STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
IN RE: Application of First ) Savings and Loan Association of )
Okeechobee for authority to ) CASE NO. 79-2039 establish a branch at Royal's )
Okeechobee Center )
)
WRITTEN REPORT PURSUANT TO
SECTION 120.57(1)(B)12, FLORIDA STATUTES (1979)
By application filed with the Department of Banking and Finance (the "Department") on August 29, 1979, First Savings and Loan Association of Okeechobee ("First Savings") sought authority to open a branch office at Royal's Okeechobee Center ("Royal's") in Okeechobee County, Florida. By letter dated September 19, 1979, First Federal Savings and Loan Association of Fort Pierce ("Fort Pierce Federal") demanded a public hearing on the application.
On February 6, 1980, the parties convened for hearing, and the Department put on its case. First Savings was not then represented by counsel, however, and the parties made a joint motion for a continuance to allow First Savings to obtain counsel. The hearing reconvened on July 23, 1980. The final portion of the transcript of proceedings was filed with the Division of Administrative Hearings on October 10, 1980. The following entered appearances:
For First Savings and Loan Association of
Okeechobee: Edgar A. Brown, Esquire
Post Office Box 4382
Fort Pierce, Florida 33450
For First Federal Savings and Loan Association of
Fort Pierce: Frank H. Fee, III, Esquire
Post Office Box 1000
Fort Pierce, Florida 33450
For Department of Banking and
Finance: Franklin J. Wollett, Esquire Elsa Lopez, Esquire
William L. Lyman, Esquire Office of the Comptroller The Capitol
Tallahassee, Florida 32301
The parties stipulated that Section 665.441, Florida Statutes (1979), and Rule 3C-21.40, Florida Administrative Code, apply in the present proceedings.
FINDINGS OF FACT
For purposes of the present application, First Savings designated the southern portion of Okeechobee County ("County") and Buckhead Ridge in Glades County as the service area for its proposed branch at Royal's, which would lie
2.1 miles south of its only existing office in the City of Okeechobee ("City"). The proposed service area ("PSA") is bordered on the north by the southern limits of the City. The PSA was drawn around a natural customer base, it was not unrealistically delineated, and no party suggested otherwise.
The University of Florida's Bureau of Economic and Business Research ("Bureau") estimated the population of the County at 19,881 as of April 1, 1979. Of this number, 4,134 were estimated to live in the City. The 1970 census population figures are 11,233 for the County and 3,715 for the City. The Bureau estimated the County population as of July 1, 1976, at 17,883; at 18,135 as of July 1, 1977; and at 18,759, as of July 1, 1978. The Bureau estimated City population as of July 1, 1978 at 3,953. For midyear 1980, the Bureau projected a County population ranging from 19,600 to 21,000. For midyear 1985, the Bureau projected a County population ranging from 22,300 to 26,300. First Savings estimated the County population, as of August 27, 1979, at 20,350, of whom it estimated some 8,000 lived within the PSA, in addition to 2,160 Glades County PSA residents.
The City has grown in population much more slowly than the unincorporated portion of the County. From 1976 to 1977, the City's population increased less than one percent. The City's population in 1978 was virtually the same as its population the year before. In the year between July 1, 1978, and July 1, 1979, however, the populations grew by 181 persons, or 4.58 percent. Population in the unincorporated area of the County grew at an average annual rate of 14.3 percent from 1970 to 1976. Population in the unincorporated area of the County increased only 1.6 percent between 1976 and 1977, but increased
4.4 percent between 1977 and 1978.
According to the Bureau, there were 7,000 households in the County on April 1, 1979, with an average size of 2.8 persons. The 1970 census put the figures at 3,178 households with an average size of 3.34 persons.
New migration into the County between 1970 and 1979 accounted for 83.24 percent of population growth. The percentage of the population 65 and older was
10.62 on April 1, 1979, up from 10.37 percent the preceding year. The percentage of the population between 15 and 65 was 60.6 percent on April 1, 1979, up from 59.9 percent the year before.
