deposits, representing an increase of 9.6 percent over the previous year, and a 23.3 percent growth rate in loans. As to the two branches located within or near the PSA which opened during 1977 and for which data as of June 30, 1978, was available, the Clearwater Beach Bank branch (located 1.8 miles
south of the proposed site) reported $1.7 million in deposits after 7 1/2 months of operation and the Community Bank of Pinellas branch (located 2.5 miles south) reported $1.61 million in deposits after 18 months of operation. All but one of the savings and loan offices experienced above average rates of growth (between
42.5 and 78.5 percent) for the 1977 and 1978 reporting periods.
The name selected for the proposed branch banking facility is Atlantic Bank of Largo - Indian Rocks Branch. The president of the Protestant Bank of Indian Rocks stated that he felt that the proposed name would be confusing because his bank is commonly referred to as the "Indian Rocks Bank".
There was no testimony adduced at the hearing that the Applicant was not in substantial compliance with all state and federal laws affecting its operations.
The Deputy Comptroller, Gerri Raines Dolan, and the Director of the Division of Banking, Ryland Terry Rigsby, as advisory staff members to the Comptroller, reviewed the application. They assisted and concurred with the Comptroller in the ultimate determination of the application.
RULINGS ON PROPOSED FINDINGS OF FACTS AND EXCEPTIONS
The Department rules on the Proposed Findings of Facts submitted by the parties as follows:
APPLICANT'S PROPOSED FINDINGS
Applicant's proposed finding as to the net profit to asset ratio is accepted.
Applicant's proposed finding as to the adjusted capital to asset ratio is accepted.
Applicant's proposed finding as to the boundaries of the PSA are accepted.
Applicant's proposed findings as to the population estimates of the PSA and the communities located within the PSA are accepted to the extent they are not inconsistent with the Department's findings adopted herein.
Applicant's proposed finding as to net migration into Pinellas County and the age distribution characteristics of Pinellas County are accepted to the extent they are not inconsistent with the Department's findings adopted herein.
Applicant's proposed finding that the Bank of Indian Rocks is the only full service bank with its main office operating in the PSA is accepted.
Applicant's proposed finding that the Bank of Indian Rocks experienced a 23.3 percent rate of growth for loans and a relatively modest rate of growth for deposits during the last reporting year is accepted.
Applicant's proposed findings as to the nature of the proposed branch site are accepted.
Applicant's proposed finding as to the banks servicing the PSA is accepted to the extent that said banks have branch offices located in the PSA,
but is rejected to the extent that said finding excludes other banks which may service customers in the PSA.
Applicant's proposed finding that the PSA community is heavily dominated in terms of bank operations by the Bank of Indian Rocks is rejected as being unsupported by competent substantive evidence in the record. The record indicates that based on a telephone sample survey of 399 persons, 49 percent of the households in the PSA have their primary checking account at the Bank of Indian Rocks. The Applicant's proposed finding does not necessarily follow from the survey.
Applicant's proposed finding as to the percentage of people located in the PSA that have a primary checking account in the PSA and bank with the Bank of Indian Rocks is rejected for the reasons previously stated in paragraph 10.
Applicant's proposed finding as to the need for an additional full service bank based on the statistical data presented is rejected as constituting a conclusion of law.
Applicant's proposed finding as to the savings and loan associations serving the PSA is accepted to the extent that said savings and loan associations have offices located in the PSA, but is rejected to the extent that said finding excludes other savings and loan association offices which may serve customers in the PSA.
Applicant's proposed findings as to the nature of the primary service area is accepted, with the exception of the finding as to the amount of land available for future development which is rejected as being unsupported by competent substantial evidence in the record.
Applicant's proposed findings that the Applicant's economic capacity will be enhanced by the branch; that the Applicant can support the proposed branch and statements with regard thereto, are rejected as constituting conclusions of law and legal argument, rather than findings of fact.
Applicant's proposed findings as to the range of services that will be offered at the proposed branch are accepted.
Applicant's proposed finding as to the need for additional banking facilities and the convenience of the proposed bank are rejected as constituting conclusions of law.
Applicant's proposed findings as to the substantial experience of the bank staff, and significant assets are accepted; however, Applicant's proposed findings to the capability of the
bank to support the branch facilities is rejected as constituting a conclusion of law.
Applicant's proposed findings as to the Applicant's return on assets on 1977, 19978 and year to date are accepted.
