Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: The applicant Metropolitan Bank and Trust Company is located at 4600 West Cypress Street, Tampa, Florida, and was established on May 31, 1974. Excluding its Chief Executive Officer and Executive Vice-President, the applicant has 25 officers with a combined total of 352 years of banking experience. The average age of the officers is 41, with an average of 15 years of banking experience. Six of the management team are past bank presidents. The applicant presently has two existing branch banking facilities. One is located 0.9 miles Southeast from the main office and one is located 8.6 miles Northwest of the main office. A third facility, acquired by merger, located 19.4 miles Southeast of the main facility, has been approved and was expected to open in April, 1979. As a result of the merger between Metropolitan and the American Guarantee Bank, the applicant now has 160 employees, The applicant has paid regular cash dividends to its stockholders since opening. As of December 31, 1978, the applicant had total assets of over $187,000,000.00. Its loans to loanable funds ratio has been maintained at about 80 percent. That ratio was 76.7 percent as of February 14, 1979. The protestant stipulated at the hearing that the applicant had no problem meeting its liquidity needs. As of December 31, 1978, the applicant had an adjusted capital to assets ratio of 8.2 percent. Its net profit to asset ratio was .836 percent as of December 31, 1978. The establishment of the proposed branch is expected to have no significant effect upon future earnings of the applicant. It is anticipated that the slight loss after the first year of operation will not exceed two cents per share and that the branch will contribute significantly to earnings of the applicant after the first year. The applicant presently has approximately $1.4 million in deposits and $2.8 million invested in loans from residents and business people in the primary service area of the proposed branch bank. The name of the proposed facility is to be Metropolitan Bank and Trust Company, Carrollwood Branch Office. It is to be located on the southwest corner of Dale Mabry Highway and Ehrlich Road, an unincorporated area of Hillsborough County, approximately 8.8 air miles from the main office. The property is presently owned by the applicant. No officer or employee of the applicant has an interest in the land purchased. The total cost of the land, building, furniture and fixtures and other fees is expected to amount to approximately $409,500.00. As of December 31, 1978, the applicant had an amount in excess of $1,391,500.00 to invest in bank premises. The proposed facility will offer full services, including checking and savings services, certificates of deposits, installment and commercial loans, VISA cards, safe deposit boxes, a 24-hour teller machine and Saturday banking. Additionally, the applicant intends to extend its main office services of international banking and trust services to the proposed branch. The building is to contain some 4,300 square feet and the drive-in area will contain some 1,050 square feet. Forty-three parking spaces will be provided. There will be five interior teller windows and four drive-in teller stations. The facility will also have a community room available for local citizens. The lending authority of the proposed branch manager will be $25,000.00 on an unsecured basis and $50,000.00 on a secured basis. Larger loans can be made available through consultation and approval of the parent bank. Long-term mortgage loans and acquisition and development loans will be available through the proposed branch. The proposed facility will have a branch manager and six staff (non- officer) members. The designated proposed branch manager is A. H. Vermeulen who has 22 years of experience in the banking industry and is currently a vice- president of the applicant. Mr. Vermuelen suffered a heart attack several weeks before the administrative hearing in this cause. It is expected that he will be able to resume his duties with the applicant. However, if he is unable to do so, the applicant has designated Charles Overholt as the proposed branch manager. Mr. Overholt has had 12 years of banking experience, has been an assistant branch manager of the Flagship Bank in St. Petersburg and is currently the applicant's vice-president in charge of the bookkeeping department. The applicant projects that total deposits at the proposed branch bank will be $5,000,00.00 at the end of the first year of operation, and $11,000,000.00 and $17,000,000.00 respectively at the end of the second and third years of operation. At the end of the first year of operation, the applicant anticipates a net loss of $22,100.00. Net profits of $211,300.00 and $459,500.00 are estimated for the end of the second and third years of operation. The site for the proposed branch banking facility is located on a main north/south traffic artery (North Dale Mabry Highway) and fronts on a major east/west traffic artery (Ehrlich Road). In selecting this site and designating the primary service area, the factors of residential development, population growth, traffic activity and flow, and existing financial institutions and services in the area were considered. Within the applicant's primary service area, there are presently two existing banks. The protestant Carrollwood is located 2.8 miles south of the applicant's site and the Exchange Bank of Temple Terrace branch is located 2.9 miles south of the proposed site. By an Order dated February 20, 1979, the Office of the Comptroller granted authority to the Sun Bank of Tampa Bay to open a branch bank to be located approximately 1.5 miles south of the site. Other applications for branch banks in the area are pending and there are several savings and loan institutions in the area. While the population of Tampa has declined in recent years, there have been considerable increases in population in the unincorporated areas of Hillsborough County, including the applicant's primary service area. The largest part (76.63 percent) of the increase in the unincorporated areas have resulted from net migration, as opposed to natural increase. There has been a good balance of growth in both the working or labor age group and the group aged 65 and above. The per capita personal income figures for Hillsborough County are below the State average and are increasing somewhat slower that the State average. The comparative figures report for June 30, 1977, through June 30, 1978, show that the protestant increased its total deposits by a little over 30 percent, the Exchange Bank of Temple Terrace increased its total deposits by almost 25 percent, and the Sun Bank of Tampa Bay likewise increased deposits by a little over 21 percent. The average for increases in deposits for the County was 16.6 percent. Official state estimates of population for the primary service area are not available. The applicant estimates the 1978 population of the primary service area to be 20,800. A population of 25,000 is projected for 1980 and a population of 33,000 is projected for 1985. The population of this area has grown approximately 105 percent since the year 1970. The two existing banks in the area result in a population per bank of 10,400 persons. The Sun Bank's branch brings this down to 6,933 persons per banking facility. The national average population per banking office is 4,715 and the Florida average is 8,086. The figures above for the primary service area do not take into account savings and loan institutions in the area nor customers served by banks outside the primary service area. The primary service area is mainly a "bedroom," residential community at the present time, with little commercial or industrial development. There is no significant concentration of employment in the area. The makeup of the populace is primarily upper middle class. Most of the residential development has occurred West of North Dale Mabry Highway. There are between 8,600 and 10,500 new residential units planned in the subdivisions located within the primary service area and, as of the date of the subject application, some 1,900 had been completed. Developers and landowners feel that commercial development in the area will naturally follow the residents development. At least two land developers in the primary service area have had difficulty obtaining financing in the form of large acquisition and development loans and construction loans from existing banks within the primary service area. The applicant is 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 29th 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 COPIES FURNISHED: J. Riley Davis William S. Lyman Taylor, Brion, Buker and Green Assistant General Counsel P. O. Box 1796 Office of the Comptroller Tallahassee, Florida 32302 The Capitol Tallahassee, Florida 32304 Robert W. Perkins and Richard B. Collins Comptroller Gerald A. Lewis Michaels, Sheffield, Perkins, The Capitol Collins and Vickers Tallahassee, Florida 32304 Post Office Box 10069 Tallahassee, Florida 32302
The Issue The purpose of the mandatory public hearing was to afford public comment on the application for authority to acquire Intercontinental Bank, West Miami, Florida (Intercontinental Bank). The hearing also allowed the Applicants, Eligio Cedeño and Alvaro Gorrin Ramos, to present evidence that they meet the criteria of Subsection 658.28(1), Florida Statutes, relating to reputation, character, experience, and financial responsibility such that they are qualified to acquire and own Intercontinental Bank in a legal and proper manner without detriment to the interests of the bank's stockholders, depositors, and creditors, or to the general public.
Findings Of Fact On January 12, 2005, OFR received the Application. OFR published notice of receipt of the Application on January 28, 2005, in the Florida Administrative Weekly. OFR has satisfied the notice requirements of Subsection 120.80(3)(a)1.a., Florida Statutes, and Florida Administrative Code Rule 69U-105.103. On February 3, 2005, OFR made a timely request for additional information regarding the Application. The Applicants answered this request in a letter dated May 5, 2005. The Applicants, as required by federal law, have filed a separate application with the Federal Deposit Insurance Corporation. The Applicants are foreign nationals. Mr. Eligio Cedño is proposed to own more than 25 percent of Intercontinental Bank's common stock, and Mr. Alvaro Gorrin Ramos is proposed to own more than 25 percent of Intercontinental Bank's common stock. On September 19, Don Saxon, Commissioner of OFR, issued an Order Granting Office's Petition for Public Hearing on the Application. The public hearing was scheduled for November 18, 2005, and the Applicants published a notice in the November 3, 2005, edition of The Miami Herald, which indicated the date, time, and location of the scheduled public hearing, and which otherwise complied with the requirements of Florida Administrative Code Rule 69U-105.105(1) and satisfied the notice requirement of Subsection 120.80(3)(a)4., Florida Statutes. A public hearing was held as scheduled on November 18, 2005. No member of the public appeared at the hearing, and no person expressed opposition to the Application. Mr. Eligio Cedño, a proposed major shareholder of Intercontinental Bank, has more than 26 years of banking and financial experience. He has experience as a senior officer, director, and major shareholder with various financial institutions, including Bolivar, Banco, C.A. Mr. Cedño appears to be sufficiently qualified by reputation, character, experience, and financial responsibility to control Intercontinental Bank in a legal and proper manner, and the interests of the other stockholders and the depositors and creditors of the bank, and the interests of the public generally will not be jeopardized by the proposed change in ownership. Mr. Gorrin Ramos, a proposed major shareholder of Intercontinental Bank, is a businessman with a variety of business interests throughout the United States and Venezuela. He has prior financial institution experience with Banco Canarias. Mr. Ramos appears to be sufficiently qualified by reputation, character, experience, and financial responsibility to control Intercontinental Bank in a legal and proper manner, and the interests of the other stockholder and the depositors and creditors of the bank, and the interests of the public generally will not be jeopardized by the proposed changes in ownership. Neither of the Applicants has been convicted of, or pled guilty or nolo contendre to any violation of Section 655.50, Florida Statutes, relating to the Florida Control of Money Laundering in Financial Institutions; Chapter 896, Florida Statutes, relating to offenses related to financial institutions; or any similar state or federal law. OFR conducted a background investigation on the Applicants and discovered no information to preclude the Applicants from acquiring the aforementioned shares of common stock in Intercontinental Bank. The current management and directors of Intercontinental Bank, including its president, Mr. Amadeo Lopez-Castro, Jr., will maintain their positions in the bank and will continue to manage the institution. In addition, Messrs. Carlos J. Fernandez, Alvaro J. Gorrin, and Marcel Rotker will be added to the existing board of directors of the bank. Intercontinental Bank's business plan reflects that the bank will offer full-service banking to individuals and businesses located primarily in the Miami-Dade County community. DONE AND ENTERED this 10th day of January, 2006, in Tallahassee, Leon County, Florida. S SUSAN B. HARRELL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 10th day of January, 2006.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. /
The Issue At issue in this proceeding is whether respondent, Swiss Bank Corporation (Swiss Bank) violated job service regulations.
