STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PAN AMERICAN BANK OF ORLANDO, )

)

Petitioner, )

)

vs. ) CASE NO. 80-235

)

FLAGSHIP BANK OF ORLANDO ) and OFFICE OF THE COMPTROLLER, )

)

Respondent. )

)

REPORT

Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, on March 25, 1980, at 10:00 a.m. in Room 551 of the Orange County Courthouse, Orlando, Florida. The purpose of the hearing was to receive evidence concerning the application of the Flagship Bank of Orlando for authority to open a branch banking facility in Orlando, Florida.

APPEARANCES

For Petitioner: Lawrence O. Turner, Jr.

Pan American Bancshares, Inc.

150 Southeast Third Avenue Post Office Box 010831 Miami, Florida 33101

For Respondent Benjamin F. Smathers, Esquire Flagship: Smathers and Kemp

801 North Magnolia Avenue Post Office Box 3627 Orlando, Florida 33802

For Respondent Karyln Anne Loucks

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

The Capitol

Tallahassee, Florida 32301

INTRODUCTION AND RULINGS ON EVIDENTIARY MATTERS

In January of 1980, the Flagship Bank of Orlando, also referred to herein as the "applicant, filed its application with the respondent Office of the Comptroller for authority to open a branch banking facility at 2300 West Oak Ridge Road in Orlando, Orange County, Florida. The petitioner, Pan American Bank of Orlando, also referred to herein as the "protestant", 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 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 B, C, D, and F and the testimony of

1. E. Davis, President of Flagship Bank of Orlando. The protestant did not introduce into evidence any exhibits or present any witnesses. The Office of the Comptroller introduced into evidence Exhibits 1 through 4. Exhibit 2 contained confidential information and was sealed. Florida Administrative Code, Chapters 3C-9 and 3C-13 were officially noticed pursuant to Section 120.61, Florida Statutes.

   
   

   At the conclusion of the hearing, all parties were given the opportunity to submit to the Hearing Officer proposed findings of fact. The Office of the Comptroller and the protestant filed such proposed findings. To the extent that the proposed findings are not included in this Report, they are rejected as being either unsupported by competent, substantial evidence, irrelevant and immaterial to the issues for consideration 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:

   
   

   1. The applicant Flagship Bank of Orlando is a subsidiary of the Flagship Banks of Florida in Miami, which owns 23 banks with 66 banking offices and had assets of $1,847,000,000.00 at the end of 1979. The main office of the applicant is located at 1400 East Colonial Drive in Orlando, some nine miles from the proposed branch site. The applicant presently has two branch banking facilities in operation in Orlando: the West Branch Office, located at 3500 West Colonial Drive, and the Sand Lake Road Office, located at 6707 Sand Lake Road, which opened in September of 1979. The West Branch Office has assets of approximately $8,000,000.00 and the Sand Lake Road Office has deposits of approximately $2,700,000.00. As of June 30, 1979, the applicant had 3.8 percent of the total amount of deposits in Orange County, Florida.

      
      

   2. As of June 30, 1979, the applicant's total deposits were

      $60,063,000.00. For the year 1979, its net profit to asset ratio was 1.19 percent. At the end of February, 1980, the applicant's after-tax net income was

      $177,379.00, giving it a 1.3 percent ratio on an annual basis. As of February 29, 1980, the adjusted capital asset ratio was 11.88 percent. The applicant's liquidity ratio is 34 percent or 35 percent, and it presently has approximately

      $6.00 in reserve for each classified asset dollar.

      
      

   3. The applicant's president, H.E. Davis, has been with the applicant since 1973 and has been in banking since 1956. The proposed branch manager is Mike A. Fettig, who has been with the applicant for three and a half years and is presently an assistant branch manager with the applicant's Sand Lake branch office. Dean Murdock is the proposed branch loan officer and has been in banking since 1965. Vicky McHoy is the proposed branch assistant manager. She has been in banking with the applicant for 12 years. Additional staff at the proposed branch will be experienced bank personnel pulled from the applicant's main office or other branches. Due to their active training program, the applicant's president does not believe that this will have a detrimental effect upon its management capabilities.

   4. The proposed branch bank will offer extended weekday drive-in teller hours and Saturday banking hours, in addition to a full range of services including an automatic teller machine, night depository, foreign currency exchange, commercial and installment lending at the branch level, safety deposit boxes, and Visa and Master Charge. Only one other bank in the Orlando area offers foreign currency exchange services.