Applicant's proposed findings as to the liquid assets as a percent of total liabilities; condition of assets; classified assets and loan loss ratio are accepted.
Applicant's proposed findings as to increased earnings, increased average balances and reduced chargeoffs are accepted.
Applicant's proposed finding that there has been no cash operating loss of the Applicant is rejected as being unsupported by competent substantial evidence in the record. Applicant's other statements with regard thereto are rejected as constituting legal argument rather than findings of facts.
Applicant's proposed finding that the review of the branch by management of the Applicant and the Atlantic Bancorporation is significant is accepted; however, Applicant's proposed finding as to the judgment of the management as to the success of the proposed branch constitutes a conclusion of law.
Applicant's proposed finding that there was no insider transaction involved in the purchase of the land is rejected as being irrelevant and immaterial.
Applicant's proposed finding that there was no showing that the lease transaction constitutes an insider transaction is rejected as being unsupported by competent substantial evidence in the record.
Applicant's proposed finding that the lease sum represents approximately a 12 percent return on assets is accepted; however, the Applicant's proposed finding that the lease arrangement was not controverted as being unfair or unreasonable is rejected as being irrelevant and immaterial.
Applicant's proposed finding that the depth of management is sufficient to operate the branch is rejected as constituting a conclusion of law. Applicant's proposed findings as to the number of years of experience of various officers of the bank is accepted.
Applicant's proposed finding as to whether the name of the proposed branch was confusing is rejected as constituting a conclusion of law.
Applicant's proposed finding that the Applicant does not have more than four pending branch applications is accepted.
Applicant's proposed findings that there was no evidence presented which would indicate that the bank was not in compliance
with federal and state regulations and statements of bank offices thereto are accepted.
PROTESTANT'S PROPOSED FINDINGS
Protestant's proposed findings in Section 1 are accepted, with the exception of the last sentence which is rejected as being a conclusory statement not supported by competent substantial evidence in the record.
Protestant's proposed findings in Section 2 are accepted.
Protestant's proposed findings in Section 3 are accepted, with the exception that the record reflects that the proposed site is located in the vicinity of the northwest quadrant of the intersection of Indian Rocks Road and Walsingham, and does not specify the number of fees west of the intersection.
Protestant's proposed findings as to the PSA's boundaries as delineated by the Applicant in Section 4 are accepted. The second and third sentences in Section 4 are rejected as being unsupported by competent
substantial evidence in the record. The first sentence in the second paragraph of Section 4 is accepted. The second sentence in the second paragraph of Section
4 is rejected as constituting legal argument rather than a finding of fact. The remaining proposed findings in Section 4 relating to the boundaries of the PSA of the First Bank of Treasure Island are irrelevant for the reason that said PSA is not necessarily applicable to subsequent applications.
Protestant's proposed finding in Section 4 as to the population of the PSA is accepted and the proposed findings relating to the population of First Bank of Treasure Island's PSA is rejected as being irrelevant.
Protestant's proposed finding in Section 4 as to the residential nature of the PSA is accepted. Protestant's proposed finding as to the limited nature of commercial activity is rejected as being unsupported by competent substantial evidence. The record reflects that although commercial activity in the PSA is in the form of small retail, professional, and service type establishments, these establishments are numerous in number. Protestant's proposed finding as to the considerable greenbelt lands which cannot be used for development is rejected as being unsupported by competent substantial evidence. The record reflects that there are greenbelt areas which cannot be used for development, but does not reflect that the amount of these lands is considerable.
Protestant's proposed findings in the first and second sentences in Section 5 are accepted. The third sentence in Section 5 is accepted to the extent that traffic coming from west to east cannot enter the proposed site directly. The remaining findings in the first paragraph of Section 5 are accepted, with the exception of the last phrase of the last sentence which is rejected as speculation and not supported by competent substantial evidence in the record.
Protestant's proposed finding in the second paragraph of Section 5 as to the number of Applicant's existing customers in the PSA is accepted, however, the remaining findings in that paragraph are rejected as unsupported by competent substantial evidence in the record.
Protestant's proposed finding in the last paragraph of Section 5 is rejected as constituting a conclusion of law.
Protestant's proposed finding in the first paragraph of Section 6 are accepted to the extent that said finding represents the number of offices of financial institutions serving the PSA and not the number of financial institutions.