Findings Of Fact The Parties Petitioner, John D. Topley, a native of Great Britain, is a citizen of the United States of America, and a resident of the State of New York. Respondent, Swiss Bank Corporation (Swiss Bank), is one of the three largest banks in Switzerland, and maintains its headquarters in Basel, Switzerland. Currently, Swiss Bank operates eight branches in the United States, including its most recent operation, the "Miami Agency", which commenced operations on December 1, 1987. Respondent, Florida Department of Labor and Employment Security (Department) is the State job service agency charged with the responsibility of administering, inter alia, job service regulations under the provisions of 20 CFR Parts 651-658. Background In or about September 1988, Swiss Bank filed an application with the Department for alien employment certification on behalf of Joseph Zeller (Zeller), a Swiss citizen, to enable it to employ Zeller as vice president and branch manager of its Miami Agency. According to the application, Zeller was the holder of an E-1 visa, which permits a maximum admission to the United States of one year, and had been employed by Swiss Bank as the vice president and branch manager of the Miami Agency since December 1987. According to the application, the full description of the job duties as vice president and branch manager of the Miami Agency were to be as follows: Responsible for overall supervision and management of Foreign Banking Agency with projected first year assets of approximately $100 million. Special emphasis on start-up marketing of services and longterm profitability of the Agency while overseeing the proper performance of the Agency's operations and employees. Specific duties include: Develop, evaluate and implement marketing strategies. Support account officers on marketing calls. Review and approve credit proposals and subsequent offers and agreements. Monitor efficient loan administration while foreseeing future needs of corporate clients. Review all loan proposals before forwarding to U.S. headquarters and overseas parent office Credit Committees. Consult with officers and clients in loan negotiations. Exercise full managerial authority concerning staffing performance appraisals, promotions, salary recommendations, and terminations. Prepare yearly budget utilizing input of all departments. Monitor, on exception basis, all operational and computer activity of the Agency. Make certain that accounting principles and audit procedures are in compliance with banking standards. In addition, must oversee the daily asset funding and foreign exchange activities and oversee deposit and private client activities. The minimum education, training and experience for the position was stated to be 5 years for the job offered or 5 years experience in a position as a "senior manager for a Major International Commercial Bank with management responsibilities for developing and maintaining relationships with banks and commercial clients abroad," a special requirement of "strong oral and written Spanish" was indicated, and the basic rate of pay was stated to be $139,000 per annum. When the application was filed with the Department, Swiss Bank had apparently made no effort to recruit United States workers since Part A, Section 21, of its application evidenced no such efforts, but simply stated that Swiss Bank "will advertise and post notice of job opening upon instructions from Department of Labor." Consistent with the requirements of 20 CFR Part 656.20(c), the application concluded with a certification of conditions of employment by Swiss Bank, under penalty of perjury, that: e. The job opportunity does not involve unlawful discrimination by race, creed, color, national origin, age, sex, religion, handicap, or citizenship; * * * h. The job opportunity has been and is clearly open to any qualified U.S. worker. Swiss Bank's Recruitment Efforts By memorandum of December 12, 1988, the Department instructed Swiss Bank to advertise the aforesaid job opportunity in a professional publication. Notwithstanding, Swiss Bank advertised the job opportunity in The Miami Herald, a newspaper of general circulation, on December 26, 27 and 28, 1989, and posted a notice of such job opportunity at its place of business for the two week period of December 26, 1988 through January 9, 1989. In response to the newspaper advertisement, the Department received seven resumes which it forwarded to Swiss Bank for consideration. No response was gendered by the notice posted at Swiss Bank. By letter of January 25, 1989, Swiss Bank advised the Department that none of the seven applicants met the requirements for the position, purported to delineate the reasons why each applicant failed to qualify, and requested that the Department continue the "expedicious processing" of Swiss Bank's application for alien employment certification on behalf of Mr. Zeller.1 In response, on or about January 30, 1989, the Department advised Swiss Bank that the advertisements it had run were contrary to the Department's memorandum of December 12, 1988, which had advised Swiss Bank to advertise the job opportunity in a professional publication, that such advertisements were unlikely to produce a satisfactory test of the United States work force, and that its application was not likely to be approved as submitted.2 The Department concluded by inquiring of Swiss Bank as to whether it wished to re- advertise or whether it wished the Department to forward the application "AS IS" to the certifying officer. By letter of March 8, 1989, Swiss Bank advised the Department that it had elected to re-advertise the job opportunity, and would do so by running an advertisement in one issue of The Wall Street Journal. The advertisement appeared in The Wall Street Journal on April 19, 1989, under that newspaper's "positions available" section, and provided as follows: VICE PRESIDENT & BRANCH MANAGER: Resp for overall superv & mgmt of Foreign Banking Agency w/projected 1st yr assets of approx $100 mil. Special emph on start-up marketing of services & long term profitability of the Agency while overseeing proper performance of agency's operations & employees. Spec duties incl: Dvlp, eval & implement marketing strategies. Support acct officers on marketing calls. Review & approve credit proposals & subseq offers & agreements. Monitor efficient loan admin while foreseeing future needs of corporate clients. Review all loan proposals before forwarding to U.S. headquarters & overseas parent office Credit Committees. Consult w/officers & clients in loan negotiations. Exerc full managerial authority concerning staff performance appraisals, promotions salary recommendations, & terminations. Prepare yearly budget utilizing input of all depts. Monitor, on exception basis, all operational & computer activity of Agency. Make certain acct principles & audit procedures are in compliance w/banking standards. Oversee daily asset funding & FX activities & oversee deposit & private client activities. Will supervise 10-20 workers. Sal $139,000/yr; M-F, 9-5. Reqmnts: 5 yrs exp performing the above described duties or 5 yrs exp as a Sr. Mgr for a major intern'l comm'l bank w/mgmt respons for developing & maintaining relationships w/banks & comm'l clients abroad. Must have strong oral & written Spanish. RESUME ONLY TO JOB SERVICE OF FLORIDA, 701 S.W. 27 AVENUE-ROOM 15, Miami, FL, 33135. Ref: Job Order #FL0020357. Such advertisement described the job opportunity and minimum job requirements in the same manner as Swiss Bank had described them in its application for alien employment, discussed supra, and was the last advertisement Swiss Bank was to run for the position. In response to The Wall Street Journal advertisement, the Department received 34 resumes which it referred to Swiss Bank for consideration. By letter of June 2, 1989, Swiss Bank advised the Department that, after review of the resumes, it had found 27 applicants unqualified and that it proposed to contact 7 applicants, including Mr. Topley, to personally discuss their banking experience and qualifications for the position. Notably, such letter contained the following introductory paragraph: Our minimum requirements for the position are five years' experience in the job offered or five years' experience as a manager with a major international commercial bank with management responsibilities for developing and maintaining relationships with banks and commercial clients abroad. The position also requires the services of an individual with strong abilities in oral and written Spanish. As our head office is located in Basel, Switzerland and our international correspondent, commercial, and private banking operations are structured so as to be attached to our General Management in Basel, we must also rely on the services of an individual in the position of Vice President & Manager of our Miami office who has European banking experience, providing international banking services to international private and corporate clients, and developing and marketing correspondent and commercial services with European banks and commercial clients. This is essential not only as it relates to the overall structure of the Bank, but is also in conjunction with the marketing plan implemented in 1989 under the newly constituted management and sales organization for the business sector "Correspondent Banking" and the new General Management Division, "Supervision International Organization." (Emphasis added). Pertinent to this case, this was the first occasion that Swiss Bank emphasized European capital market experience as a minimum requirement for the position, and neither The Wall Street Journal advertisement nor Swiss Bank's application for alien employment certification mentioned such requirement. Such "requirement" would, however, be subsequently featured as the primary reason for rejecting the 7 applicants ultimately interviewed. On June 15, 1989, Mr. Topley, at the request of Swiss Bank, appeared for an interview at its New York Branch, located at 4 World Trade Center, New York, New York. The person selected by Swiss Bank to interview Mr. Topley, and apparently the other 6 candidates, was a young personnel officer recently arrived from Switzerland, whose English was poor, and who could not speak intelligently because of an apparent lack of knowledge regarding banking activities in the United States or Latin America. Mr. Topley's "interview" took at most 20 minutes, and he was never interviewed by anyone else for the position including, as would be appropriate considering the nature of the position, a high level officer of the bank with knowledge of the area. Such "interview", for a senior executive position paying $139,000, requiring fluent Spanish, and high level job experience, by a personnel officer with no experience in the area and who could not reasonably evaluate the candidates' qualifications, was a patent sham. By letter of July 27, 1989, Swiss Bank advised Mr. Topley that he had not been selected to fill the position. In so doing, the bank stated: Although your background and qualifications are impressive, we regret that the position has been filled by an applicant who more fully meets our needs... Such letter was misleading in that none of the applicants had been selected to fill the position. Rather, by letter of August 10, 1989, Swiss Bank would advise the Department that it had found none of the applicants it interviewed met its immediate needs or minimum requirements, and requested that the Department "proceed towards certification of our application on behalf of Mr. Joseph Zeller." In its letter of August 10, 1989, to the Department regarding the results of its interviews with the 7 applicants, Swiss Bank further expanded the minimum job requirements for the position, first alluded to in its letter of June 2, 1989, and relied heavily on such "requirements" as a basis for rejecting the 7 applicants. As a predicate to its evaluation of the applicants, Swiss Bank stated: We are seeking to permanently fill the position of Vice President and Branch Manager of our Miami Agency. Our minimum requirements for the position are five years' experience as a manager with a major international commercial bank, with management responsibilities for developing and maintaining relationships with banks and commercial clients abroad, and strong abilities in oral and written Spanish. As we are a Swiss bank with headquarters in Basel, Switzerland, we must also rely on the services of an individual