      
      

   5. According to the application, the interior of the proposed branch bank will contain a lobby area of approximately 1,300 square feet, with provisions for four inside teller stations. One drive-in teller will operate from within the building with provision for two remote teller lines. The building will also contain an employee lounge, two restrooms, a bookkeeping and/or work area, a storage area, a meeting room, two offices and customer booths. Based upon the applicant's actual experience at its Sand Lake Road Office, it is estimated that the cost of the building will be $162,000.00. The applicant presently owns the land and there was no evidence of any insider transaction in the purchase of the land. The applicant estimates that it will have total deposits at the end of the first year of operation in the amount of $3,000,000.00, and that it will have total deposits of $5,000,000.00 and $6,000,000.00 at the end of the second and third years of operation.

      
      

   6. The site selected for the proposed branch is located on Oak Ridge Road west of the intersection of said Road and South Orange Blossom Trail at the southwest corner of Texas Avenue and Oak Ridge Road. Oakridge Road is a main east/west thoroughfare in the area, and the proposed site is adjacent to a shopping center containing 23 stores, including a Winn Dixie and Eckerds Drug Store. The applicant's primary service area (PSA) is bordered by four main highways: the Florida Turnpike, some 2 1/4 miles to the west of the proposed site; Interstate 4 and Pinelock Avenue, some 3 3/4 miles north; Orange Avenue, some 2 3/4 miles east; and Sand Lake Road, some 1 3/4 miles south. The area is a mixture of residential housing, retail, wholesale, distribution facilities and light manufacturing.

      
      

   7. The applicant's goal in operating the proposed branch office is to acquire new customers in a rapidly growing area and to service its existing customers in the area. Presently, the applicant has 250 deposit customers and

      70 loan customers residing or doing business within the designated primary service area.

      
      

   8. The applicant estimates the population of the PSA to be approximately 38,800, with the greater density of population being on the east side of Orange Blossom Trail. The majority of persons in the PSA are employed in clerical, sales and other lower income categories. The average per capita income within the PSA was $10,882.00 in 1979.

      
      

   9. According to data published by the University of Florida, Division of Population, the estimated population of Orlando on April 1, 1979, was 124,658, indicating an annual average growth rate of 2.9 percent since the 1970 population figure of 99,006. According to the same data, the total population of Orange County in April of 1979, was estimated at 441,337, indicating an average annual growth rate of 3.1 percent since the 1970 population of 344,311. Net migration into Orange County between 1970 and 1979 accounted for 73.07 percent in population growth. Between April of 1970 and July 1, 1978, the weight of retirees (the 65+ age group) in the County's total population increased from 9.6 to 10.5 percent; and the weight of the labor force (ages 15 -

      64) increased from 61.7 to 66.0 percent.

   10. The per capita personal income for Orlando increased from $5,985 in 1976 to $6,535 in 1977, and the increases for Orange County were from $6,496 in 1976 to $7,093 in 1977. The state averages for the same two years increased from $6,101 to $6,697. The December 1979 issue of the Orlando SMSA Labor Market Trends shows an average unemployment rate of 5.8 percent for the twelve month period ending in November 1979, as compared to 6.4 percent for the comparable 1978 period.

       
       

   11. Within the applicant's designated PSA, there are three operating main offices of commercial banks - Landmark Bank of Orlando, Royal Trust Bank of Orlando and ComBank/Pine Castle Bank. These banks are located at a distance from 1.8 miles to 3 miles from the proposed site. There are two opened and operating branch bank facilities and four approved but unopened branch banks within the PSA. The closest existing banking office, the branch of the Sun First National Bank of Orlando, is located 1.0 mile east of the proposed site. The proposed sites of the approved, but unopened branch banks are located between 1.5 miles and 2 miles from the proposed site. The approved branch site of the protestant, Pan American Bank of Orlando, is located some 641 yards from the applicant's proposed site, and it is expected to open in April of 1980. There are also three branch offices of savings and loan associations in operation and two branches approved but unopened. The existing banking and savings and loan facilities in the area have all experienced significant increases in deposits over the past two years. Data as of June 30, 1979, from the Comparative Figures Report of the Florida Bankers Association indicate that the banks in Orlando experienced the following increases over the year's period:

       18.7 percent in total loans, 13.8 percent in time deposits, 6.8 percent in demand deposits and 10.8 percent in total deposits.