Protestant's proposed finding in the first sentence of the second paragraph of Section 6 is rejected as being unsupported by competent substantial evidence in the record. The record reflects that the Applicant offers automatic transfer from savings to checking and not that they contend this service is unique. Protestant's proposed finding in the second sentence of the second paragraph of Section 6 is accepted with the exception that the record does not support the finding that the Bank of Indian Rocks offers automatic transfer accounts. The finding in the last sentence of the second paragraph of Section 6 is rejected as being irrelevant.
Protestant's proposed finding in the third paragraph of Section 6 is rejected as being unsupported by competent substantial evidence in the record. The record reflects that some of the questions asked in the Burke survey may
have been based on the assumption that automatic transfer accounts were not presently offered in the PSA, however, the entire survey was not based on that assumption.
Protestant's proposed finding in the fourth paragraph of Section 6 is accepted.
Protestant's proposed finding in the fifth paragraph of Section 6 is rejected as being unsupported by competent substantial evidence in the record, said finding is based on hearsay evidence which is uncorroborated.
Protestant's proposed finding in the sixth paragraph as to the number of businesses that the Applicant listed in its application which were not in its PSA is accepted, however, the remaining finding in that paragraph is rejected as irrelevant.
Protestant's proposed finding in the last paragraph of Section 6 is rejected as constituting a conclusion of law.
Protestant's proposed finding as to the provisions of Rule 3C- 13.041(2)(a), F.A.C. in the first paragraph of Section 7 are accepted.
Protestant's proposed finding as to the Applicant's capital to asset ratio in the second paragraph of Section 7 is accepted. Protestant's remaining finding in that paragraph is rejected as constituting legal argument and opinion, rather than a finding of fact.
Protestant's proposed findings in the first paragraph of Section 7 are accepted.
Protestant's proposed finding in the fourth paragraph of Section 7 is rejected as being unsupported by competent substantial evidence in the record. The record reflects that Mr. Maurer stated that the Applicant probably would not be able to add to capital through earnings based on the projected losses of the unopened branches.
Protestant's proposed findings as to the projected deposits of the Applicant's branches in the fifth paragraph of Section 7 are accepted, however, Protestant's proposed finding as to the need for additional capital is rejected as constituting a conclusion of law, opinion and legal argument. The remaining findings in that paragraph and the first sentence of the sixth paragraph are rejected as being legal argument rather than findings of facts based on competent substantial evidence in the record. The finding in the second sentence of the sixth paragraph is accepted.
Protestant's proposed finding in the seventh paragraph of Section 7 that the applicant does not have sufficient personnel to staff and manage its new branches is accepted. Protestant's proposed finding that no manager for the proposed branch has been selected is rejected as being unsupported by competent substantial evidence in the record. Although there appears to be conflicting testimony as to this fact, the application contained in the record states that James Arntz had been selected as the branch manager, in addition to testimony on direct examination that Mr. Arntz had been selected as the branch manager and the record supports said finding. Protestant's proposed finding as to the managerial capacity of the Applicant and its impact on the adequacy of capital to asset ratio is rejected as constituting a conclusion of law.
Protestant's proposed findings contained in the first two sentences of the eighth paragraph of Section 7 are accepted. Protestant's proposed finding contained in the last sentence is rejected as constituting a conclusion of law.
Protestant's proposed finding in the last paragraph of Section 7 is rejected as constituting a conclusion of law.
Protestant's proposed finding in the first sentence of
the first paragraph of Section 8 is accepted. The remaining findings in that paragraph are rejected as constituting conclusions of law.
Protestant's proposed finding in the first sentence of the second paragraph of Section 8 is accepted, and the remaining finding in that paragraph is rejected as constituting a conclusion of law.
Protestant's proposed findings in Section 9 are accepted.
Protestant's proposed findings in Section 10 are accepted.
Protestant's proposed findings in the first two paragraphs and the first, second and fourth sentence of the third paragraph of Section 11 are accepted. The proposed findings in the third and fifth sentences of the third paragraph are rejected as constituting conclusions of law. Protestant's proposed findings in the first two sentences of the fourth paragraph of Section
11 are accepted, the remaining sentence in that paragraph is rejected as constituting a conclusion of law.
Protestant's proposed findings in Section 12 are accepted, with the exception that (1) 9 percent represents an average cost of time deposits and to a minimum and (2) the proposed finding in the last sentence constitutes a conclusion of law.