who has banking experience in the European market, providing international banking services, including capital transactions such as private placements to U.S. and foreign institutional investors, and private banking services, primarily to overseas high net worth individuals and institutions. The actual and targeted activities of our Miami Foreign Banking Agency are concentrated in two areas: private banking services for wealthy overseas individuals and institutions, and the development and marketing of financing and equity placements for U.S. and other North and South American companies in the European financial market. This includes raising capital through bonds, notes, commercial paper and other types of financing vehicles, as distinguished from corporate lending activities. It also includes the structuring of financing such as Eurobond transactions involving underwriting the issue and its placement among non U.S. investors. (Emphasis added). The representations emphasized in the aforesaid letter find no parallel in Swiss Bank's application for alien employment certification or the minimum requirements for the position set forth in The Wall Street Journal. To the contrary, they are repugnant to the representations Swiss Bank made to the Department by letter of December 1, 1988, to justify its special requirement that the position required a person with "strong oral and written Spanish" capabilities. Pertinent to this issue, such letter stated: The banking services provided by our Miami office are geared particularly to a Latin-American and U.S. Hispanic clientele comprised of private and institutional investors. These clients constitute a mix of high net-worth South American investors who regularly travel to the United States to conduct their finances and participate in U.S. investment opportunities, and a domestic Miami clientele, made-up primarily of high net-worth Cuban and other wealthy U.S. Hispanic investors. The complex nature of investments and monetary developments which must be explained to, and understood by, our clients requires a sophisticated command of both oral and written Spanish. Likewise, a comfortable business environment is absolutely essential to the ability to attract clients and maintain client relationships among high net-worth investors. This, in turn, requires our ability to convey trust and a thorough understanding of the intricacies of capital preservation, tax reduction and inflation protection through the mechanics of customized financial planning and problem-solving, including the use of a variety of complicated products such as fixed/call deposits; money market, numbered checking, and custody accounts; credit options; and various other investment services. * * * While our entire promotional campaign is replete with emphasis on our language capabilities (including Spanish-language literature prepared specifically for the Miami Agency that promotes our exceptional ability to provide services in English, Spanish, German and French), the Spanish language requirement for officers posted to Miami is more than a marketing tool for attracting new clientele. As indicated previously, the Miami Agency was opened to expand our private banking services in the United States to high net-worth international investors, and to function as the U.S. center of activity for our Latin America Private Banking II operations, including Venezuela, Mexico, Colombia, and Ecuador. (See New York Branch Organizational Chart that identifies Latin America Private Banking positions reporting to our Vice President & Branch Manager in Miami.) * * * The Vice President & Manager of the Miami Agency must utilize Spanish- language capabilities virtually the entire work-day. He is required to speak Spanish and lend support as the branch's highest authority when representing the Bank on all marketing calls; he must supervise relationships with all borrowing and non-borrowing private clients; he must develop and implement marketing strategy that appeals to a Spanish-speaking clientele; he must supervise a full staff of Spanish-speaking employees; he must consult with officers and clients individually and in tandem in loan negotiations; and he must oversee Latin American private client activities for the Venezuela, Mexico, Colombia, and Ecuador desks as well as private client activities for Miami. Finally, as its rationale for rejecting Mr. Topley as a candidate for the position, Swiss Bank stated in its letter of August 10, 1989, that: Mr. Topley presently works for the Park Avenue Bank, a small bank privately owned by Middle East capital. The bank typically provides personal financial services and manages U.S. expenses for non-resident clients. He left the First American Bank of New York because a new President restructured the bank to build-up the domestic area and cut-back international. Mr. Topley's international experience was primarily focused on the credit side. While he established First American's international division and private banking group, the division was soon cut-back and the international private banking group was negligible, consisting of just two people. Mr. Topley developed a private banking marketing plan, but was relieved of his private banking responsibilities before he was allowed to carry it out. Mr. Topley's experience with Bank of Montreal in merchant and correspondent banking and as a credit and marketing officer were all on the credit side. Furthermore, Mr. Topley's international experience has been limited to Latin America, with some background in Asia and the Middle East. He does not have any European capital market experience. The foregoing justification for the rejection of Mr. Topley's application is not an accurate representation of his experience, as reflected by his resume or otherwise. To the contrary, Mr. Topley has extensive experience as an international banker with major financial institutions, with an emphasis on start-up and management of branches and subsidiaries, over twenty-five years of such experience in Latin America, and speaks fluent Portuguese and Spanish. Contrary to the aforesaid letter, Mr. Topley's international banking experience was not primarily focused on the credit side, and his international experience was not limited to Latin America, assuming such was a legitimate factor, such that he had no European capital market experience. Rather, during his tenure with Libra Bank Limited, London, England, and with Bank of Montreal, New York and Toronto, Mr. Topley had a great deal of European capital market experience. In sum, the rationale advanced by Swiss Bank for the rejection of Mr. Topley is a fabrication, and Mr. Topley has demonstrated that he is qualified by education, training and experience for the position offered by Swiss Bank. Mr. Topley Complains By letter of August 16, 1989, to the Department, Mr. Topley registered a complaint regarding the hiring practices of Swiss Bank. In so doing, Mr. Topley stated: It is my belief and contention that this bank, in order to justify their placing of a Swiss national, namely Mr. J. Zeller, as Vice President and Manager of their de-novo branch in Miami, went through a bogus job search, initiated by an ad in the Wall Street Journal on April 18, 1989 . . . with no intention of hiring any of the numerous applicants, which included myself. The reason for doing this, in my opinion was to conform with the Labour Certification requirements of the State of Florida, which I believe states that 'a foreign national can only be employed in a stated senior position if a qualified American citizen cannot be found.' It should be mentioned here that Mr. Zeller, the Swiss national, was already in place as Vice President and Manager of the Miami Branch of the Swiss Bank Corporation when the ad was placed for that very position on April 18, 1989. Mr. Topley's "belief and contention" is aptly supported by the credible proof in this case. While Mr. Topley's complaint was pending, the Department had transmitted Swiss Bank's application for alien employment certification to the regional certifying officer, U.S. Department of Labor, Atlanta, Georgia. On May 17, 1990, that office advised Swiss Bank that it proposed to deny the request for certification based on Swiss Bank's failure to meet the requirements of 20 CFR Part 656 based on its conclusion, inter alia, that at least one United States worker who applied was qualified for the position. Swiss Bank filed a notice of rebuttal to the findings of the U.S. Department of Labor, but thereafter withdrew its request for certification on behalf of Mr. Zeller, which was confirmed by the Department of Labor on July 10, 1990. The announced rationale for Swiss Bank's withdrawal of such application was "because the person who is now in charge of our Miami Office possesses a green card and does not require an alien labor certificate." Such person, chosen by Swiss Bank to fill the position of Vice President and Manager of the Miami Agency, was Mr. Ruedi Burri, a Swiss citizen.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: 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. 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. 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. 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. 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. 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. 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. 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. The name of the proposed branch is to be Atlantic Bank of St. Augustine - St. Augustine South Branch. The applicant has received no notification that it is not in substantial compliance with the regulatory laws and statutes. 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. 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. 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
The Issue Consideration of the entitlement of Merchants & Southern Bank of Clay County to be granted permission to organize a corporation for the purpose of conducting general banking business in Clay County, Florida. See Section 658.19, Florida Statutes. ,
Findings Of Fact On April 12, 1985, Applicant submitted to the Department of Banking and Finance (Department) an application, pursuant to Section 658.19, Florida Statutes, for authority to organize a corporation for the purpose of conducting a general banking business in Clay County, Florida. See Department's Exhibit No. 1-A. Notice of receipt of the application was published in the Florida Administrative Weekly on April 26, 1985, under the name "Merchants & Southern Bank of Clay County." A Notice of Intention to Appear and Petition for Public Hearing was filed by the Protestant, Keystone State Bank, on or about May 15, 1985. Said Petition contained a request for public hearing and objected to the granting of such application on three grounds: There being no need for additional bank facilities in the primary service area where the proposed bank is to be located. The primary service area would not support the proposed bank and all other existing bank facilities in said service area. Public convenience and advantage would not be promoted by the establishment of the proposed bank. The application was deemed substantially complete on June 13, 1985, following submission of specific information and publication of the second and third choice names in the Florida Administrative Weekly on June 14, 1986. A Notice of Hearing was sent on July 11, 1985, for a hearing to be held October 30, 1985, and October 31, 1985. On August 16, 1985, Protestant filed a motion for continuance. On August 27, 1985, an order was entered granting the motion for continuance and rescheduling the hearing for December 10 and 11, 1985, in the jury room of the Clay County Courthouse. On October 31, 1985, a further Amended Notice of Hearing was prepared amending the location of the hearing to the meeting room in the Green Cove Springs public library. On November 7, 1985, an amendment was filed by the Applicant changing the corresponding director from Hugh E. Shiver to Ronald A. Carpenter. On November 8, 1985, an amendment was filed by Applicant adding Tim W. Kaskey as a proposed director. On November 18, 1985, the Office of the Comptroller acknowledged said amendments and determined they did not constitute material changes as that term is used in Rule 3C-9.02(6), Florida Administrative Code. Mr. Shiver, subsequent to said amendments and prior to hearing, resigned as a director. A hearing