STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PEOPLES BANK OF ST. AUGUSTINE, )

)

Petitioner, )

)

vs. ) CASE NO. 79-624

) ATLANTIC BANK OF ST. AUGUSTINE ) and OFFICE OF THE COMPTROLLER, )

)

Respondents. )

)

REPORT

Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, on July 11, 1979, in Room 229 of the St. Johns County Courthouse, St. Augustine, Florida. The purpose of the hearing was to receive evidence concerning the application of the Atlantic Bank of St. Augustine to open a branch banking facility northwest of the intersection of U.S. Highway No. 1 and State Read 312 in St. Johns County, Florida.

APPEARANCES

For Petitioner John E. Hankal Peoples Bank of Hankal and Wolfe

St. Augustine: Post Office Drawer 11-1

St. Augustine, Florida

For Respondent Roger A. Larson

Atlantic Bank of Graham, Hodge, Larson and Hume, P.A. St. Augustine: Suite 415, Kilgore Square

2400 West Bay Drive Largo, Florida 33540

For Respondent Michael A. Cross

Office of the Assistant General Counsel Comptroller: Office of the Comptroller

The Capitol Tallahassee, Florida

INTRODUCTION AND RULINGS ON EVIDENTIARY MATTERS

The Atlantic of St. Augustine (hereinafter referred to as the "applicant"), filed its application in February of 1979 with the Office of the Comptroller, Department of Banking and Finance, Division of Banking, for authority to open a branch bank northwest of the intersection of U.S. Highway No. 1 and State Road

312 in unincorporated St. Johns County, Florida. The Petitioner, Peoples Bank of St. Augustine (hereinafter referred to as the "protestant") an approved, but

unopened de novo bank, timely filed its petition for a public hearing on the application.

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 John H. McCormack, a vice president of Atlantic Bancorporation and chairman of the board of Atlantic National Bank of Jacksonville; Stuart Williams, an assistant vice president and branching manager of Atlantic Bancorporation; Richard Kaden, a vice president and treasurer of Atlantic Bancorporation; Robert George Allen, the proposed branch manager and Donald Tully, president and chief executive officer of the Atlantic Bank of St. Augustine. Exhibits 1 through 9 were received on behalf of the applicant.

The Comptroller presented the testimony of Adina Simmons, who was qualified and accepted as an expert in the areas of economics and demographics, and Exhibits 1 and 2.

The protestant presented the testimony of E. V. Overby, chairman of the board of directors of Peoples Bank of St. Augustine; William C. Payne, who was accepted as an expert in the fields of banking and marketing; Walter L. Law with the Independent Bankers Association of Florida; and Gary C. Usina, the president and chief executive officer of the protestant. Exhibits A and B were received on behalf of the protestant. During opening statements, the attorney for the protestant challenged the constitutionality of the branch banking statute, alleging a violation of equal protection of the laws.

Each of the parties have submitted proposed findings of fact which have been carefully considered. To the extent that said proposed findings are not included in the findings of fact in this Report, they are rejected as either being not supported by competent, substantial evidence, irrelevant or immaterial to the issues for consideration, or as being 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:

1. The Atlantic Bank of St. Augustine has its main office at 24-28 Cathedral Place, downtown St. Augustine, St. Johns County, Florida, and was established in 1934. It is now a wholly owned subsidiary of the Atlantic Bancorporation. The applicant has one existing remote drive-in facility located approximately one mile from the main office and about nine-tenths of a mile from the proposed branch site. This facility does not offer full services, and, at the time a decision was made to apply for another branch, it was not feasible to expand this existing facility due to insufficient available land.

   
   

2. According to the most recent data available, the applicant's adjusted capital to asset ratio was 8.3 percent and its net income to asset ratio was .94 percent for 1978. The applicant's liquidity ratio is in the 40 to 45 percent range. Its asset condition is very good as is its past performance. The applicant has suffered a declining percentage share of the market, decreasing from 50.2 percent in 1970 to 40.2 percent at year end 1978. According to the applicant, this is a result of having only one full service facility which is located in the congested downtown area of St. Augustine. The main purposes of

   the proposed branch are to provide more convenience for the applicant's existing customers (38 percent of which are estimated to reside in the proposed primary service area) and to protect its market share of bank customers.

   
   

3. The applicant's management team is composed of eleven directors and non-director senior officers. Its president and chief executive officer has been with the applicant since 1950 and was born and raised in the City of St. Augustine. Three of its other officers have in excess of twenty-two years of banking experience. The proposed branch manager, Robert George Allen, is

   currently on the applicant's staff as an assistant vice-president and manager of the installment loan department, and has twelve years of banking experience.

   
   

4. The site for the proposed branch is located northwest of the intersection of U.S. Highway No. 1 on State Road 312. The owner of the land for the proposed site is the Craig Funeral Home, which is not directly or indirectly associated with this application. The land will be purchased by the applicant at a cost of $180,000.00. The applicant will construct a 4,930 square foot one- story concrete block building on the site at a cost of approximately

   $260,000.00. The facility will have 34 parking spaces with three inside and five outside teller stations. The site will contain 200 feet of frontage on

   U.S. Highway No. 1 and will have both northerly and southerly access off said highway. The applicant intends to offer a full range of services at the proposed branch facility.