Labor market indicators reported in the March, 1979, issue of the Labor Force Summary show an average unemployment rate of 7.7 percent for 1978.
Revised data put the County's unemployment rate at 6.8 percent for March of 1980, as compared to a state average of 4.9 percent. Preliminary figures show County unemployment of 5.5 percent for April of 1980, as compared to a state average of 4.8 percent.
Per capita personal income in the County was $2,617 in 1970, as compared to $3,698 in Florida. By 1976, per capita personal income in the County had increased at an annual rate of 7.5 percent to $3,802, as compared to the average annual state increase of 8.2 percent to $6,101. Per capita income in the County was $4,113 in 1977 as compared to the state figure of $6,697. For 1978, the County's per capita income was $4,939 as compared to per capita income statewide of $7,578.
Since early March of 1980, Fort Pierce Federal has maintained a branch office approximately one-third of a mile south of the site proposed for First Savings' branch. Fort Pierce Federal has begun construction of a 2,400 square foot permanent facility to house the branch office at an expected cost of
$350,000, including land and equipment. If First Savings opens the branch office it proposes for Royal's, the profitability of Fort Pierce Federal's branch office nearby will be affected significantly. But Fort Pierce Federal, which has more assets than any other financial institution with offices in the County, some $395,000,000, attributes less than one percent of its savings deposits and less than one percent of its mortgage loans to its Okeechobee branch.
Across the street from First Savings' proposed branch is the site proposed for a full-service branch office which Okeechobee County Bank is already authorized to open. Competition between commercial banks and thrift institutions is expected to increase with regulatory changes which are to take effect on January 1, 1981. The main office of Okeechobee County Bank is 2.1 miles north of the site proposed for First Savings' branch. Another bank, Commercial Bank of Okeechobee, is only 1.4 miles north of the Royal's site. First Federal Savings and Loan Association of Martin County has an office in the City, about 2.1 miles north of the proposed First Savings' branch.
According to the 1979-1980 Branch Directory and Summary of Deposits with market indicators, First Savings had deposits of $27,393,000 as of June 30, 1979, up $996,000 from the year before. According to the same source, the branch office of First Federal Savings and Loan Association of Martin County had deposits of $5,553,000 as of the same date, up $2,354,000 from the year before. No other thrift institutions had offices in the County at the time. In its application, First Savings asserted that 28.3 percent of its deposits and 23.1 percent of its mortgage loan portfolio were attributable to the PSA.
According to the Florida Bankers' Association's Corporate Figures Report dated August of 1979, Commercial Bank of Okeechobee had total deposits of
$18,600,000 on June 30, 1979, up from $14,594,000 a year earlier. According to the same source, Commercial Bank of Okeechobee had outstanding loans of
$10,500,000 on June 30, 1979, up from $7,370,000 a year earlier. Okeechobee County Bank had total deposits of $35,602,000 on June 30, 1979, up from
$32,530,000 a year earlier, according to the same source. Okeechobee County Bank had outstanding loans of $24,836,000 on June 30, 1979, up from $19,367,000 a year earlier, again according to the Florida Bankers' Association's Corporate Figures Report dated August of 1979.
During 1979, First Savings made 344 loans secured by first mortgages in Okeechobee County, Fort Pierce Federal made two, and First Federal Savings and Loan Association of Martin County made 56. From July 1, 1980, to July 23, 1980, First Savings made 140 loans secured by first mortgages in Okeechobee County; Fort Pierce Federal made one; and First Federal Savings and Loan Association of Martin County made 18. As of August 29, 1979, First Savings had
250 mortgages and 1,495 savings accounts in the PSA.
Harry E. Horrick, Jr., became president of First Savings in 1954, and became a director in January of 1975. He had previously worked for ten years as an examiner employed by the Federal Home Loan Bank Board, as a vice president of a savings and loan association in Gadsden, Alabama, and as a mortgage consultant to the First Federal Savings and Loan Association of Washington, D.C. In all, First Savings employs 13 persons. The home office has 10,500 square feet, not
all of which is occupied. First Savings has written off no loans in the last three years, although it suffered a five or six hundred dollar loss on the sale of a duplex on which it had foreclosed.