on the Petition was held on December 10 and 11, 1985, in the meeting room of the public library in Green Cove Springs, Clay County, Florida. Notice of the hearing was published on November 25 and 26, 1985, in the Florida Times Union and on November 21, 1985, in the Clay County Crescent. See Applicant's Exhibit No. 1. The Applicant's designated PSA (proposed service area) exists entirely within Clay County, Florida. PSA boundaries are as follows: DISTANCE FROM BOUNDARY DESCRIPTION SITE IN MILES north Bull Creek 12 miles south Junction Putnam Co., 6 miles Bradford Co., Alachua Co. & Clay County east Putnam County line 4 miles west Bradford County line 1 mile The PSA is serviced by State Road 21 in a general north- south direction, by State Road 100 in a general east-west direction and by various feeder roads throughout the PSA. See Department's Exhibit 1-A, map filed in response to question $2 of Exhibit A. Although the Applicant has the expectation of success in serving the area described above, testimony reveals that the northwest corner of the PSA, in the Kingsley Lake location, will not provide much business. Moreover, Applicant could be expected to realize as much as 75% of its deposits in an area which is five miles in radius from Keystone Heights, Florida, the location of the proposed bank. This would be consistent with the experience of the Protestant, Keystone State Bank, which obtains 73% of its deposits from that area. The area designated by the Applicant as its PSA, that is, the geographical area from which the proposed bank expects to draw 75% of its deposits, is a less likely eventuality than an area which more or less conforms to the five mile radius where experience of the existing Keystone State Bank has shown deposits approximating 75%. In addition to the difficulty of gaining success in the northwest corner of the designated PSA, due to the distance from the proposed bank location and the preference of those particular customers to bank in Starke, Florida, the balance of the northern one-half of the PSA is sparsely populated. Obviously, this lack of population limits the number of depositors. Likewise, the artificial boundaries at the county lines as set forth in the designated PSA are not realistic. The Applicant can be expected to serve portions of Bradford and Putnam counties as part of the PSA. The Applicant has recognized this overlap into other counties in its designation of a so-called "secondary service area." Protestant's Exhibit 2, a map, delineates the designated PSA in a pink outline and the five mile radius in a yellow circle. Applicant's Exhibit 2 is another map showing this secondary area in cross hatching. The secondary service area described by the Applicant is as follows: DISTANCE FROM BOUNDARY DESCRIPTION SITE IN MILES north same as PSA same as PSA South same as PSA same as PSA east population district 6 miles 444T and northern 1/5 of 442T west enumeration district 5 miles 76, 78T 78U and 78B After considering the Protestant's argument that the PSA for the Applicant is the five mile radius area and the Applicant's designated PSA and secondary service area, the expected PSA is found to be an area basically resembling the five mile radius with the secondary designation by the Applicant and the approximate lower half of the Applicant's designated PSA. The PSA consists primarily of small, commercial, service and professional organizations. See Department's Exhibit No. 1-A. Some of the businesses shown in the application have since gone out of business, while other new businesses have opened. The evidence is inconclusive as to whether there has been a net gain or loss in businesses. Clay Electric is the largest employer in the PSA, and there are no large manufacturing concerns within the contemplated service area. The Applicant proposes to name the bank "Merchants & Southern Bank of Clay County." The proposed charter site is a parcel of land approximately 210 feet x 251 feet located on Highway 21 in the City of Keystone. See Department's Exhibit 1-A, Option to Purchase (Exhibit "A") to Exhibit F "Banking House Quarters." The proposed bank will occupy a single story building to be constructed and will be in excess of 2,500 square feet. The Applicant intends to lease both land and building from Dennis R. O'Neil, a proposed director. The lease arrangement represents an insider transaction. Mr. O'Neil has agreed to enter into a ten year lease with the proposed bank that would call for interest only payments during the bank's first three years of operation, with the rate being two points above prime based on the costs incurred in acquisition of land and construction of the building. "Prime" is defined as the prime rate charged by Citibank, N.A., on the 25th day of each month. The annual rental for year four shall be determined by multiplying thirteen per cent times the value of the premises. Annual rental for years five through ten and the three five-year renewal periods will be determined by multiplying the annual rental for year four by the respective annual adjustment in the Consumer Price Index. There are two financial institutions located within Keystone Heights. One of those is a bank, the Protestant Keystone State Bank. Its main office is located approximately one-half mile from the proposed site of the Applicant bank. The Protestant also has a branch bank which is 7 1/2 miles south of the Applicant bank. That branch bank is nearby Merchants & Southern Bank of Hawthorne which operates a branch bank in Melrose, Florida, some seven miles to the south of Keystone Heights. This operation by Merchants & Southern Bank of Hawthorne is through a corporation with some relationship to the Applicant. That relationship was not shown to be one presenting any inappropriate arrangement by having a Merchants & Southern Bank with a location in Melrose and one in Keystone Heights. Florida Federal Savings and Loan Association also serves customers in Keystone Heights through an office in that location. That office is approximately 5/8 of a mile from the proposed site of the Applicant. Florida Federal Savings and Loan Association has not objected to the creation of a new banking institution in Keystone Heights. In examining the proposed location, there is no indication that the Applicant, in view of the PSA that is found in this report, has made an unrealistic delineation or designation of the service area in an attempt to exclude existing financial institutions. Both existing financial institutions within Keystone Heights have the potential to offer a full array of banking services. In fact, Keystone Heights Bank does offer those services, to include a wide variety of deposit products, loan products and ancillary services. On the other hand, Florida Federal Savings and Loan Association does not have the same variety in installment loans that is typically seen in a commercial bank or the composition of clients or deposits. Population trends for the PSA and other areas are as follows: AVG ANN % CNG TOT CNG AREA 1970 1980 1983 1970-80 FOR PER. Florida 6,791,418 9,746,418 10,591,701 3.67 43.5 County 32,059 67,052 74,524 7.7 109.2 County 21,825 52,446 59,503 9.2 104.3 SA 2,996 6,145 6,965 7.4 105.0 Key. Hts. 800 1,056 1,104 2.8 3.2 G. Cove S. 3,857 4,154 4,099 - 7.7 Org. Pk. 5,019 8,766 9,166 5.7 74.7 Pen. Fms. 561 630 652 1.2 12.3 Unicorp. P Municip: Protestant's demographic evidence shows an overall increase in the projected population within the five mile radius, from 6,930 to 9,783, or a total increase of 2,853 persons for the period 1980 to 1990, or a total increase of 41.2% for the period. This compares to a 105% increase between 1970 and 1980, from 3,024 to 6,930 persons. While the percentage of growth is approximately one-half for the period 1980 to 1990 as compared to 1970-1980, it should be noted that the 1970-1980 population increase was 3,149 persons compared to a "projected" increase of 2,853 persons for the period 1980 to 1990. The 41.2% total increase exceeds the median projection of 29.5% for the state as a whole during the same period. Thus, for all periods considered since 1970 the growth within that area was or is projected to be significantly larger than the population growth of the state. Most of the Clay County and Florida growth during 1970 to 1980 resulted from net migration: NET MIGRATION AS A PER CENT OF TOTAL GROWTH AREA 1970-1980 county 88.32% state 43.5 % The state, county and PSA are comparable in age grouping. 1980 AGE GROUPINGS AREA 15-64 YRS. 45 YRS OR OLDER 65 YRS. OR OLDER county 65.65% 24.44% 7.35% state 63.40% 38.70% 17.1% PSA 59.10% 41.2 % 22.0% The number of households in Clay County has increased at a significantly greater rate than for the state. HOUSEHOLD DATA PERCENTAGE INCREASE AREA 1970 1980 1970-1980 County 9,396 21,646 130.0% State 234,187 382,209 63.2% Per capita personal income (PPI) trends for Clay County and the state of Florida are listed below: PER CAPITA PERSONAL INCOME AREA 1978 1979 1980 1981 1982 county $ 6,345 6,864 7,680 8,520 9,094 state 7,330 8,202 9,202 10,362 10,907 Data provided by the Florida Department of Labor and Employment Security indicates that Clay County has significantly lower unemployment rates than the state. UNEMPLOYMENT RATES AREA 1979 1980 1981 1982 1983 County 3.8% 3.4% 4.8% 5.5% 6.7% State 6.0% 5.9% 6.8% 8.2% 8.6% 23. A comparison of total deposit growth in the PSA with that of Clay County and Florida yielded the following results: TOTAL BANKING DEPOSITS (June 30 in each year reported) AREA 1983 1984 CHANGE Absolute 1983-1984 Per cent State 55,569,572 60,187,042 4,617,480 8.3 County 158,230 183,806 25,576 16.2 PSA 27,018 35,524 8,306 30.7 The deposits of Protestant have over the past five years had an average annual growth rate of approximately 22% compounded annually, compared to an 8% compounded growth rate in deposits for the state of Florida for the same period. As stated, the banking institutions in the PSA can be described as full service in nature. However, the applicant proposes increased lobby and drive-in hours consistent with financial institutions in neighboring Alachua and Bradford counties and to provide Automatic Teller Machines. (Keystone State Bank does intend to offer Automatic Teller Machines in the future.) The failure to presently provide these additional services constitutes a deficiency in services and these additional services will provide a substantial convenience and advantage for a significant number of people. This deficiency in service is not monumental, but it is significant. Protestant had determined that being open on Saturday until 12:00 did not warrant the extra overhead costs but has not attempted to remain open on Saturday for a period of ten years, a period during which Protestant acknowledged that services provided by banks have expanded. The capital structure of the proposed bank would total $1, 500,OOO as follows: S1,125,OOO to common capital, $300,000 to surplus and 575,000 to undivided profits. The Applicant intends to issue 75,000 shares of common stock with a par value of S25.00 per share and a selling price of S20.00 per share. The Board of Directors are as follows: NAME OCCUPATION # OF SHARES Dennis R. O'Neil president 75,000 Ronald A. Carpenter attorney -0- Tim W. Kaskey CPA -0- Herbert Treweek insurance -0- Charles Blount owner-auto agencies -0- Total: 75,000 One of the proposed directors, Dennis R. O'Neil, owned the High Springs Bank, Leach County, from 1977 to 1984. Mr. O'Neil acquired the Merchants & Southern Bank of Alachua County in November, 1984. He is the sole stockholder of Merchants & Southern Bank of Ocala, a denovo bank granted in mid-1985. In each of said banks, he has served as Chairman of the Board of Directors. Proposed director Ronald A. Carpenter, served on the Board of Directors of High Springs Bank from 1978 through 1983. He presently serves on the Board of Directors of Merchants & Southern Bank of Alachua County and Merchants and Southern Bank of Ocala. Mr. Treweek presently serves on the Board of Directors of Merchants & Southern Bank of Alachua County. Mr. Blount has served on the Board of Directors of Atlantic Bank of Gainesville for seven years, the High Springs Bank for six years, the Barnett Bank of Alachua County for one year, and is presently on the Board of Directors of Merchants & Southern Bank of Alachua County. Mr. Kaskey is presently serving on the Board of Directors of Merchants & Southern Bank of Ocala. Four of the members of the proposed Board of Directors are also members of the