Protestant's proposed findings in the first two paragraphs of Section
13 are accepted. The remaining findings of the last paragraph are rejected as constituting conclusions of law.
Protestant's proposed findings in the first paragraph of Section 14 are accepted, with the exception that the record reflects that the purchase price of the proposed site was $240,000 and not $200,000.
Protestant's proposed findings in the first two sentences of the second paragraph of Section 14 are rejected as being irrelevant. The proposed findings in the third sentence is accepted. The proposed findings in the remaining sentences of that paragraph are rejected as constituting legal argument and conclusions of law.
Protestant's proposed findings in Section 15 as to the provisions of Rule 3C-13.041(3) are accepted. The remaining proposed findings are rejected as being irrelevant.
Protestant's proposed findings in Section 16 as to the provisions of rule 3c-13.041(2)(c) are accepted. The proposed finding in the second sentence of that section is accepted. The proposed finding in the third sentence is rejected as being unsupported by competent substantial evidence in the record for the reasons stated above in paragraph 53 of this Order. The proposed finding in the last sentence is rejected as constituting a conclusion of law.
DEPARTMENT'S PROPOSED FINDINGS
The Department's proposed findings contained in paragraph 1, 3, 4 through 10, 12 through 19,22 and 23 are accepted.
The Department's proposed findings contained in paragraph 2 are accepted with the exception of the third sentence which is rejected as being unsupported by competent substantial evidence in record for the reasons stated above in paragraph 53 of this Order.
The Department's proposed findings contained in paragraph 11 are accepted, with the exception of the figure for the projected deposits for the first year based on 2.2 persons per household which is rejected as being unsupported by competent substantial evidence in the record. The record reflects that this figure is $2,487,000 and not $2,700,000.
The Department's proposed findings contained in paragraph 20 are accepted, with the exception of the number of deposit and loan customers residing in the PSA which is rejected as being unsupported by competent substantial evidence. The record reflects that there was conflicting testimony as to the number of existing deposit customers, however, the hearing officer found the number to be 140, and 65 loan customers.
The Department's proposed findings contained in paragraph 21 are accepted, with the exception of the amount of square feet of the building to house the proposed branch, which is rejected as being unsupported by competent substantial evidence. Although the application contained in the record stated that the building would contain 3,640 square feet (including the drive-in canopy), the hearing officer found that the building would contain 2,000 square feet.
PROTESTANT'S EXCEPTIONS TO THE REPORT AND FINDINGS OF FACT OF HEARING OFFICER
The Protestant's exception contained in Section 1, with regard to the Hearing Officer's ruling's on the proposed findings, is accepted to the extent that the better practice would be for the Hearing Officer to specify which proposed findings are rejected as not supported by the evidence, which are irrelevant and which constitute conclusions of law. However, it has been recognized that the hearing officer is not required to make explicit rulings on subordinate. commulative, immaterial or unnecessary proposed facts. Forrester
v. Career Service Commission, 361 So.2d 220 (1st DCA Fla. 1978). Notwithstanding, the Department has expressly ruled on each proposed finding and stated the reasons therefore.
Protestant's exception contained in Section 2 is rejected for the reason that some of the proposed findings contained in Protestant's Proposed Findings of Fact were not based on competent substantial evidence, were irrelevant or constituted conclusions of law, as more fully set forth above in paragraphs 31 through 70. Therefore, it would be improper for either the Hearing Officer or the Department to adopt each and every proposed finding contained in Protestant's Proposed Findings of Fact as requested in the exception.
Protestant's exception contained in Section 3 is rejected for the reason that the Hearing Officer's finding that the proposed branch manager is James Arntz is supported by competent substantial evidence in the record. The testimony contained in pages 497 and 498 of the transcript, cited by Protestant
in its exception, refers to the Applicant's application for a branch office in northeast St. Petersburg. Although there was conflicting testimony as to this fact (see TR-465 and TR-540), the application contained in the record also identified James Arntz as the proposed branch manager. As such, there was competent substantial evidence in the record to support the Hearing Officer's finding.
Protestant's exception contained in Section 4 is accepted for the reason that the Hearing Officer found that the "the greater weight of the evidence indicates that average number of persons per household in Pinellas County is 2.2". As such, Applicant's revised figures based on 2.2 percent per household are accepted which indicate that the proposed branch will not show a profit until the fourth year. The Department's findings of fact have modified the Hearing Officer's findings accordingly.
