STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

APALACHICOLA STATE BANK, )

)

Petitioner, )

)

vs. ) CASE NO. 78-099

)

OFFICE OF COMPTROLLER and ) GULF STATE BANK OF FRANKLIN ) COUNTY, )

)

Respondent. )

) APALACHICOLA STATE BANK, )

)

Petitioner, )

)

vs. ) CASE NO. 78-2377

)

OFFICE OF COMPTROLLER and ) GULF STATE BANK OF FRANKLIN ) COUNTY, )

)

Respondent. )

)

REPORT

Pursuant to notice, an administrative hearing was held in the captioned causes, consolidated for hearing purposes, before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, on February 15, 1979, in the Franklin County Courthouse, Commission Meeting Room, Apalachicola, Florida. The purpose of these hearings was to receive evidence concerning the applications of the Gulf State Bank of Franklin County to open two branch banking facilities in Eastpoint (Case No. 78-2377) and in Apalachicola (Case No. 79-099)

APPEARANCES

For Petitioners/ Alfred O. Shuler Protestant: Shuler and Shuler

Post Office Box 850 Apalachicola, Florida 32320

For Respondents/ J. Ben Watkins Applicant: Watkins and Watkins

41 Commerce Street Apalachicola, Florida 32320

For Respondent/ Michael A. Gross

Division of Assistant General Counsel Banking: Office of Comptroller

The Capitol

Tallahassee, Florida 32304 INTRODUCTION

The Gulf State Bank of Franklin County, also referred to herein as the "applicant," filed two applications with the Division of Banking in October of 1978 to open branch banking facilities in Eastpoint and in Apalachicola, Florida. The Apalachicola State Bank, also referred to herein as the "protestant," timely filed petitions for hearings on both applications. All parties agreed that the two cases should be consolidated for hearing.

At the hearing, the Division of banking presented the testimony of Adina Simmons, who was qualified as an expert witness in the area of economics and demographics. The public files on both applications were received into evidence as Exhibit A. The confidential files were received as Exhibit B and were sealed due to their confidential status.

In support of their two applications, the applicant produced the testimony of fourteen witnesses. These witnesses included the applicant's President, residents and businessmen in Apalachicola and Eastpoint and various representatives of community organizations in Apalachicola. Received into evidence on behalf of the applicant were Exhibits 1 through 10.

The Protestant presented the testimony of nine witnesses, including its President, several members of its board of directors and residents in the Apalachicola area.

FINDINGS OF FACT

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

1. The applicant Gulf State Bank of Franklin County is located in Carrabelle, Florida, and was established in 1971. There are no other banking facilities in Carrabelle and the applicant presently has no branch banking facilities. The applicant's total asset level is 8.1 million dollars, and it has maintained a capital to total assets ratio which has continuously exceeded seven percent. As of December 31, 1978, the capital to total asset ratio was

   7.6 percent. With the exception of the first year of operation, the applicant's net earnings to total assets have exceeded the ratio of 0.5 percent. During the last two years, this ratio has exceeded one percent. As of the June 30, 1978, comparative figures report, the applicant had total deposits of $6,555,000.00, showing a decrease of about 5.4 percent from June of 1977. It has been the applicant's established policy to reinvest all earnings rather than paying dividends.

   
   

2. The applicant proposes to open two branch banking facilities - one in Apalachicola and one in Eastpoint. Presently, the only banking facility in these areas is the protestant Apalachicola State Bank. This bank has its main office in downtown Apalachicola and it was established in 1906. It is a full service bank, and increased its total deposits by 18.6 percent between 1977 and 1978. On March 15, 1978, the Protestant opened a branch banking facility in Eastpoint, Florida. Although a $5,000.00 profit was projected for the first

   year of operation, the protestant's branch in Eastpoint is not presently operating at a profit. The protestant's Eastpoint branch has drive-in windows and offers all services with the exception of trust accounts and large loans. Both the main office and the Eastpoint branch of the protestant began offering Saturday morning banking hours approximately five weeks before the hearing in these proceedings. The only other financial institution in the area is a branch office of the Citizens Federal Savings and Loan Association of Port St. Joe, which was expected to begin operations in early March of 1979.

   
   

3. As of July 1, 1977, Franklin County had an estimated population of 8,128, increasing only 1,063 above the 1970 population census. The majority of growth occurred in the unincorporated area of the County, which includes Eastpoint. The source of population growth is net migration. Between 1970 and 1977, net migration accounted for 85.32 percent of the County's growth, leaving about 14 percent attributable to natural increase. The percentage of the 15 to

   44 year old age group has increased from 33.9 percent in 1960 to 38.9 percent in 1977. The age group of 65 and older has increased from 13 percent in 1960 to 17 percent in 1977. A medium projection for the county's population is 8,600 for the year 1980, 9,200 for 1985 and 10,200 for 1990. While the per capita income level of the County has grown at a higher percentage rate as compared to the state average, the per capita income level for Franklin County is the lowest in the State. In 1975-76, that figure was $3,061.00 as compared to a state average of $6,021.00. The unemployment rate in Franklin County was the highest in the State in September, 1978, sitting at 16.5 percent as compared to the state average of 7.6 percent. Franklin County's figure was down to 12 percent in October, 1978. Residents and business people in the area gave testimony to the effect that there is sufficient employment available in the area, but that it is difficult to find people willing to work.