Board of Directors of Merchants & Southern Bank of Alachua County. Merchants & Southern Bank of Alachua County has fourteen board members, therefore less than 25% of the board members of Merchants & Southern Bank of Alachua County also serve on the proposed board of directors. The organizers, proposed directors and officers of the Applicant bank have reputations evidencing honesty and integrity. They have sufficient employment experience in businesses to demonstrate responsibility and understanding of financial affairs. At least one member of the proposed board of directors other than the chief executive officer has direct banking experience. All of the organizers and directors of the proposed bank are residents of Alachua County, Florida. Applicant presented Dr. William McCollough, an expert in economics and finance. In that capacity he testified to the following as it relates to projections of deposits, income, expenses and viability of a denovo bank in Keystone Heights: The projection of total deposits at the end of the first year as set forth in the application was reasonable. The applicant's statement of earnings in terms of the result over the three-year period are a reasonable estimation of possible outcome. This perception is based on the witness' understanding that the application shows average loans outstanding with zero loans to start. The estimate of deposit base in years two and three is reasonable. The proposed bank should sustain a positive return by the third year and sustain an adequate capital structure. Keystone State Bank and the denovo bank will be able to sustain themselves at a profitable return on equity. The conclusions set forth in the application indicate that there will be a loss in the first year of $30,569 and a profit in the second and third years in the amount of $16,470 and $35,085, respectively. William Wood was presented by Protestant as an expert in preparing and analyzing bank applications as to format, and in that capacity presented the following testimony as to deposits, income and expenses: In years one and two of operation, the proposed bank would suffer a loss of $589,000 plus, and in year three a profit of $56,000. That the above figures were based upon an assumption that average deposits are shown in the exhibits and not year-end totals for deposits The assumption by Mr. Wood that more than a half million dollar loss assumes no income from Federal funds. Nevertheless, he found the investment income portion of the application attributable to this source should be reduced from $345,600 to $99,000 due to the opinion that the yield on government obligations was overstated. The higher return would be at 17.45%. Keystone State Bank presently receives 9.35%, which is roughly the figure used by Wood in making the estimate. That the capital to deposits ratio at the end of year three, by Mr. Wood's calculations, would be 8.75%, and that generally for a denovo bank, a ratio of 8 to 12 per cent would be reasonable. The criteria used in Mr. Wood's analysis of the application concerning rates of interest and rates for payment on deposits were limited solely to the existing rates shown by Keystone State Bank and not to rates at the time of the application or other banks' historical experience. However, the Keystone experience is valuable in understanding the possible success of the Applicant in competing in this market. Keystone State Bank has commercial loans at a rate of 13.06% and its installment loans are at 11.6%. Interest charges proposed by the Applicant on installment loans are 14%. The Applicant projects that interest to be paid on time deposits is 8%, whereas Keystone State Bank is paying a slightly higher yield on deposits. These differences, according to Wood, point out the difficulty of the Applicant in trying to penetrate the market. Wood does not believe that it is reasonable to expect the Applicant to have success in the market when the loan rates of the existing bank are lower than those proposed by the Applicant, and the Applicant projects an interest payment of less than what the experience has been for the existing bank. This analysis by Wood is realistic. Wood points out that the interest expense of 8% on time deposits is calculated on the assumption that the deposits constitute 60% of the total deposits. The experience of the Protestant bank has been that the time deposits constitute 85% of total deposits. Consequently, the Applicant may have understated its interest expenses. Wood has a concern that the depreciation schedule related to the equipment shows a ten year depreciation for all equipment, which in some instances is inappropriate. This references the Automatic Teller Machines, typewriters, furniture, fixtures and CRTs. When the issues of financial feasibility are considered in view of the remarks of the experts as reported, and in consideration of the documents presented in the application, it is unclear what basis the Applicant had in mind in depicting its financial position within the first three years. The information does not make it clear that either a system of year-end figures or average figures within the year was contemplated. It is evident that the Applicant's projections as to profit and loss within those first three years are not accurate. Such matters as interest expense on time deposits; the ability to be successful in the market place, charging higher rates on installment loans and paying less interest on time deposits than the direct competition; miscalculating the amount of yield on government obligations; misstating the depreciation expenses; and the ambiguity in the formula utilized to establish the estimate of income lead to this factual conclusion. Nonetheless, given the operating margin of $500,000 above the one million dollar requirement for institution of bank operation, there is the necessary flexibility in this proposal to overcome these problems in estimation. The Keystone State Bank has a 55% loan to deposit ratio. It has shown a return on equity in 1984 at 21.3% and a return on assets of 1.38%, ranking it as number one in the twenty-three similar size banks in Florida. Its growth rate in the past five years as compounded annually has been 27%. In that five year period it has earned on the average 18.31% on equity and 1.31% on equity and 1.33% on return on assets, ranking at 14th in 237 banks in the deposit range of 25 million to 49 million dollars within the state of Florida. In summary, as indicated by its president, Jo Reed, who testified in the course of the final hearing, if the proposed bank were granted a charter, Keystone State Bank would still be a stable depository for the residents of the area and would continue as a strong and profitable financial institution. DONE AND ENTERED this 19th day of March, 1986, at Tallahassee, Florida. CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of March, 1986.
Findings Of Fact The Department rules on the Proposed Findings of Facts submitted by the parties as follows: APPLICANT'S PROPOSED FINDINGS Applicant's proposed finding as to the net profit to asset ratio is accepted. Applicant's proposed finding as to the adjusted capital to asset ratio is accepted. Applicant's proposed finding as to the boundaries of the PSA are accepted. Applicant's proposed findings as to the population estimates of the PSA and the communities located within the PSA are accepted to the extent they are not inconsistent with the Department's findings adopted herein. Applicant's proposed finding as to net migration into Pinellas County and the age distribution characteristics of Pinellas County are accepted to the extent they are not inconsistent with the Department's findings adopted herein. Applicant's proposed finding that the Bank of Indian Rocks is the only full service bank with its main office operating in the PSA is accepted. Applicant's proposed finding that the Bank of Indian Rocks experienced a 23.3 percent rate of growth for loans and a relatively modest rate of growth for deposits during the last reporting year is accepted. Applicant's proposed findings as to the nature of the proposed branch site are accepted. Applicant's proposed finding as to the banks servicing the PSA is accepted to the extent that said banks have branch offices located in the PSA, but is rejected to the extent that said finding excludes other banks which may service customers in the PSA. Applicant's proposed finding that the PSA community is heavily dominated in terms of bank operations by the Bank of Indian Rocks is rejected as being unsupported by competent substantive evidence in the record. The record indicates that based on a telephone sample survey of 399 persons, 49 percent of the households in the PSA have their primary checking account at the Bank of Indian Rocks. The Applicant's proposed finding does not necessarily follow from the survey. Applicant's proposed finding as to the percentage of people located in the PSA that have a primary checking account in the PSA and bank with the Bank of Indian Rocks is rejected for the reasons previously stated in paragraph 10. Applicant's proposed finding as to the need for an additional full service bank based on the statistical data presented is rejected as constituting a conclusion of law. Applicant's proposed finding as to the savings and loan associations serving the PSA is accepted to the extent that said savings and loan associations have offices located in the PSA, but is rejected to the extent that said finding excludes other savings and loan association offices which may serve customers in the PSA. Applicant's proposed findings as to the nature of the primary service area is accepted, with the exception of the finding as to the amount of land available for future development which is rejected as being unsupported by competent substantial evidence in the record. Applicant's proposed findings that the Applicant's economic capacity will be enhanced by the branch; that the Applicant can support the proposed branch and statements with regard thereto, are rejected as constituting conclusions of law and legal argument, rather than findings of fact. Applicant's proposed findings as to the range of services that will be offered at the proposed branch are accepted. Applicant's proposed finding as to the need for additional banking facilities and the convenience of the proposed bank are rejected as constituting conclusions of law. Applicant's proposed findings as to the substantial experience of the bank staff, and significant assets are accepted; however, Applicant's proposed findings to the capability of the bank to support the branch facilities is rejected as constituting a conclusion of law. Applicant's proposed findings as to the Applicant's return on assets on 1977, 19978 and year to date are accepted. Applicant's proposed findings as to the liquid assets as a percent of total liabilities; condition of assets; classified assets and loan loss ratio are accepted. Applicant's proposed findings as to increased earnings, increased average balances and reduced chargeoffs are accepted. Applicant's proposed finding that there has been no cash operating loss of the Applicant is rejected as being unsupported by competent substantial evidence in the record. Applicant's other statements with regard thereto are rejected as constituting legal argument rather than findings of facts. Applicant's proposed finding that the review of the branch by management of the Applicant and the Atlantic Bancorporation is significant is accepted; however, Applicant's proposed finding as to the judgment of the management as to the success of the proposed branch constitutes a conclusion of law. Applicant's proposed finding that there was no insider transaction involved in the purchase of the land is rejected as being irrelevant and immaterial. Applicant's proposed finding that there was no showing that the lease transaction constitutes an insider transaction is rejected as being unsupported by competent substantial evidence in the record. Applicant's proposed finding that the lease sum represents approximately a 12 percent return on assets is accepted; however, the Applicant's proposed finding that the lease arrangement was not controverted as being unfair or unreasonable is rejected as being irrelevant and immaterial. Applicant's proposed finding that the depth of management is sufficient to operate the branch is rejected as constituting a conclusion of law. Applicant's proposed findings as to the number of years of experience of various