Douglas Miller, Allen Richardson, K. O. Arnold, Sr., and James Benson testified on behalf of the Petitioner. Respondent Keystone State Bank offered Respondent's Exhibits 1 and 2 which were admitted into evidence. Testifying for the Keystone State Bank were Albert Howard, Jr., Glare Chiappini, Winifield Broadhurst, Jr., and Moreau P. Estes. Respondent Department of Banking and Finance Exhibits 1 and 2 were also admitted. No witnesses were presented by the Respondent Department. Carolyn Broadhurst, Josephine T. Benson and Geri Jackson were sworn and testified in opposition to granting the branch banking application during the public comment portion of the hearing.
Lake Area State Bank and Keystone State Bank have submitted proposed findings of fact which have been carefully considered. To the extent that the proposed findings are not included 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.
Petitioner Lake Area State Bank's branch bank application was filed on August 12, 1981. The Department deemed the application substantially complete on September 2, 1981, and timely noticed the application in the Florida Administrative Weekly on September 11, 1981.
On September 24, 1981, the Respondent Keystone State Bank requested a formal administrative hearing pursuant to Section 120.57(1), Florida Statutes.
Lake Area State Bank's proposed branch bank site is located on the corner of State Road 26 and Quail Street, Melrose, Alachua County, Florida.
The proposed branch bank site is approximately seven miles from the Petitioner's main office in Hawthorne, Alachua County, Florida, and approximately 1.5 miles south and west of Keystone's Melrose branch facility in Clay County, Florida.
The branch bank proposed by the Petitioner would be located in the "Tolles House", a large historic residence constructed before 1900. All of the services provided by Petitioner at its main banking facility in Hawthorne will be provided at the Melrose branch location, including a loan office, teller windows, drive-in teller facilities, loans, deposits, cashier's checks and other services normally offered by a commercial bank.
Petitioner will initially staff the Melrose branch bank with a branch manager and loan officer, a teller and a clerk. Harold Boatright, presently Senior Vice-President of the Hawthorne office of Lake Area State Bank, will be branch manager and loan officer. Several persons presently working in Petitioner's Hawthorne office and living in the Melrose area have requested transfers to the branch office if it is authorized.
The management of Lake Area State Bank consists of K. O. Arnold, Shreveport, Louisiana, Chairman of the Board of Directors and owner of 95 percent of the outstanding stock of the bank, M. G. Bull, President of Lake Area State Bank for two years, Harold Boatright, Senior Vice-President, Betty Coggins, cashier with fifteen years of experience with Petitioner, Pat Stroud, Vice-President of Operations with seven years experience with Petitioner and Chris Joyce, Vice-President and Comptroller with eight years of experience with Petitioner.
On November 30, 1981, Lake Area State Bank's capital accounts totaled
$1,340,029 and total deposits equaled $7,442,447 for a ratio of capital to total deposits of approximately eighteen (18) percent.
Petitioner's net profit for calendar year 1980 was $154,977 and total assets for the same period was $8,597,391 for a ratio of net profits to total assets of 1.8 percent. Net profits before taxes for the first eleven months of 1981 totaled $317,414.
Keystone State Bank's main facility is 7.3 miles north of Petitioner's proposed branch. The closest commercial banking facilities other than Keystone State Bank's branch which is 1.5 miles away from the proposed branch and Lake Area's main office, which is 13.3 miles away, are in Gainesville, 20 miles, Starke, 25 miles, and Palatka, 26 miles. Other banking and credit needs are provided by the Keystone Branch of Fortune Federal Savings and Loan, 7.2 miles, Clay Electric Employees Credit Union, approximately 8 miles, and the Interlachen Branch of First Federal Savings and Loan Association of Putnam County, mileage unknown.
Keystone State Bank invested $95,000 in its Melrose branch. The branch met or exceeded the projections for deposits, revenues, operating expenses and profits found in its 1978 application for a branch bank. Total deposits increased from $13,716,989 to $18,722,444 in eleven months from December 31, 1980, to November 31, 1981. Keystone State's total profits for the first eleven months of 1981 were $225,000 of which $29,000 was attributed to its Melrose branch.
The town of Melrose is situated at the intersection of four counties: Alachua, Bradford, Clay and Putnam. A substantial number of the residents of Melrose work in the Gainesville area which is south and west of Melrose. According to 1980 census data, the immediate market area of Melrose has a population of 565. Five miles from the immediate market area the population is 4,762 and ten miles from that area the population is 10,474.
Estimated annual average population growth in the state and pertinent four-county area from 1980-1990 is as follows: Florida, 2.3 percent; Alachua,
29 percent; Bradford, 2.2 percent; Clay, 3.8 percent; and Putnam, 2.2 percent.
Average annual growth of personal income per capita from 1979 to 1990 for the state and pertinent four-county area is as follows: Florida, 8.5 percent; Alachua, 9.0 percent; Bradford, 8.3 percent; Clay, 5.7 percent; and Putnam 7.4 percent.
The Petitioner has projected deposits, revenues, operating costs and profits for the proposed Melrose branch as follows:
| 1ST YEAR | 2ND YEAR | 3RD YEAR |
Total estimated deposits | $1,957,000 | $2,250,550 | $2,588,132 |
Estimated gross revenue | 237,971 | 273,666 | 314,716 |
Total estimated expenses | 223,078 | 249,345 | 274,187 |
Estimated profit | $14,892 | $24,321 | $40,529 |
The above fiscal projections appear to be reasonable based on the population and personal income data available for the area, the growth experienced by Keystone State Bank in the Keystone Heights area and the growth experienced by Lake Area State Bank in the Hawthorne area.
Lake Area State Bank has sufficient earnings and earning prospects to support the anticipated expenses of its proposed Melrose branch without jeopardizing the profitable position of the bank, its retained earnings or the dividend return to its shareholders.
Lake Area State Bank has sufficient depth and quality of management to operate the branch without reducing its current level of services or exceeding its management or operational capacity.
The proposed Melrose branch bank site is still subject to meeting further county approval regarding adequate parking and highway ingress and egress.
The Petitioner's proposed branch name, Lake Area State Bank, Melrose Office, reasonably identifies the branch and is not likely to unduly confuse the public.
Lake Area State Bank is in substantial compliance with applicable laws governing its operations.
Lake Area State Bank's proposed Melrose branch will increase competition in the Melrose area which can reasonably be expected to result in new and improved services, increased earnings on time deposits and decreased interest rates on loans. The proposed branch should stimulate economic activity in the Melrose area. For persons living west and south of Keystone's Melrose branch, the proposed branch would be closer and more convenient than the existing banking facility.
Lake Area State Bank has an option to buy the proposed branch site for
$108,000, which option will be exercised if all governmental regulatory approvals are obtained. The cost of renovating and converting the "Tolles House" residence to accommodate commercial activity is estimated at 75,000.
A number of residents living in the vicinity of the proposed site expressed concern that the proposed branch would be located in a former residence in a neighborhood otherwise zoned residential. Many residents of Melrose are opposed to the proposed branch bank due to the site selected by Lake Area State Bank's management which is in an area of older restored homes. Their opposition is a direct result of Petitioner's successful efforts before the Alachua County Commission to have the property rezoned from residential to commercial.
Lake Area State Bank's ability to meet its fiscal projections would be enhanced if the bank was supported by the local residents of Melrose. If the proposed branch was located in an area of Melrose less disruptive to existing local residents, the antagonism of local residents toward the bank would be significantly reduced if not eliminated.
In accordance with the provisions of Section 120.57(1)(a)(12), Florida Statutes, conclusions of law and a recommendation are not included in this Report.