Since its founding, First Savings has always maintained a reserve equal to or in excess of the minimum required. On June 30, 1979, First Savings was in compliance with applicable reserve requirements which called for reserves of some $793,000. First Savings had in excess of $850,000 in reserves. First Savings has always been in compliance with liquidity requirements. As of June 30, 1979, First Savings had 11.8 percent liquidity, which was in excess of minimum requirements. First Savings is insured by the Federal Savings and Loan Insurance Corporation. For the fiscal year ending June 30, 1979, First Savings' return on average assets was approximately 0.9 percent which exceeds the minimum requirement of 0.5 percent. Unaudited balances for the fiscal year ending June 30, 1980, indicated a return on average assets of approximately 0.7 percent or
$227,000.
First Savings has executed a three-year lease for 1,750 square feet for the proposed branch office, with renewal options. There is no relationship between the landlord and any director of First Savings of which Mr. Horrick is aware. The First Savings board of directors examined the lease, but there has been no independent appraiser. At the proposed branch, First Savings would employ a new accounts girl, two tellers, and a branch manager. It would primarily be for savings deposits and withdrawals and for loan payments. Loan applications would be taken for processing at the main office.
At the time of its application, First Savings estimated that leasehold improvements, furniture, fixtures, and equipment for the proposed branch would cost approximately $21,500. At that time, it projected annual income attributable to the branch at $173,000. Even on First Savings' own assumptions, this projection was an inadvertent overstatement of approximately $10,000, the result of an error in arithmetic. First Savings projected the corresponding expenses at $157,850, but allocated nothing for advertising, nothing for deposit insurance premiums, and nothing for federal income tax. In projecting revenues, First Savings did not take into account what effect Fort Pierce Federal's new branch and Okeechobee County Bank's proposed branch might have on the amount of savings deposited at First Savings' branch. None of the projected deposits was allocated to liquidity reserves, resulting in an overstatement of expected income. Since First Savings prepared their estimates, prices of furniture and equipment and of various expense items have increased. Since the estimates were prepared, both the rates at which thrift institutions lend as well as the rates at which they borrow have risen, but their cost of funds has increased more rapidly than interest rates have. The likelihood is that First Savings' proposed branch would operate at a loss for a year or more after opening.
Establishing the proposed branch would create no additional public confusion regarding the names of thrift institutions in Okeechobee County.
DONE AND ENTERED this 21st day of October, 1980, in Tallahassee, Florida.
ROBERT T. BENTON, II
Hearing Officer
Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301
Telephone: (904) 488-9675
FILED with the Clerk of the Division of Administrative Hearings this 22nd day of October, 1980.
COPIES FURNISHED:
Edgar A. Brown, Esquire Post Office Box 4382
Fort Pierce, Florida 33450
Frank H. Fee, III, Esquire Post Office Box 1000
Fort Pierce, Florida 33450
Franklin J. Wollett, Esquire Elsa Lopez, Esquire
William L. Lyman, Esquire Office of the Comptroller The Capitol
Tallahassee, Florida 32301
================================================================= AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA DEPARTMENT OF BANKING AND FINANCE
DIVISION OF BANKING
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF FORT PIERCE,
Petitioner,
vs. CASE NO. 79-2039
FIRST SAVINGS AND LOAN ASSOCIATION OF OKEECHOBEE COUNTY and OFFICE OF THE
COMPTROLLER, DIVISION OF BANKING,
Respondent.
/
FINAL ORDER
Pursuant to notice, an administrative hearing was held before Robert T. Benton, II, Hearing Officer with the Division of Administrative Hearings, on February 6, and July 23, 1980, in the County Courthouse, 305 Northwest 2nd Street, Okeechobee, Florida. The purpose of the hearing was to receive evidence concerning the application of First Savings and Loan Association of Okeechobee County to open a branch office at Royal's Okeechobee Center ("Royal's") on U.S. Highway 441, South near the intersection of Durrance Road, Okeechobee, Florida.