officers of the bank is accepted. Applicant's proposed finding as to whether the name of the proposed branch was confusing is rejected as constituting a conclusion of law. Applicant's proposed finding that the Applicant does not have more than four pending branch applications is accepted. Applicant's proposed findings that there was no evidence presented which would indicate that the bank was not in compliance with federal and state regulations and statements of bank offices thereto are accepted. PROTESTANT'S PROPOSED FINDINGS Protestant's proposed findings in Section 1 are accepted, with the exception of the last sentence which is rejected as being a conclusory statement not supported by competent substantial evidence in the record. Protestant's proposed findings in Section 2 are accepted. Protestant's proposed findings in Section 3 are accepted, with the exception that the record reflects that the proposed site is located in the vicinity of the northwest quadrant of the intersection of Indian Rocks Road and Walsingham, and does not specify the number of fees west of the intersection. Protestant's proposed findings as to the PSA's boundaries as delineated by the Applicant in Section 4 are accepted. The second and third sentences in Section 4 are rejected as being unsupported by competent substantial evidence in the record. The first sentence in the second paragraph of Section 4 is accepted. The second sentence in the second paragraph of Section 4 is rejected as constituting legal argument rather than a finding of fact. The remaining proposed findings in Section 4 relating to the boundaries of the PSA of the First Bank of Treasure Island are irrelevant for the reason that said PSA is not necessarily applicable to subsequent applications. Protestant's proposed finding in Section 4 as to the population of the PSA is accepted and the proposed findings relating to the population of First Bank of Treasure Island's PSA is rejected as being irrelevant. Protestant's proposed finding in Section 4 as to the residential nature of the PSA is accepted. Protestant's proposed finding as to the limited nature of commercial activity is rejected as being unsupported by competent substantial evidence. The record reflects that although commercial activity in the PSA is in the form of small retail, professional, and service type establishments, these establishments are numerous in number. Protestant's proposed finding as to the considerable greenbelt lands which cannot be used for development is rejected as being unsupported by competent substantial evidence. The record reflects that there are greenbelt areas which cannot be used for development, but does not reflect that the amount of these lands is considerable. Protestant's proposed findings in the first and second sentences in Section 5 are accepted. The third sentence in Section 5 is accepted to the extent that traffic coming from west to east cannot enter the proposed site directly. The remaining findings in the first paragraph of Section 5 are accepted, with the exception of the last phrase of the last sentence which is rejected as speculation and not supported by competent substantial evidence in the record. Protestant's proposed finding in the second paragraph of Section 5 as to the number of Applicant's existing customers in the PSA is accepted, however, the remaining findings in that paragraph are rejected as unsupported by competent substantial evidence in the record. Protestant's proposed finding in the last paragraph of Section 5 is rejected as constituting a conclusion of law. Protestant's proposed finding in the first paragraph of Section 6 are accepted to the extent that said finding represents the number of offices of financial institutions serving the PSA and not the number of financial institutions. Protestant's proposed finding in the first sentence of the second paragraph of Section 6 is rejected as being unsupported by competent substantial evidence in the record. The record reflects that the Applicant offers automatic transfer from savings to checking and not that they contend this service is unique. Protestant's proposed finding in the second sentence of the second paragraph of Section 6 is accepted with the exception that the record does not support the finding that the Bank of Indian Rocks offers automatic transfer accounts. The finding in the last sentence of the second paragraph of Section 6 is rejected as being irrelevant. Protestant's proposed finding in the third paragraph of Section 6 is rejected as being unsupported by competent substantial evidence in the record. The record reflects that some of the questions asked in the Burke survey may have been based on the assumption that automatic transfer accounts were not presently offered in the PSA, however, the entire survey was not based on that assumption. Protestant's proposed finding in the fourth paragraph of Section 6 is accepted. Protestant's proposed finding in the fifth paragraph of Section 6 is rejected as being unsupported by competent substantial evidence in the record, said finding is based on hearsay evidence which is uncorroborated. Protestant's proposed finding in the sixth paragraph as to the number of businesses that the Applicant listed in its application which were not in its PSA is accepted, however, the remaining finding in that paragraph is rejected as irrelevant. Protestant's proposed finding in the last paragraph of Section 6 is rejected as constituting a conclusion of law. Protestant's proposed finding as to the provisions of Rule 3C- 13.041(2)(a), F.A.C. in the first paragraph of Section 7 are accepted. Protestant's proposed finding as to the Applicant's capital to asset ratio in the second paragraph of Section 7 is accepted. Protestant's remaining finding in that paragraph is rejected as constituting legal argument and opinion, rather than a finding of fact. Protestant's proposed findings in the first paragraph of Section 7 are accepted. Protestant's proposed finding in the fourth paragraph of Section 7 is rejected as being unsupported by competent substantial evidence in the record. The record reflects that Mr. Maurer stated that the Applicant probably would not be able to add to capital through earnings based on the projected losses of the unopened branches. Protestant's proposed findings as to the projected deposits of the Applicant's branches in the fifth paragraph of Section 7 are accepted, however, Protestant's proposed finding as to the need for additional capital is rejected as constituting a conclusion of law, opinion and legal argument. The remaining findings in that paragraph and the first sentence of the sixth paragraph are rejected as being legal argument rather than findings of facts based on competent substantial evidence in the record. The finding in the second sentence of the sixth paragraph is accepted. Protestant's proposed finding in the seventh paragraph of Section 7 that the applicant does not have sufficient personnel to staff and manage its new branches is accepted. Protestant's proposed finding that no manager for the proposed branch has been selected is rejected as being unsupported by competent substantial evidence in the record. Although there appears to be conflicting testimony as to this fact, the application contained in the record states that James Arntz had been selected as the branch manager, in addition to testimony on direct examination that Mr. Arntz had been selected as the branch manager and the record supports said finding. Protestant's proposed finding as to the managerial capacity of the Applicant and its impact on the adequacy of capital to asset ratio is rejected as constituting a conclusion of law. Protestant's proposed findings contained in the first two sentences of the eighth paragraph of Section 7 are accepted. Protestant's proposed finding contained in the last sentence is rejected as constituting a conclusion of law. Protestant's proposed finding in the last paragraph of Section 7 is rejected as constituting a conclusion of law. Protestant's proposed finding in the first sentence of the first paragraph of Section 8 is accepted. The remaining findings in that paragraph are rejected as constituting conclusions of law. Protestant's proposed finding in the first sentence of the second paragraph of Section 8 is accepted, and the remaining finding in that paragraph is rejected as constituting a conclusion of law. Protestant's proposed findings in Section 9 are accepted. Protestant's proposed findings in Section 10 are accepted. Protestant's proposed findings in the first two paragraphs and the first, second and fourth sentence of the third paragraph of Section 11 are accepted. The proposed findings in the third and fifth sentences of the third paragraph are rejected as constituting conclusions of law. Protestant's proposed findings in the first two sentences of the fourth paragraph of Section 11 are accepted, the remaining sentence in that paragraph is rejected as constituting a conclusion of law. Protestant's proposed findings in Section 12 are accepted, with the exception that (1) 9 percent represents an average cost of time deposits and to a minimum and (2) the proposed finding in the last sentence constitutes a conclusion of law. Protestant's proposed findings in the first two paragraphs of Section 13 are accepted. The remaining findings of the last paragraph are rejected as constituting conclusions of law. Protestant's proposed findings in the first paragraph of Section 14 are accepted, with the exception that the record reflects that the purchase price of the proposed site was $240,000 and not $200,000. Protestant's proposed findings in the first two sentences of the second paragraph of Section 14 are rejected as being irrelevant. The proposed findings in the third sentence is accepted. The proposed findings in the remaining sentences of that paragraph are rejected as constituting legal argument and conclusions of law. Protestant's proposed findings in Section 15 as to the provisions of Rule 3C-13.041(3) are accepted. The remaining proposed findings are rejected as being irrelevant. Protestant's proposed findings in Section 16 as to the provisions of rule 3c-13.041(2)(c) are accepted. The proposed finding in the second sentence of that section is accepted. The proposed finding in the third sentence is rejected as being unsupported by competent substantial evidence in the record for the reasons stated above in paragraph 53 of this Order. The proposed finding in the last sentence is rejected as constituting a conclusion of law. DEPARTMENT'S PROPOSED FINDINGS The Department's proposed findings contained in paragraph 1, 3, 4 through 10, 12 through 19,22 and 23 are accepted. The Department's proposed findings contained in paragraph 2 are accepted with the exception of the third sentence which is rejected as being unsupported by competent substantial evidence in record for the reasons stated above in paragraph 53 of this Order. The Department's proposed findings contained in paragraph 11 are accepted, with the exception of the figure for the projected deposits for the first year based on 2.2 persons per household which is rejected as being unsupported by competent substantial evidence in the record. The record reflects that this figure is $2,487,000 and not $2,700,000. The Department's proposed findings contained in paragraph 20 are accepted, with the exception of the number of deposit and loan customers residing in the PSA which is rejected as being unsupported by competent substantial evidence. The record reflects that there was conflicting testimony as to the number of existing deposit customers, however, the hearing officer found the number to be 140, and 65 loan customers. The Department's proposed findings contained in paragraph 21 are accepted, with the exception of the amount of square feet of the building to house the proposed branch, which is rejected as being unsupported by competent substantial evidence. Although the application contained in the record stated that the building would contain 3,640 square feet (including the drive-in canopy), the hearing officer found that the building would contain 2,000 square feet. PROTESTANT'S EXCEPTIONS TO THE REPORT AND FINDINGS OF FACT OF HEARING OFFICER The Protestant's exception contained in Section 1, with regard to the Hearing Officer's ruling's on the proposed findings, is accepted to the extent that the better practice would be for the Hearing Officer to specify which proposed findings are rejected as not supported