Protestant's exception contained in Section 5 is rejected for the reason that the Hearing Officer's finding is supported by competent substantial evidence in the record. The testimony contained on pages 511 and 512 of the transcript, which is cited by the Protestant, merely states that the Applicant probably would not be able to add to capital through earnings based on the assumption of the projected losses of the Applicant's new branches. As such, the Hearing Officer's finding is accurate.
Protestant's exception contained in Section 6 is accepted for the reason that the record reflects that the Applicant's president stated that the branch will probably have Saturday banking hours, but that the exact hours had not been determined. The Department's Findings of Facts have modified the Hearing Officer's findings accordingly.
Protestant's exception contained in Section 7 is rejected for the reason that the Hearing Officer's finding is supported by competent substantial evidence in the record. On pages 328 and 329 of the transcript, the witness for the Applicant testified that there was a stacking lane which functionally is in front of the site for traffic hearing west.
Protestant's exception contained in Section 8 is rejected for the reasons that the Hearing Officer's finding based on the study was limited and for a limited purpose, and the questions asked in the survey and the procedure appear reasonable. In addition, the Hearing Officer's and Department's reliance on the study is minimal, if at all.
Protestant's exception contained in Section 9 is rejected for the reason that the adverse impact of the establishment of a branch on other banks is irrelevant, because it is not a consideration under the statutory and regulatory criteria applicable to branch bank applications.
Protestant's exceptions contained in Sections 10 and 19, 21 and 23 are rejected for the reasons that the requested findings are conclusions of law which are not properly included in the Hearing Officer's report pursuant to Section 120.60(3), Florida Statutes.
Protestant's exception contained in Section 20 is rejected for the reason that the requested finding as to an appraisal of land and improvements is irrelevant where, as in this case, there is no insider transaction involved in the purchase of the land.
Protestant's exception contained in Section 22 is rejected for the reason that the revisions referred to by the Protestant were updated figures based on data unavailable at the time of the application and figures relating to the lease arrangement. Although at the time of the application, the Applicant intended to purchase the proposed site, it later decided to lease the proposed site. The Department does not view this as a material change in the application and fails to see how the Protestant was prejudiced by this change. As to the updated figures, in McDonald v. Department of Banking and Finance, 346 So.2d 569, 584 (Fla. 1st DCA), the court stated that the hearing officer may freely consider relevant evidence of changing economic conditions and other current circumstances external to the application. It should also be noted that the revisions referred to by the Protestant were testified to at the hearing in June, thus giving the Protestant a month's notice to make any changes necessary in the preparation of its case which was later presented at the continuation of the hearing in July. Protestant's exception contained in Section 24 is rejected for the reason that the requested findings are not material to the statutory and regulatory criteria applicable to branch applications.
CONCLUSIONS OF LAW
When an application to open a branch bank is filed, it is the applicant's responsibility to prove that the minimum requirements set forth in Section 659.06, Florida Statues, and Rule 3C-13.041, Florida Administrative Code, which are prerequisites to the granting of authority, are met. It is the duty of the Department to make an investigation of the facts listed therein and then to approve or disapprove the application in its discretion. This discretion is neither absolute nor unqualified, but is conditioned upon a consideration of the criteria listed in Section 659.06, Florida Statutes, and Rule 3C-13.041(2), Florida Administrative Code.
If in the opinion of the Department, any of the foregoing criteria have not been met, and cannot be remedied by the applicant, it cannot approve the application. If the criteria have been met, it still remains within the discretion of the Department to approve or disapprove the application. In considering a branch application, the applicant's capacity to support such expansion is of major importance. The closing of a branch does not present the same risk of loss to the public as does the failure of a bank. Therefore, the judgment of the applicant as to the viability of a proposed branch will ordinarily be respected, provided that in the opinion of the Department, the applicant's capacity is sufficient or will be enhanced by the new activity. This policy has been formalized in Rule 3C-13.041, Florida Administrative Code.
For purposes of applications for branch banks, Rule 3C- 13.041(1), Florida Administrative Code, defines primary service areas (PSA) as the "smallest area from which the proposed branch expects to draw approximately seventy-five percent of its deposits. It should be drawn around a natural customer base. It should not be unrealistically delineated to exclude competing banks or to include areas of concentrated population".