       
       

   12. The name selected for the proposed branch banking facility is Flagship Bank of Orlando - Oakridge Office. No evidence was produced that such name would be misleading or confusing to the public.

       
       

   13. There was no testimony adduced at the hearing that the applicant was not in substantial compliance with all state and federal laws effecting 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 24th day of April, 1980, in Tallahassee, Florida.

DIANE D. TREMOR

Hearing Officer

Division of Administrative Hearings

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

COPIES FURNISHED:

Lawrence O. Turner, Jr. Comptroller Gerald A. Lewis Pan American Bancshares, Inc State of Florida

150 Southeast Third Avenue The Capitol

Post Office Box 010831 Tallahassee, Florida 32301 Miami, Florida 33101

Benjamin F. Smathers, Esquire Smathers and Kemp

801 North Magnolia Avenue Post Office Box 3267 Orlando, Florida 33802

Karyln Anne Loucks Assistant General Counsel Office of the Comptroller The Capitol

Tallahassee, Florida 32301

================================================================= AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA DEPARTMENT OF BANKING AND FINANCE

DIVISION OF BANKING

PAN AMERICAN BANK OF ORLANDO,

Petitioner,

vs. CASE NO. 80-235

FLAGSHIP BANK OF ORLANDO and OFFICE OF THE COMPTROLLER,

Respondents.

/

FINAL ORDER

Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer, with the Division of Administrative Hearings on March 25, 1980, at 10:00 a.m. in Room 551 of the Orange County Courthouse, Orlando, Florida. The purpose of the hearing was to receive evidence concerning the application of the Flagship Bank of Orlando for authority to open a branch banking facility in Orlando, Florida. At the hearing, the parties were represented by counsel:

APPEARANCES

For Petitioner, Lawrence O. Turner, Jr.

Pan American Pan American Bancshares, Inc. Bank of 150 Southeast Third Avenue

Orlando: Post Office Box 010831 Miami, Florida 33101

For Respondent, Benjamin F. Smathers, Esquire Flagship Bank Smathers and Kemp

of Orlando: 801 North Magnolia Avenue

Post Office Box 3627 Orlando, Florida 33802

For Respondent, Karlyn Anne Loucks

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

The Capitol

Tallahassee, Florida 32301

Having fully considered the facts and information contained in the record relating to the application of the Flagship Bank of Orlando for authority to open a branch banking facility in Orlando, Florida, the Comptroller of the State of Florida, as head of the Department of Banking and Finance, hereby renders the following FINDINGS OF FACT, CONCLUSIONS OF LAW AND FINAL ORDER in the above styled case. The Deputy Comptroller, Walton S. Kinsey, and the Director of the Division Banking, Ryland Terry Rigsby, as advisory staff members to the Comptroller, reviewed the hearing officer's report and the entire record. They assisted and concurred with the Comptroller in the ultimate determination of this application.

FINDINGS OF FACT

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 one through thirteen, submitted on April 24, 1980, a copy of which is attached hereto and incorporated herein by this reference, is adopted in toto.

RULINGS ON PROPOSED FINDINGS

The Department rules on the proposed findings of facts submitted by the parties as follows:

Petitioner's Proposed Findings

1. Petitioner's proposed findings contained in paragraphs one, two, three, four, seven, eight, nine and ten are accepted.

   
   

2. Petitioner's proposed findings contained in paragraphs five, six, and fourteen are rejected as being inconsistent with the hearing officer's findings and unsupported by competent substantial evidence in the record.

   
   

3. Petitioner's proposed findings contained in paragraphs eleven, twelve and thirteen are rejected as being unsupported by competent substantial evidence in the record.

   
   

   Department's Proposed Findings

4. The Department's proposed findings contained in paragraphs one through sixteen are accepted to the extent that they are consistent with the hearing officer's findings.

   
   

   CONCLUSIONS OF LAW

   
   

   1. 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 Statutes, 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 factors 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, Florida Administrative Code.

1. 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 is 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.