by the evidence, which are irrelevant and which constitute conclusions of law. However, it has been recognized that the hearing officer is not required to make explicit rulings on subordinate. commulative, immaterial or unnecessary proposed facts. Forrester v. Career Service Commission, 361 So.2d 220 (1st DCA Fla. 1978). Notwithstanding, the Department has expressly ruled on each proposed finding and stated the reasons therefore. Protestant's exception contained in Section 2 is rejected for the reason that some of the proposed findings contained in Protestant's Proposed Findings of Fact were not based on competent substantial evidence, were irrelevant or constituted conclusions of law, as more fully set forth above in paragraphs 31 through 70. Therefore, it would be improper for either the Hearing Officer or the Department to adopt each and every proposed finding contained in Protestant's Proposed Findings of Fact as requested in the exception. Protestant's exception contained in Section 3 is rejected for the reason that the Hearing Officer's finding that the proposed branch manager is James Arntz is supported by competent substantial evidence in the record. The testimony contained in pages 497 and 498 of the transcript, cited by Protestant in its exception, refers to the Applicant's application for a branch office in northeast St. Petersburg. Although there was conflicting testimony as to this fact (see TR-465 and TR-540), the application contained in the record also identified James Arntz as the proposed branch manager. As such, there was competent substantial evidence in the record to support the Hearing Officer's finding. Protestant's exception contained in Section 4 is accepted for the reason that the Hearing Officer found that the "the greater weight of the evidence indicates that average number of persons per household in Pinellas County is 2.2". As such, Applicant's revised figures based on 2.2 percent per household are accepted which indicate that the proposed branch will not show a profit until the fourth year. The Department's findings of fact have modified the Hearing Officer's findings accordingly. Protestant's exception contained in Section 5 is rejected for the reason that the Hearing Officer's finding is supported by competent substantial evidence in the record. The testimony contained on pages 511 and 512 of the transcript, which is cited by the Protestant, merely states that the Applicant probably would not be able to add to capital through earnings based on the assumption of the projected losses of the Applicant's new branches. As such, the Hearing Officer's finding is accurate. Protestant's exception contained in Section 6 is accepted for the reason that the record reflects that the Applicant's president stated that the branch will probably have Saturday banking hours, but that the exact hours had not been determined. The Department's Findings of Facts have modified the Hearing Officer's findings accordingly. Protestant's exception contained in Section 7 is rejected for the reason that the Hearing Officer's finding is supported by competent substantial evidence in the record. On pages 328 and 329 of the transcript, the witness for the Applicant testified that there was a stacking lane which functionally is in front of the site for traffic hearing west. Protestant's exception contained in Section 8 is rejected for the reasons that the Hearing Officer's finding based on the study was limited and for a limited purpose, and the questions asked in the survey and the procedure appear reasonable. In addition, the Hearing Officer's and Department's reliance on the study is minimal, if at all. Protestant's exception contained in Section 9 is rejected for the reason that the adverse impact of the establishment of a branch on other banks is irrelevant, because it is not a consideration under the statutory and regulatory criteria applicable to branch bank applications. Protestant's exceptions contained in Sections 10 and 19, 21 and 23 are rejected for the reasons that the requested findings are conclusions of law which are not properly included in the Hearing Officer's report pursuant to Section 120.60(3), Florida Statutes. Protestant's exception contained in Section 20 is rejected for the reason that the requested finding as to an appraisal of land and improvements is irrelevant where, as in this case, there is no insider transaction involved in the purchase of the land. Protestant's exception contained in Section 22 is rejected for the reason that the revisions referred to by the Protestant were updated figures based on data unavailable at the time of the application and figures relating to the lease arrangement. Although at the time of the application, the Applicant intended to purchase the proposed site, it later decided to lease the proposed site. The Department does not view this as a material change in the application and fails to see how the Protestant was prejudiced by this change. As to the updated figures, in McDonald v. Department of Banking and Finance, 346 So.2d 569, 584 (Fla. 1st DCA), the court stated that the hearing officer may freely consider relevant evidence of changing economic conditions and other current circumstances external to the application. It should also be noted that the revisions referred to by the Protestant were testified to at the hearing in June, thus giving the Protestant a month's notice to make any changes necessary in the preparation of its case which was later presented at the continuation of the hearing in July. Protestant's exception contained in Section 24 is rejected for the reason that the requested findings are not material to the statutory and regulatory criteria applicable to branch applications.
The Issue Whether the Respondent violated Section 475.25(1)(a) and (i), Florida Statutes.
Findings Of Fact The admissions by the Respondent, together with the records introduced at the hearing by the Florida Real Estate Commission show that Respondent was a licensed real estate broker holding license no. 0122293. The Respondent admitted his participation in all the transactions referenced in the administrative complaint. The bank records and other evidence introduced at the hearing show that the Respondent's escrow account maintained at Liberty Bank of Cantonment lacked sufficient funds to pay the bills which Respondent admitted were owed Lawyers Title Insurance Co. in the amount of $44.00. The Respondent testified that he had paid these bills only two days before the instant hearing with a check on his personal bank account. From the Respondent's testimony, it is clear that he failed to maintain sufficiently detailed records to permit him to account for monies in his escrow account in the Liberty Bank of Cantonment and in the bank account which he maintained with the First State Bank in Pensacola, Florida. The closing statements relating to the Netzer/Hayes transaction showed that the Respondent received $1,225.00. His records for this transaction showed checks on his escrow account relating to this transaction in the amount of $1,481.60. Respondent testified that the error in this transaction occurred when he erroneously stubbed one check as relating to the Netzer/Hayes transaction, when in actuality it related to a separate transaction. However, under cross examination the Respondent could not identify the transaction to which this check related. The Respondent admitted depositing the money involved in the Netzer/Hayes transaction to his Cantonment Liberty Bank escrow account. He also admitted that he had made no transfer of funds from the Cantonment bank account to his First State Bank account. The Respondent admitted and the evidence indicates that payments were made at closing from the First State Bank account. The Liberty Bank account records show a balance of less thank $731.00 at all times after 9-30-76. Therefore, insufficient funds were maintained by the Respondent in the Liberty Bank escrow account to satisfy the obligations on the account arising from the Nitzer/Hayes transaction. Furthermore, the Respondent's handling of escrow account at the Liberty Bank in Cantonment was as it related to this transaction was improper The admissions of Respondent and the evidence introduced showed that he was the broker involved in the Suttles/ Kamplain transaction. No evidence was introduced that the Respondent failed to advise Suttles that he initially had accepted a $250.00 note in lieu of cash as an earnest money deposit. The evidence is clear that upon receipt of the money, the Respondent deposited this money to his account in the First State Bank of Pensacola. Although this account was not designated an escrow account, it did bear the designation of a management account. It was not established by substantial and competent evidence that a management account was not an escrow account. The Suttles/Kamplain transaction closed without problem; however, there is no explanation of the disbursement of the $250.00 received as an earnest money deposit in the records of this transaction. Regarding the Suttles/Gordon transaction, it was established that the Respondent was the broker who handled this transaction. No substantial and competent evidence was produced that the Respondent failed to disclose to the Gordons that he did not obtain an initial $100.00 deposit on the transaction. The record is clear that the Respondent did receive a check in the amount of $1,500.00 from Mr. Suttles which the Respondent deposited to his account in the First State Bank. The Gordons did testify that the Respondent was authorized to allow the Suttles to occupy the premises prior to closing. After occupying the property, the Suttles were to make rental payments to be credited to the payment of the mortgage. After moving into the house, Mr. Suttles and his wife began to have domestic problems, and he immediately ceased to make all rental payments upon the property. Mr. Suttles did not advise the Respondent that he was not making payments and did not intend to make further payments on the house. Mr. Suttles did avoid all of Respondents efforts to contact him. The Suttles and the Gordons did execute the closing papers but by the time the papers were executed, Mr. Suttles failure to make the rental payments had caused a deficiency in payment of the mortgage. Because the mortgage was in arrears, the transaction could not close. When the Respondent became aware of the Suttles' separation, he began to make arrangements to have them vacate the Gordon house. However, Respondent failed to keep the Gordons fully advised as to the statuts of this transaction. Further, the check given to the Gordons by Respondent was not honored by the First State Bank of Pensacola because of insufficient funds in the Respondent's account to meet this obligation. The Respondent retained and disbursed portions of the $1,500.00 deposited to the account, although the transaction did not close. Money was disbursed to the Gordons and Respondent took out his commission. Whether Respondent was not entitled to disburse the monies under the contract between Respondent and the Gordons cannot be determined upon the evidence presented. However, it is clear that Suttles was a bona fide purchaser, who after he entered into occupancy, determined that he would not complete the transaction; and under the terms of the contract between the Respondent and the Gordons, the Respondent earned his commission when a purchaser was obtained. It is clear that the Respondent did not keep the Gordons properly advised of the situation regarding the sale of their house to the Suttles; and that the Respondent's check to the Gordons on the First State Bank was not honored because the account was impaired. The evidence and testimony taken as a whole at the hearing shows that Respondent did not keep a running balance of the accounts which he maintained at the Liberty Bank of Cantonment or the First State Bank of Pensacola. The evidence further shows that the Respondent failed to withdraw commissions earned in their total amount subsequent to closings on property, did not pay bills which closing statements indicate he was obligated to pay, permitted inter-bank transfers of funds owed him by banking institutions to his escrow or management account, did not take steps to ensure that the First State account was properly and clearly titled as an escrow account, did not properly annotate withdrawals from his escrow accounts, and failed to maintain money in his escrow account until it was disbursed.