APPEARANCES
For Petitioner: Frank H. Fee, Esquire Post Office Box 1000
Ft. Pierce, Florida 33450
For Respondent,
First Savings and Loan Edgar A. Brown, Esquire Association of Okeechobee Post Office Box 4382 County: Ft. Pierce, Florida 33450
For Respondent, Franklyn J. Wollett Office of the Comptroller Elsa L. Whitehurst
Department of Banking Assistant General Counsels Finance: Office of the Comptroller
The Capitol, Room 1302 Tallahassee, Florida 32301
By Application filed with the Department of Banking and Finance (the "Department") on August 29, 1979, First Savings and Loan Association of Okeechobee ("First Savings") sought authority to open a branch office at Royal's
in Okeechobee County, Florida. By letter dated September 19, 1979, First Federal Savings and Loan Association of Fort Pierce ("Fort Pierce Federal") demanded a public hearing on the application.
On February 6, 1980, the parties convened for hearing and the Department put on its case. First Savings was not then represented by counsel, however, and the parties made joint motion for a continuance to allow First Savings to obtain counsel. The hearing reconvened on July 23, 1980. The final portion of the transcript of proceedings was filed with the Division of Administrative Hearings on October 10, 1980.
The parties stipulated that Section 665.441, Florida Statutes (1979), and Rule 3C-21.40, Florida Administrative Code, apply in the present proceedings.
The pertinent provision of Chapter 665, Florida Statutes (1979), which governs the approval of the establishment of a branch office is as follows:
665.441(3) APPROVAL OF ESTABLISHMENT.--
Each application for approval of the establishment and maintenance of a branch office shall state the proposed location thereof, the need therefor, the functions to be performed therein,
the estimated volume of business thereof, the estimated annual expense thereof,
and the mode of payment therefor. Each such application shall be accompanied by a budget of the association for the current earnings period and for the next succeeding semiannual period, which reflects the estimated additional expense of the maintenance of such a
branch office. Upon the receipt by the department of such an application,
it shall determine whether the establishment and maintenance of such office
will unduly injure any properly conducted existing association or federal association in the community where such
branch office is proposed to be established. If it finds that no undue injury is likely to result and that the establishment and maintenance of such branch office is advisable, it may approve the application.
The Department's rule implementing Section 665.441(3), Florida Statutes, at the time the application was submitted, was Rule 3C-21.40, Florida Administrative Code, which provided, in pertinent part,
3C-21.40 Regulatory Standards for Evaluating Branch Applications. The department, through the Comptroller, the Deputy Comptroller for Banking and Finance, or the Director of the Division of Banking, shall approve
or disapprove savings and loan association branch application in its discretion. In
considering applications for savings and loan association branches, 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 savings and loan association. Therefore, the judgment of the applicant as the viability of the 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
and that no undue injury to any existing state or federal association is proven.
Primary Service Area (PSA). The PSA, for the purpose of an application
for a savings and loan association branch, is defined as the smallest area from which the applicant expects to draw approximately seventy-five (75) percent of its deposits. It should be drawn around a natural customer base and should not be unrealistically delineated to exclude competing financial institutions or to include areas of concentrated population.
Standards. In order to determine the capacity of the savings and loan association to support such expansion, the
department shall consider the following criteria:
Whether the applicant is in compliance with the reserve requirement of Section 665.201, F.S., and Rule 3C-22.01, F.A.C.
Whether the applicant has a
return on average assets of 0.5 percent or above for the preceding year
and calculated as of the last day of the quarter preceding the application. It should be noted, however, that factors such as overall liquidity, asset condition, managerial capacity, and past performance, among others, are important in assessing the overall
capacity of the savings and loan association to establish a branch and may therefore, impact on the relative significance of a return on average assets of above or below
0.5 percent.
Whether the applicant is in compliance the liquidity requirement of Section 665.371, F.S.
Whether the applicant is in substantial compliance with all applicable state and federal laws affecting its operations.