   
   

4. As indicated above, Eastpoint is among the fastest growing areas of Franklin County. Approximately one-third of the 75 businesses located in Eastpoint have come in or relocated to more modern facilities within the past three years. Another area of large growth is St. George Island. Leisure Properties, Inc. has eight approved subdivisions, three of which are presently completely sold. In 1978, that company realized $3,000,000.00 income from land sales on the Island. A 28-unit motel and a condominium is planned for St. George Island, as is a State park. It is estimated that when the State park becomes operational, 5,000 visitors will come to the Island on a daily basis during the 100-day season. It can be expected that such activity and traffic will promote and attract the existence of service facilities and service personnel. Approximately 80 percent of the construction work on St. George Island is performed by local contractors. The value of residential permits on the Island represented $1,021,360.00 in 1978.

   
   

5. The proposed Apalachicola branch banking facility is to be located at

   73 Avenue E, or on the northeast quadrant of the intersection of U.S. 98-319 (Avenue E) and Sixth Street. This site is presently owned by the applicant and is located 22.5 miles West of the main Carrabelle office and 6.2 miles West of the proposed Eastpoint branch. The applicant proposes to construct a concrete story and a half building with 1500 square feet on the first floor and 540 square feet on the second floor. The applicant plans to utilize three inside teller stations, one walk-up teller station and one drive-in teller window.

   
   

6. In December of 1978, 29 percent (or $2,111,000.00) of the applicant's total deposits represented accounts from the proposed Apalachicola service area. A majority of this amount (22.1 percent of the applicant's total deposits) were deposits of public funds by various county departments located in the courthouse

   in Apalachicola. In addition, the applicant has $576,000.00 (representing 12.22 percent of its total loan portfolio) in loans to individuals and businesses in the Apalachicola service area. It is projected that the total estimated deposits for the proposed Apalachicola branch will be $1,800,000.00 at the end of the first year of operation, $2,700,000.00 at the end of the second year and

   $3,300,000.00 at the end of the third year of operation.

   
   

7. The management for the proposed Apalachicola branch was hired two years in advance of tee anticipated opening date for training and familiarization with the proposed service area. He is a vice president of the applicant bank and a member of its board of directors. Prior to that, he had an auditing and accounting background. At its February, 1979, meeting, the applicant's stockholders voted to authorize the board of directors to name two additional directors during the year. The board intends to name these two new directors from the new Apalachicola service area after approval is obtained.

   
   

8. The proposed Eastpoint branch is to be placed on Lot 8, Block 1, of the David Brown Estate Subdivision located on the Northeast quadrant of the intersection of Island Drive and Avenue C. This site is 16.4 miles West of the main Carrabelle office. This branch is considered to be a drive-in facility of the proposed Apalachicola branch, and only a 12 by 12 foot concrete block building with two teller stations is planned. During December of 1978, the applicant had $415,000.00 in deposit accounts (representing 5.7 percent of the applicant's total deposits) in the proposed Eastpoint service area. The applicant also has $788,500.00 in loans to individuals and businesses in the Eastpoint service area, representing 16.7 percent of its total loan portfolio. The applicant projects for the Eastpoint branch total estimated deposits in the amount of $300,000.00 by the end of the first year of operation, $450,000.00 by the end of the second year and $600,000.00 by the end of the third year. The primary service area of the proposed Eastpoint branch includes St. George Island which is connected to Eastpoint by a causeway.

   
   

9. The proposed Eastpoint branch will be managed by a supervisor below officer level, but will be under the office management of the proposed Apalachicola branch manager. The Eastpoint branch will have all standard deposit, withdrawal and clearing services.

   
   

10. The names of the proposed branches are Gulf State Bank of Franklin County - Apalachicola Branch and Gulf State Bank of Franklin County - Eastpoint Branch.

    
    

11. There was no evidence to illustrate 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, Section 120.57(1)(a)(12), conclusions of law and a recommendation are not included in this Report.

Respectfully submitted and entered this 26th day of March, 1979, in Tallahassee, Florida.

DIANE D. TREMOR

Hearing Officer

Division of Administrative Hearings

530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675

Michael A. Gross Comptroller Gerald A. Lewis Assistant General Counsel State of Florida

Office of the Comptroller The Capitol

The Capitol Tallahassee, Florida 32304 Tallahassee, Florida 32304

Docket for Case No: 78-000099

Orders for Case No: 78-000099