   
   

2. For the purpose of applications for branch banks, Rule 3C-13.041(1), Florida Administrative Code, defines the primary service area (PSA), as "the smallest area from which the proposed branch expects to draw approximately 75 percent of its deposits. It should be drawn around a natural customer base and should not be unrealistically delineated to exclude competing banks or to include areas of concentrated population". Based upon traffic patterns, population concentration, commercial activity, and location of financial institutions in the area, the Department concludes that the Applicant has realistically delineated its PSA in accordance with Rule 3C-13.041(1), Florida Administrative Code. In making this determination, the Department recognizes that the population density of the PSA is greater east of Orange Blossom Trail, but also recognizes that many of the people living there work in the industrial park located west of the Orange Blossom Trail.

   
   

3. It is the opinion and conclusion of the Department that the Applicant has 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 11.88 percent as of February 29, 1980. This ratio far exceeds the minimum requirement of the 7.0 percent set forth in Rule 3C-13.041(2)(a), Florida Administrative Code. 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 and liquidity are considered good and it had an after-tax net income of $177,379 at the end of February 1980. This performance indicates that the Applicant's managerial capacity is also good. Based upon the above-cited

   facts, the Department concludes that the establishment of the proposed branch will not unduly expose the Applicant's depositors or shareholders

   
   

4. 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 1.19 percent for the year 1979, which far exceeds the minimum requirement of 0.5 percent, set forth in Rule 3C-13.041(2)(b), Florida Administrative Code. A consideration of the additional factors set forth in said rule as discussed in paragraph 4 above, further supports the conclusion that the Applicant has sufficient earnings and earning prospects to support the anticipated expenses of the proposed branch. In addition, existing banking and savings and loan facilities in the area have all experienced significant increases in deposits over the past two years and the area has experienced rapid population growth and development of commercial and industrial centers which indicates that earning prospects in the area are good.

   
   

5. 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 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 it has sufficient managerial capacity to successfully operate the proposed branch.

   
   

6. It is the opinion and conclusion of the Department that the name of the proposed branch reasonably identifies it as such and is not likely to unduly confuse the public. Therefore, the criterion of 3C-13.041(2)(d), Florida Administrative Code, IS met.

   
   

7. 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.

   
   

8. In view of the fact that the Applicant already has 250 deposit customers and 70 loan customers residing or doing business within the PSA, the fact that the area is experiencing population growth and commercial development, the fact that the proposed branch site is conveniently located in a shopping center on a main thoroughfare and the fact that the Applicant has met the criteria set forth in Rule 3C-13.041(2)(a), (b), (c), (d), and (e), the Department is satisfied that public convenience and necessity will be served by the proposed branch.

   
   

9. It is the opinion and conclusion of the Department that the purchase of the land for the proposed branch facility did not involve an insider transaction within the meaning of Rule 3C-13.041(3), Florida Administrative Code.

FINAL ORDER

Based upon the foregoing findings of facts and conclusions of law, it is thereupon

ORDERED AND ADJUDGED that the application of Flagship Bank of Orlando for authority to open a branch at 2300 West Oakridge Road in Orlando, Orange County, Florida, is hereby granted upon the following conditions:

1. The branch bear the name Flagship Bank of Orlando Oakridge Office.

   
   

2. The Federal Deposit Insurance Corporation gives final approval of the branch at the designated site.

   
   

3. Subsequent to the approval by the Department and

   the Federal Deposit Insurance Corporation, and at least

   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.

   
   

4. 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.

   
   

5. Should the branch not be opened within twelve months after departmental approval of the appli- cation, such approval shall automatically expire, unless extended by the Department in the meantime for good cause shown.

DONE AND ORDERED this 16th day of May, 1980, in Tallahassee, Florida.

GERALD A. LEWIS

Comptroller State of Florida

CERTIFICATE OF FILING AND SERVICE

I HEREBY CERTIFY that the original of the foregoing was filed with the Clerk of the Department of Banking and Finance and copies were sent by U.S. Mail to Lawrence O. Turner, Jr., Pan American Bancshares, Inc., 150 Southeast Third Avenue, Post Office Box 010831, Miami, Florida 33101 and Benjamin F. Smathers, Esquire, Smathers and Kemp, 801 North Magnolia Avenue, Post Office Box 3627, Orlando, Florida 33802 this 16th day of May, 1980.

KARLYN ANNE LOUCKS

Assistant General Counsel Office of the Comptroller The Capitol

Tallahassee, Florida 32301

(904) 488-9896

Docket for Case No: 80-000235

Orders for Case No: 80-000235