The name of the proposed branch reasonably identifies the branch as
such and is not likely to unduly confuse the public.
Insider Transactions. Any financial arrangement or transaction involving
the establishment of a savings and loan association branch and the
directors of the association, officers, stockholders owning 5.0 percent or
more of the stock, if applicable, or their relatives, their associates or interests should ordinarily be avoided.
Should there be transactions of this nature, they must be fair, fully disclosed, reasonable and comparable to similar
arrangements which could have been made with unrelated parties.
In all such cases, appraisals of land and improvements thereon shall be made by an independent qualified appraiser, and be dated no earlier than six (6) months from the filing date of the application. In those instances where the branch application involves a lease arrangement with an insider, the appraisal should be directed to the comparability of the proposed lease with other leasing arrangements for similar business property.
Site Designation.
(a) location. No application for a savings and loan association branch
shall he deemed complete until a proposed site has been specifically designated by either street address or legal description.
Upon consideration of the oral and documentary evidence adduced at the hearing, the Report of the Hearing Officer submitted on October 22, 1980, is hereby adopted and incorporated herein. The Report includes Findings of Facts which are set forth below:
FINDINGS OF FACT
For purposes of the present application, First Savings designated the southern portion of Okeechobee County ("County") and Buckhead Ridge in Glades County as the service area for its proposed branch at Royal's, which would lie
2.1 miles south of its only existing office in the City of Okeechobee ("City"). The proposed service area ("PSA") is bordered on the north by the southern limits of the City. The PSA was drawn around a natural customer base, it was not unrealistically delineated, and no party suggested otherwise.
The University of Florida's Bureau of Economic and Business Research ("Bureau") estimated the population of the County at 19,881 as of April 1, 1979. Of this number, 4,134 were estimated to live in the City. The 1970 census population figures are 11,233 for the County and 3,715 for the City. The Bureau estimated the County population as of July 1, 1976, at 17,883; at 18,135 as of July 1, 1977; and at 18,759, as of July 1, 1978. The Bureau estimated City population as of July 1, 1978 at 3,953. For midyear 1980, the Bureau projected
a County population ranging from 19,600 to 21,000. For midyear 1985, the Bureau projected a County population ranging from 22,300 to 26,300. First Savings estimated the County population, as of August 27, 1979, at 20,350, of whom it estimated some 8,000 lived within the PSA, in addition to 2,160 Glades County PSA residents.
The City has grown in population much more slowly than the unincorporated portion of the County. From 1976 to 1977, the City's population increased less than one percent. The City's population in 1978 was virtually the same as its population the year before. In the year between July 1, 1978 and July 1, 1979, however, the population grew by 181 persons, or 4.58 percent. Population in the unincorporated area of the County grew at an average annual rate of 14.3 percent from 1970 to 1976. Population in the unincorporated area of the County increased only 1.6 percent between 1976 and 1977, but increased
4.4 percent between 1977 and 1978.
According to the Bureau, there were 7,000 households in the County on April 1, 1979, with an average size of 2.8 persons. The 1970 census put the figures at 3,178 households with an average size of 3.34 persons.
New migration into the County between 1970 and 1979 accounted for 83.24 percent of the population growth. The percentage of the population 65 and older was 10.62 percent on April 1, 1979, up from 10.37 percent the preceding year. The percentage of the population between 15 and 65 was 60.6 percent on April 1, 1979, up from 59.9 percent the year before.
Labor market indicators reported in the March, 1979 issue of the Labor Force Summary show an average unemployment rate of 7.7 percent for 1978. Revised data put the County's unemployment rate at 6.8 percent for March of 1980, as compared to a state average of 4.9 percent. Preliminary figures show County unemployment of 5.5 percent for April of 1980, as compared to a state average of 4.8 percent.
Per capita personal income in the County was $2,617 in 1970, as compared to $3,698 in Florida. By 1976, per capita personal income in the County had increased at an annual rate of 7.5 percent to $3,802, as compared to the average annual state increase of 8.2 percent to $6,101. Per capita income in the County was $4,113 in 1977 as compared to the state figure of $6,697. For 1978, the County's per capita income was $4,939 as compared to per capita income statewide of $7,578.