The Department concludes that the Applicant has realistically delineated its PSA in accordance with Rule 3C-13.041(1), Florida Administrative Code. The PSA's boundaries represent natural and man-made barriers which take into account traffic patterns in general and in relation to commercial centers in particular, the Applicant's existing customer base and the potential new customers in the densely populated residential sections of the area. The fact that the Applicant's designated PSA overlaps or is larger than PSAs designated in branch applications of other banks in the area does not necessarily indicate that it
was unrealistically delineated, since each parent bank bases its decision to open a new branch on the locational distribution of its existing and potential new customers, factors which may, as in this case, dictate different boundaries of the PSA.
It is the opinion and conclusion of the Department that the Applicant has or agrees to provide sufficient capital accounts to support the bank's deposit base and the additional fixed asset proposal for the proposed branch and its operations, without undue exposure to its depositors or shareholders. Therefore, the criterion of Rule 3C-13.041(2)(a), Florida Administrative Code, IS met.
The Applicant's adjusted capital to asset ratio was 7.35 percent as of March 31, 1979. This ratio exceeds the minimum requirement 7.0 percent of the aforementioned rule. The adequacy of the Applicant's capital to asset ratio is reinforced by a favorable assessment of other factors enumerated in the aforementioned rule: Its general asset condition, based on its historically low percentage of classified assets, is considered good, as is its liquidity for banks of comparable size. The Applicant, after showing an operating loss and a loss before taxes at year-end 1977, showed an operating profit and a net profit before taxes at year-end 1978. Furthermore, managerial capacity has been good as is particularly reflected in the low percentage of classified assets. In addition, the Applicant's capital accounts due to its opening of approved and pending branches, if not replaced through profits of the parent bank, could be made up, as it has bee in the past, by the Atlantic Bancorporation. In view of the above cited facts, the Department concludes that the establishment of the proposed branch will not unduly expose the Applicant's depositors or shareholders.
It is the opinion and conclusion of the Department that the Applicant has sufficient earnings and earning prospects to support the anticipated expenses of the proposed branch, without jeopardizing the profitable position of the bank, its retained earnings, or the dividend return to its shareholders. Therefore, the criterion of Rule 3C-13.041(2)(b), Florida Administrative Code, IS met.
The Applicant's net profit to asset ratio was 0.44 percent as of December 31, 1978, and 0.55 percent as of the date of the final hearing. Although the ratio at year-end 1978 does not quite meet the minimum net profit to asset ratio requirement of the aforementioned rule, a consideration of the additional factors set forth in the rule as discussed in paragraph 4 above, and the net profit to asset ratio, based on the most recent available data, when taken together, meet the criterion set forth in Rule 3C- 13.041(2)(b). Furthermore, it should be particularly noted that the Applicant's earnings have turned upward since 1977, that its net profit to asset ratio as of the date of the final hearing was 0.55, and its total average deposits grew 25 percent between 1977 and 1978, facts which indicate that the Applicant has sufficient earnings and earning prospects. As to the growth in deposits of the other financial institutions in the PSA, the Bank of Indian Rocks, had $61.3 million in total deposits, representing an increase of 9.6 percent over the previous year, and the Clearwater Beach Bank branch reported $1.17 million in deposits after 7 1/2 months of operation and the Community Bank of Pinellas branch reported $1.61 million in deposits after 18 months of operation. All but one of the savings and loan officers experienced above average rates of growth for the 1977 and 1978 reporting periods. In addition, the PSA is a densely populated residential area with several commercial activity centers. The population growth between 1970 and 1978 was due entirely to net migration, a factor generally favorable to new
financial institution offices since the newcomers do not have ties to existing financial institutions.
It is the opinion and conclusion of the Department that the Applicant has sufficient depth and quality of management to operate the branch without reducing its current level of services or exceeding its managerial or operational capacity. Therefore, the criterion of Rule 3C-13.041(2)(c), Florida Administrative Code, IS met.
The Applicant has demonstrated, both by past performance as well as the credentials of its management team, that is has sufficient managerial capacity to successfully operate the proposed branch.
It is the opinion and conclusion of the Department that the name of the proposed branch reasonably identifies the branch as such, and is not likely to unduly confuse the public. Therefore, the criterion of Rule 3C-13.041(2)(d), Florida Administrative Code, IS met.