   
   

5. The primary service area of the proposed branch is depicted on the map attached to the application. It is bounded on the west by Interstate 95, on the east by the Atlantic Ocean, on the south by the St. Johns/Flagler County line and on the north by State Road 16, on the east by the San Sebastian River to Anastasia Island, then the south city limits of St. Augustine and the Atlantic Ocean.

   
   

6. Within the applicant's primary service area, there are two remote banking facilities, both of which opened in 1975 and one of which belongs to the applicant, situated 0.9 and 1.2 miles north of the proposed site. Also, the protestant's approved, but unopened, main office is to be located 0.2 miles south of the proposed site. The latter two sites are located on the same, west side of U.S. Highway No. 1 and are separated by a K-Mart store. The protestant is the only independently owned bank in St. Augustine. It has a primary service area which is similar to the applicant's proposed primary service area. On the day prior to the administrative hearing in this cause, the protestant closed the purchase on its land and is now contemplating the opening of a modular facility pending construction of its permanent facility. There are also two savings and loan offices located within the applicant's primary service area. Near the primary service area, there is another branch facility (Barnett) and two main commercial banking offices -- Barnett Bank of St. Johns County and the applicant's bank, located 2.2 and 2.3 miles northeast of the proposed branch site. There are also three more savings and loan offices located near the primary service area.

   
   

7. The two existing and operating banks in the area -- Barnett and the applicant -- had, as of December 31, 1978, total deposits of $54.78 and $36.62 million, respectively. Barnett showed a significant increase in loans and demand deposits, while the applicant illustrated a decline in deposits and a smaller percentage increase in loans. The county totals show an increase of

   13.5 percent in loans, a decrease in demand deposits of 11 percent, an increase in time deposits of 12.7 percent and an increase in total deposits of 3.3 percent, for a total of $101,446,000.00. The savings and loan offices within

   and near the proposed primary service area have demonstrated increases in deposits ranging from 7.6 percent to over 100 percent.

   
   

8. The applicant estimates the volume of total deposits for the proposed branch to be $1.297 million at the end of the first year, $2.699 million at the end of the second year and $4.171 million at the end of the third year of operation. The applicant estimates a loss of $56,530.00 the first year, a profit of $49,129.00 the second year and a profit in the third year of

   $156,076.00.

   
   

9. The name of the proposed branch is to be Atlantic Bank of St. Augustine

   - St. Augustine South Branch.

   
   

10. The applicant has received no notification that it is not in substantial compliance with the regulatory laws and statutes.

    
    

11. Official state population estimates for the primary service area are not available. The applicant, however, estimates the population of the area to be 8,900 in 1974 and 12,792 in 1978. These figures are based primarily on estimates of a population of 12,700 for a slightly smaller area made by the Board of the County Commissioners in May, 1979, for the purpose of a grant assistance application. Based on the same data, the applicant projects the primary service area population for 1980 to be 14,438. The population growth rate for the area between 1974 and 1978 was thus estimated at 43.7 percent, for an average annual growth rate of 10.9 percent.

    
    

12. Inasmuch as official estimates for the applicant's primary service area are not available, the Office of the Comptroller considered the trends of population changes in the city, the beaches, the county and the unincorporated areas, as measured by the University of Florida Division of Population. Some of the relevant population data considered was the following:

    
    

    St. Augustine Beach	632	1,131
    St. Augustine	12,352	12,611
    Unincorporated Area	17,412	31,188
    St. Johns County	31,035	44,550

    
    

    These figures illustrate that the fastest population growth has occurred in the unincorporated areas of the County. The University of Florida projects a population of 47,600 in the County by the year 1980, for an average annual growth rate of 3.4 percent. Almost all of the County's population growth between 1970 and 1978, 94.56 percent, has resulted from net migration, but not necessarily exclusive of retirees. Between 1970 and 1977, there was some increase in the weight of the 65+ age group, but a larger increase occurred in the weight of those ages 15-64, the labor age group. The former increased from

    14.1 to 15.5 percent, while the latter increased from 57.9 to 62.0 percent.

    
    

13. For the twelve months ending December 1978, the county showed an unemployment rate of 7.7 percent, as compared to the state average of 6.6 percent. Recent monthly data indicates a rise in the rate of unemployment in St. Johns County -- 8.7 percent in March, 1979, as compared with a state average of 5.8 percent. For April, the county figure is 8.4 percent and the state average is 5.3, percent. The per capita personal income for St. Johns County increased from $5,356.00 in 1976 to $5,689.00 in 1977, a 6.6 percent increase. This growth is somewhat slower than the state average of 9.8 percent, and the county's per capita incomes remained below the state averages of $6,101.00 and

$6,697.00, respectively, for the same years.

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 15th day of August, 1979, in Tallahassee, Florida.

DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings

101 Collins Building Tallahassee, Florida 32301 (904) 488-9675

COPIES FURNISHED

John E. Hankal Hankal and Wolfe

Post Office Drawer H-1

St. Augustine, Florida 32084

Roger A. Larson Graham, Hodge, Larson

and Hume, P.A.

Suite 415, Kilgore Square 2400 West Bay Drive Largo, Florida 33540

Michael A. Gross Assistant General Counsel Office of the Comptroller The Capitol

Tallahassee, Florida 32301

Comptroller Gerald A. Lewis State of Florida

The Capitol

Tallahassee, Florida 32301

Docket for Case No: 79-000624

Orders for Case No: 79-000624