Since early March of 1980, Fort Pierce Federal has maintained a branch office approximately one-third of a mile south of the site proposed for First Savings branch. Fort Pierce Federal has begun construction of a 2,400 square foot permanent facility to house the branch office at an expected cost of
$350,000, including land and equipment. If First Savings opens the branch office it proposes for Royal's the profitability of Fort Pierce Federal's branch office nearby will be affected significantly. But Fort Pierce Federal, which has more assets than any other financial institution with offices in the County, some $395,000,000 attributes less than one percent of its savings deposits and less than one percent of its mortgage loans to its Okeechobee branch.
Across the street from First Savings' proposed branch is the site proposed for a full-service branch office which Okeechobee County Bank is already authorized to open. Competition between commercial banks and thrift institutions is expected to increase with regulatory changes which are to take effect on January 1, 1981. The main office at Okeechobee County Bank is 2.1
miles north of the site proposed for First Savings' branch. Another bank, Commercial Bank of Okeechobee is only 1.4 miles north of the Royal's site.
First Federal Savings and Loan Association of Martin County has an office in the City about 2.1 miles north of the proposed First Savings' branch.
According to the 1979-1980 Branch Directory and Summary of Deposits with market indicators, First Savings had deposits of $27,393,000 as of June 30, 1979, up $996,000 from the year before. According to the same source, the branch office of First Federal Savings and Loan Association of Martin County had deposits of $5,553,000 as of the same date, up $2,354,000 from the year before. No other thrift institutions had offices in the County at the time. In its application, First Savings asserted that 28.3 percent of its deposits and 23.1 percent of its mortgage loan portfolio were attributable to the PSA.
According to the Florida Bankers' Association's Corporate Figures Report dated August of 1979, Commercial Bank of Okeechobee had total deposits of
$18,600,000 on June 30, 1979, up from $14,594,000 a year earlier. According to the same source, Commercial Bank of Okeechobee had outstanding loans of
$10,500,000 on June 30, 1979, up from $7,370,000 a year earlier. Okeechobee County Bank had total deposits of $35,602,000 on June 30, 1979, up from
$32,530,000 a year earlier, according to the same source. Okeechobee County Bank had outstanding loans of $24,836,000 on June 30, 1979, up from $19,367,000 a year earlier, again according to the Florida Bankers' Association's Corporate Figures Report dated August of 1979.
During 1979, First Savings made 344 loans secured by first mortgages in Okeechobee County, Fort Pierce Federal made two, and First Federal Savings and Loan of Martin County made 56. From July 1, 1980, to July 23, 1980, First Savings made 140 loans secured by first mortgages in Okeechobee County; Fort Pierce Federal made one; and First Federal Savings and Loan Association of Martin County made 18. As of August 29, 1979, First Savings had 250 mortgages and 1,495 savings accounts in the PSA.
Harry E. Horrick, Jr., became president of First Savings in 1954, and became a director in January of 1975. He had previously worked for ten years as an examiner employed by the Federal Home Loan Bank Board, as a vice president of a savings and loan association in Gadsden, Alabama, and as a mortgage consultant to the First Federal Savings and Loan Association of Washington, D.C. In all, First Savings employs 13 persons. The home office has 10,500 square feet, not all of which is occupied. First Savings has written off no loans in the last three years, although it suffered a five or six hundred dollar loss on the sale of a duplex on which it has foreclosed.
Since its founding, First Savings has always maintained a reserve equal to or in excess of the minimum required. On July 30, 1979, First Savings was in compliance with applicable reserve requirements which called for reserves of some $793,000. First Savings had in excess of $850,000 in reserves. First Savings has always been in compliance with liquidity requirements. As of June 30, 1979, First Savings had 11.8 percent liquidity, which was in excess of minimum requirements. First Savings is insured by the Federal Savings and Loan Insurance Corporation. For the fiscal year ending June 30, 1979, First Savings' return on average assets was approximately 0.9 percent which extends the minimum requirement of 0.5 percent. Unaudited balances for the fiscal year ending June 30, 1980, indicated a return on average assets of approximately 0.7 percent or
$227,000.