It is the opinion and conclusion of the Department that the Applicant is in substantial compliance with all state and federal laws affecting its operations. Therefore, the criterion of Rule 3C-13.041(2)(e), Florida Administrative Code, IS met.
In view of the fact that the Applicant already has over 200 deposit and loan customers within the PSA, with accounts valued at approximately
$660,000 and the fact that the Applicant has met the criteria set forth in Rule 3C-13.041(a)(b)(c)(d) and (e), the Department is satisfied that public convenience and necessity will be served by the proposed branch.
It is the opinion and conclusion of the Department that the lease arrangement between the Applicant and the Atlantic Bancorporation constitutes an insider transaction within the meaning of Rule 3C-13.041(3), Florida Administrative Code, and that the Applicant has not demonstrated that the transaction is reasonable and comparable to similar arrangements which could have been made with unrelated parties as required by the aforementioned rule.
FINAL ORDER
Based upon the foregoing findings of fact and conclusions of law, it is thereupon:
ORDERED AND ADJUDGED that the application of the Atlantic Bank of Largo, Largo, Florida, for authority to open a branch in the vicinity of the intersection of the Indian Rocks Road an Walsingham Road, Largo, Pinellas County, Florida, is hereby granted upon the following conditions:
The branch bear the name Atlantic Bank of Largo - Indian Rocks Branch.
An exact site designation by street address and number be submitted to the Department prior to formally proposing an opening date for the branch.
The Federal Deposit Insurance Corporation give final approval of the branch at the designated site.
Applicant shall submit appropriate documentation to show that the adjusted capital to asset ratio continues to meet or exceed 7.0 percent, and
Applicant agrees to inject additional equity capital as necessary to meet the
7.0 percent requirement, prior to opening the branch.
A draft of the final lease agreement shall be submitted to the Division of Banking for review prior to its formal execution.
An appraisal by an independent qualified appraiser directed to the comparability of the proposed lease with other leasing arrangements for similar business property, which represents the terms of the lease to be fair and reasonable, shall be submitted to the Department.
Subsequent to the approval by the Department and the Federal Deposit Insurance Corporation and at least twenty-one (21) days prior to the desired opening date, the Department shall be given notice of the opening date. Upon receipt of such notice, the Department shall issue a Certificate of Authority to open and operate the branch.
Until the conditions herein specified and other reasonable requirements of the Department are met, or if any interim development is deemed by the Comptroller to warrant such action, the Comptroller shall have the right to alter, suspend, or withdraw this approval.
Should the branch not be opened within twelve (12) months after departmental approval of the application, such approval shall automatically expire, unless extended by the Department in the meantime for good cause shown.
DONE AND ORDERED this 12th day of October, 1979, in Tallahassee, Florida.
GERALD A. LEWIS
Comptroller, State of Florida The Capitol
Tallahassee, Florida 32301
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that the original of the foregoing was filed with the Clerk of the Division of Banking, and a true and correct copy of the foregoing sent by U.S. Mail to Stephen D. Hughes, Esquire, 920 West Bay Drive, Largo, Florida; Roger A. Larson, Esquire, Graham, Hodge, Larson and Hume, P.A., 2400 West Bay Drive, Suite 416, Largo, Florida, 33540; and Diane D. Tremor, Esquire, Division of Administrative Hearings, 530 Carlton Building, Tallahassee, Florida, 32301, this 12th day of October, 1979.
KARLYN ANNE LOUCKS
| Issue Date | Proceedings |
|---|---|
| Oct. 15, 1979 | Final Order filed. |
| Sep. 12, 1979 | Recommended Order sent out. CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Oct. 12, 1979 | Agency Final Order | |
| Sep. 12, 1979 | Recommended Order | Issue clarification hearing to determine if new branch bank should be authorized. |
BOULEVARD BANK vs. DEPT OF BANKING AND FINANCE, 78-002425 (1978)
BOCA RATON NATIONAL BANK vs. ROYAL PALM BANK AND OFFICE OF THE COMPTROLLER, 78-002425 (1978)
C & L BANK OF BLOUNTSTOWN vs. BENNETT AND FAYE EUBANKS, 78-002425 (1978)
THE FIRST BANK OF PORT RICHEY (PROPOSED) vs. DEPARTMENT OF BANKING AND FINANCE, 78-002425 (1978)
MILTON L. COPELAND, ET AL. vs. DEPARTMENT OF BANKING AND FINANCE, 78-002425 (1978)