Recommendation The record taken as a whole indicates that the violations for which the Respondent is responsible are the result of his culpable negligence as opposed to any dishonest or fraudulent act. However, the Respondent is so devoid of any knowledge of his responsibilities with regard to monies entrusted to him that he may not safely be permitted to function as a real estate broker. Based upon the foregoing-findings of fact and conclusions of law, the Hearing Officer recommends that the Florida Real Estate Commission revoke the license of Respondent as a registered real estate broker. DONE and ORDERED this 9th day of March, 1978, in Tallahassee, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304 COPIES FURNISHED: Robert Pierce, Esquire Florida Real Estate Commission 400 West Robinson Avenue Orlando, Florida 32801 O. E. Adams, Esquire Post Office Box 12217 Pensacola, Florida 32002 ================================================================= AGENCY MEMORANDUM ================================================================= Orlando, Florida November 27, 1978 MEMORANDUM TO: Renata Hendrick, Registration Supervisor FROM: Manuel E. Oliver, Staff Attorney RE: PD 3267 (PD 15776) FREC vs. Ralph D. Villeneuve t/a Don's Realty 122293-1 DOAH Case No. 78-091 Please find enclosed copies of the Final Order filed on April 13, 1978, in the reference case together with the opinion filed on November 2, 1978 by the District Court of Appeal, First District of Florida, affirming the Commission's Order, as well as a copy of the mandate issued by said Court on November 20, 1978. By virtue of the foregoing, the order of the Commission revoking defendant's registration has become firm and effective in all respects. Please make the necessary annotations in the records for all effects. Manuel E. Oliver Staff Attorney MEO/km Enclosures:* * NOTE: Enclosures noted in this memorandum are not available at the division and therefore not a part of this ACCESS document.
Findings Of Fact Petitioner, Richard L. Hoffman (Hoffman), applied to Respondent, Office of the Comptroller, Department of Banking and Finance, Division of Securities and Investor Protection (Department), for registration as an associated person with First Southern Investment Corporation. By letter dated November 25, 1986, the Department advised Hoffman that his application had been denied, and Hoffman filed a timely request for formal hearing. By "memorandum of understanding" dated June 10, 1986, Hoffman was employed by First Florida Securities Group, Inc. (First Florida) as the manager and compliance officer of its Fort Lauderdale branch office. Pertinent to this case, the memorandum of understandings provided: It is today agreed that Richard Hoffman, as manager of a branch office of First Florida Securities Group, Inc., and representing a certain "Group" in that office agrees to work for and manage the office for First Florida Securities Group, Inc., under the following conditions: 1/ * * * E. The "Group" will be allowed an inventory bank of $50,000.00 of cost -- no one item to exceed This will be reviewed periodically. It maybe exceeded only with written approval of two officers of First, Florida Securities Group Inc. 2/ The branch office opened on June 15, 1986, and by June 27, 1986, Serious problems in the operation of the branch office began to surface. These problems were addressed in a meeting on Monday, June 30, 1986, between Nick Christos, chief executive officer of First Florida; Jim Palmer, compliance officer for First Florida; and, Hoffman. The results of that meeting were memorialized in a memorandum to Hoffman of July 7, 1986, which provided, inter alia: This is to summarize the results of my meeting with you on Monday, June 30, 1986. In attendance, also, was Jim Palmer, Compliance Officer. The following is intended as a summary of conclusions, without benefit of detailed conversations that led to our mutual understanding Letter to be sent to Jim Palmer from you, with respect to "as of" trades and other trades Purchased by customers at prices under the market on Jocom. (Not yet received as of this date). * * * Understanding by you that your office would henceforth adhere strictly to the $25,000 limit with respect to maximum inventory levels per corpora- tion -- with a $50,000.00 maxi- mum for your office at the end of each trading day. (Note that this limit was violated on Friday, June 27 when 41,200 International Communications was in inventory, with a value of $51,500). * * * We reviewed the fact that our Bear Stearns Margin Clerk was concerned about the Sy Schwartz account (purchases of 30,000 and 110,000 shares of Jocom) of which 110,000 shares or $96,250 still remains unpaid as of this date. Review of concern about the number and total dollars involved in over-due payments of Ft. Lauderdale customers (not materially reduced as of this date). The proof established that Hoffman failed to comply with his agreement to explain the "as of" trades and other trades purchased by customers at prices under the market in Jocom, adhere to the maximum inventory levels, and address over- due payments. Since there was no improvement in the operation of the branch office, Mr. Christos advised Hoffman on Monday, July 14, 1986, that: Your Ft. Lauderdale group, as of pre-opening this morning, will have no authority to represent the firm in trading NASDAQ stocks. * * * 3. You will have one week, effec- tive with the termination of business on Friday, July 18, 1986, for your branch to find another "home" ... (associate themselves with another deal- er). The principal of First Florida, Mr. Winkler, declined to support Mr. Christos because of his belief that the branch office had generated substantial revenues and that it would work out its problems. Accordingly, since Hoffman and the "Group" were not to be terminated, Mr. Christos and Mr. Palmer resigned as chief executive officer and compliance officer, respectively, for First Florida. On July 15, 1986, Hoffman, who held a principal's license, was elected president of First Florida, although he continued to operate as branch manager. The confidence Mr. Winkler placed in the branch office and Hoffman was short lived. Between July 19, 1986, and July 31, 1986, First Florida received complaints from over thirty customers of the branch office regarding unauthorized transactions, the failure to report or process trades, and the failure to provide confirmations or proceeds of sale. As a consequence of these complaints, Hoffman was terminated on July 31, 1986. First Florida's loss from the operation of the branch totaled approximately $657,000. Of this sum, $357,000 was expended to cover the debit balance with its correspondent Bear Stearns for unpaid securities accounts, and $300,000 for settlements with customers who alleged that purchases in their accounts were unauthorized. While First Florida's association with the "Group" may have been unprofitable, Hoffman benefited quite well. During the period of June 15-July 15, 1986, Hoffman earned over $60,000 in commissions through First Florida. While Hoffman concedes that trades he received from customers were not processed, he asserts that the blame for such failure rests on Mr. Brazel, the "trader" for the branch office. According to Hoffman, Mr. Brazel frequently traded at home, rather than at the office, and during the week of July 21- 25, 1986, traded exclusively at home. Because of Brazel's absence, Hoffman asserted that trades were not executed or they were "lost" because of some motivation of Brazel not to process them. Hoffman concludes: "I didn't have any idea what was going on" and there was "no way (I) could control the trades." Hoffman's attempt to "pass-the-buck" to Brazel is unpersuasive. While Brazel may be culpable, Hoffman also knew by mid-July 1986, if not by early July, that serious trading problems existed at the branch office, and that Brazel, if Hoffman is to be believed, was no small part of those problems. Yet Hoffman, who had been in the business for over 30 years, was the manager of the small branch office for First Florida, was president of the firm, was the firm's trader in Brazel's absence, and was a salesman for his own accounts, denies any responsibility for his failure to assure that trades were executed on behalf of his clients or the firm. Hoffman's testimony is inherently improbable and unworthy of belief. Hoffman's failure to diligently exercise his responsibilities as branch manager, president, trader, and salesman resulted in losses to his clients, as well as to other clients of the firm, since he failed to assure that their requests to sell securities were properly processed. 3/ In addition to Hoffman's failure to properly manage the branch office and his clients accounts, several other irregularities surfaced during his tenure with First Florida. Inexplicably, while employed by First Florida, Hoffman provided a customer, Sy Schwartz, with a written guarantee against loss. That guarantee provided: Sy Schwartz: This is to inform you, I agree that if Jocom is not up by July 7, 1986 you do not have to pay for it and I will take the trade back into my trading account. /s/ Richard L. Hoffman Also unexplained by Hoffman, was his personal payment of over $119,000 to his customer, Bruce Ross, between June 19, 1986, and July 15, 1986. These monies were variously described by Ross as involving the repayment of loans or his dealings in stocks. The substance of these transactions was not, however, further explained by either Mr. Ross or Hoffman. Following his termination with First Florida, Hoffman associated himself with First Southern Investment Corporation (First Southern). During his tenure at First Southern, although not registered, Hoffman held himself out as a senior account executive, and attempted to sell securities to customers he had previously serviced at First Florida. Both Hoffman and the Department offered the testimony of various witnesses concerning their opinion of Hoffman's reputation in the business community. Not surprisingly, those who had a good experience with Hoffman found him reputable, and those who felt they had suffered adversely under his representation found him to be of bad repute. The proof of Hoffman's reputation, offered through these witnesses, was not persuasive.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the application of petitioner, Richard L. Hoffman, for registration as an associated person with First Southern Investment Corporation be DENIED. DONE AND ORDERED this 15th day of July, 1987, in Tallahassee, Florida. WILLIAM J. KENDRICK Hearing Officer Division of Administrative Hearings The Oakland Building 2900 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of July, 1987.