First Savings has executed a three-year lease for 1,750 square feet for the proposed branch office with renewal options. There is no relationship between the landlord and any director of First Savings of which Mr. Horrick is aware. The First Savings Board of Directors examined the lease, but there has been no independent appraiser. At the proposed branch, First Savings would employ a new accounts person, two tellers, and a branch manager. It would primarily be for savings deposits and withdrawals and for loan payments. Loan applications would be taken for processing at the main office.
At the time of its application, First Savings estimated that leasehold improvements, furniture, fixtures, and equipment for the proposed branch would cost approximately $21,500. At that time, it projected annual income attributable to the branch at $173,000. Even on First Savings' own assumptions, this projection was an inadvertent overstatement of approximately $10,000, the result of an error in arithmetic. First Savings projected the corresponding expenses at $157,850, but allocated nothing for advertising, nothing for deposit insurance premiums, and nothing for federal income tax. In projecting revenues, First Savings did not take into account what effect Fort Pierce Federal's new branch and Okeechobee County Bank's proposed branch might have on the amount of savings deposited at First Savings' branch. None of the projected deposits were allocated to liquidity reserves, resulting in an overstatement of expected income. Since First Savings prepared their estimates, prices of furniture and equipment and of various expense items have increased. Since the estimates were prepared, both the rates at which thrift institutions lend as well as the rates at which they borrow have risen, but their cost of funds has increased more rapidly than interest rates have. The likelihood is that First Savings' proposed branch would operate at a loss for a year or more after opening.
Establishing the proposed branch would create no additional public confusion regarding the names of thrift institutions in Okeechobee County.
CONCLUSIONS OF LAW
When an application for authority to open a branch office is filed, it is the applicant's responsibility to prove that the minimum statutory and regulatory criteria warranting the grant of authority are met. It is the duty of the Department to evaluate the application pursuant to Section 665.441(3), Florida Statutes, and the rules of the Department implementing that section and then to approve or deny the application in its discretion. This discretion is neither absolute nor unqualified, but is conditioned upon consideration of the criteria listed in Section 665.441(3), Florida Statutes, and the provisions of the rules of the Department. At the time this application was submitted, Rule 3C-21.40, Florida Administrative Code, with regard to the establishment of branch offices, was in effect.
The information which the aforementioned statute requires an applicant to submit to the Department is usually within the applicant's control. Therefore, should the Department find the information submitted inadequate, it will usually allow the applicant to supplement it. However, two of the criteria of Section 665.441(3), Florida Statutes, the establishment and maintenance of such office will not unduly injure any properly conducted existing association or federal association in the community where such branch office is proposed to be established and the advisability of the proposed branch, are not generally within an applicant's control. Therefore, if either of these criteria are not met, the Department cannot approve the application. In considering a branch application, an 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 savings and loan association. 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. See Rule 3C-21.40, Florida Administrative Code.
It is the opinion and conclusion of the Department that the statutory requirements set forth in Section 665.441(3), Florida Statutes, ARE met.
It is the opinion and conclusion of the Department that the establishment and maintenance of the proposed branch office will not unduly injure any properly conducted existing association or federal association in the community where such branch office is proposed to be established.
As found by the Hearing Officer, the Protestant, First Federal of Fort Pierce, has maintained a branch office approximately
one-third of a mile of the site proposed for the applicant's branch. At the time of the hearing, construction had begun for a permanent facility. The Hearing Officer did find that the opening of the applicant's branch will affect the profitability of First Federal's branch office. However, he also found that the parent association itself, the largest association in the County, attributes less than one percent of its savings deposits and less than one percent of its mortgage loans to its Okeechobee branch. First Federal itself would not be significantly affected by the opening of the branch. The impact on First Federal's branch is somewhat offset by the convenience the proposed branch would have on the applicant's existing customer base. As determined by the Hearing Officer, in its application, First Savings asserted that 28.13 percent of its deposits and 23.1 percent of its mortgage
loan portfolio were attributable to the PSA. Applicant's entry would also enhance competition and serve as a viable competitive alternative.
First Federal of Martin County was the only other thrift institution which had a branch in the county, and the branch had significant deposit increases from June, 1978, to June, 1979, up $2,35 million. This association will also not be unduly injured.
It is the opinion and conclusion of the Department that the establishment and maintenance of the proposed branch office is advisable.
The applicant has a sizable customer base presently in the PSA, as shown by the evidence. The new branch will serve these
customers conveniently. The applicant has also demonstrated by past performance the ability and capacity to support expansion. Since its founding, the applicant has always maintained a reserve equal to or in excess of the minimum required. First Savings has always been in compliance with liquidity requirements. The association's return on average assets for the fiscal year ending June 30, 1979, clearly exceeded the minimum requirements. Unaudited balances for the fiscal year ending June 30, 1980, indicated a return on average assets above the requirement.
The Department has also evaluated the application for compliance with Rule 3C-21.40, Florida Administrative Code. The Department concludes that:
The applicant is in compliance with the reserve requirements of Section 665.201, Florida Statutes, and Rule 3C-22.01, Florida Administrative Code;
The Applicant has a return on average assets of 0.5 percent or above for the preceding year;
The Applicant is in compliance with the liquidity requirement of Section 665.371, Florida Statutes;
The Applicant is in compliance with all applicable state and federal laws affecting its operations.
The proposed name, First Savings and Loan Association--Okeechobee Branch, reasonably identifies the branch and is not likely to unduly confuse the public
There does not appear to be any insider transactions.
FINAL ORDER
Based upon the record, the Findings of Fact and Conclusions of Law recited above, it is established that the statutory and regulatory criteria to open a savings and loan association branch office have been met. It is thereupon
ORDERED that authority to establish a branch office within Royal's Okeechobee Center on U.S. Highway 441, South, Okeechobee, Okeechobee County, Florida, is hereby granted to the Applicant upon the following conditions:
That the branch office bear the name of First Savings and Loan Association of Okeechobee County - Okeechobee Branch.
An exact site designation by street address and number be submitted to the Department, if available, prior to the proposed formal opening date for the branch office.
This approval shall expire twelve (12) months from this date if the branch office has not been opened, unless in the meantime a request for an extension of time has been requested by the Applicant and granted by the Department.
Until the conditions herein specified and other reasonable requirements of the Department of Banking and Finance are met, or if any interim developments is deemed by the Comptroller to warrant such action, The Comptroller shall have the right to alter, suspend, or withdraw this approval.
After all conditions have been net, provide approximately three (3) weeks advance notice of the proposed opening date to the Division of Banking to ensure that a Certificate of Authority to open the branch is issued in a timely manner.
DONE AND ORDERED this 21st day of November, 1980, in Tallahassee, Florida.
GERALD A. LEWIS
Comptroller, State of Florida The Capitol
Tallahassee, Florida 32301
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing was sent by
U.S. Certified Mail, Return Receipt Requested, to: Edgar A. Brown, Esquire, Post Office Box 4382, Fort Pierce, Florida 33450; Frank H. Fee, III, Esquire, Post Office Box 1000, Fort Pierce, Florida 33450; and Robert T. Benton, II, Esquire, Division of Administrative Hearings, Room 101, Collins Building, Tallahassee, Florida 32301, this 21st day of November, 1980.
FRANKLYN J. WOLLETT
Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32301
(904) 488-9896
| Issue Date | Proceedings |
|---|---|
| Nov. 29, 1980 | Final Order filed. |
| Oct. 22, 1980 | Recommended Order sent out. CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Nov. 21, 1980 | Agency Final Order | |
| Oct. 22, 1980 | Recommended Order | Petitioner's proposed branch would not cause confusion of names with others. |
