Findings Of Fact First Bank of Hollywood Beach is a state-chartered bank duly authorized and empowered under the laws of the State of Florida and of the United States to conduct a general banking business in and from offices in the State of Florida. First Bank's main office is located in Broward County, and it has three authorized branch offices in Broward County. (Hearing Officer's Exhibit 1) American Bank of Hollywood is a state-chartered bank duly authorized and empowered under the laws of the State of Florida and of the United States to conduct a general banking business in and from offices in the State of Florida. (Hearing Officer's Exhibit 1) It conducts business in its main office in Broward County, has a branch office in Broward County, and has applied for a second branch office in Broward County. Gerald A. Lewis is the Comptroller of the State of Florida and, as such, is the head of the Department of Banking and Finance. On August 1, 1980, the Department received request from the First Bank of Hollywood Beach for approval of an amendment to its charter changing its name to First American Bank of Broward County. On August 22, 1980, the department received an objection to the requested name change from American Bank of Hollywood. (Hearing Officer's Exhibit 1) Both banks have engaged in the banking business in Broward County, Florida, for more than eight years using their current corporate names. (Hearing Officer's Exhibit 1) Some of the principals of First Bank of Hollywood Beach, either as directors, officers, or shareholders, are and have been directors, officers, or shareholders of the First American Bank of Palm Beach County, which bank conducts a business through a main office and ten branch offices in Palm Beach County, Florida. Said principals desire to change the name of First Bank of Hollywood Beach to reflect its affiliation with the First American Bank of Palm Beach County. Additionally, substantially the same group of individuals has pending with the Department an application to organize a new bank to be named First American Bank of Broward County, which bank will also conduct its business through its main office in Broward County, Florida. If the de novo charter is approved, the new bank would also function as part of the "group" comprised of the First American Bank of Palm Beach County and the First Bank of Hollywood Beach. (Hearing Officer's Exhibit 1) As of the date of hearing in this cause, banks with the word "American" in their names were located in thirteen different counties within the State of Florida. At that time, within Broward County, the following commercial banks and savings and loan associations used the word "American" in their titles: American Bank of Hollywood + 1 branch (+ 1 branch applied for) Transamerica Bank of Florida + 1 branch Pan American Bank of Broward + 3 branches Great American Bank of Davie Great American Bank of Broward County Gulfstream American Bank & Trust Company + 5 branches AmeriFirst Federal Savings & Loan Associa- tion + 5 branches American Savings & Loon Association + 14 branches The proposed First American Bank of Broward County, together with First Bank's group if its requested name change is approved, would produce five additional locations of banks with "American" in their titles in Broward County. The sole basis for American Bank's objection to First Bank's requested name change is confusion based upon name similarity. No confusion exists between the First American Bank of Palm Beach County and the Pan American Bank of Palm Beach County or between the First American Bank of Palm Beach County and any bank in Broward County with "American" in its name, although the First American Bank of Palm Beach County has a branch within one mile of the Palm Beach/Broward County line. David Starke, an economist who specializes in consulting work with financial institutions, was not tendered as an expert witness and, accordingly, was not accepted as one. However, the surveys of banks with similar names in the State of Florida prepared by him reveal that all banks using the word "American" in their names also use either a first-word adjective and/or a geographic designation to distinguish one from the other. According to those surveys, both the banks and the savings and loam associations in Broward County with "American" in their titles use these two methods of distinguishing themselves. Both methods of distinction would be utilized by the requested one change in this cause. Other than uncorroborated hearsay evidence, American Bank introduced four items of correspondence which David L. Cory personally obtained from mail erroneously received by American Bank on one Saturday. All of the items of correspondence originated from persons outside of Broward County, with two of them originating from outside of the State of Florida. None of the items was addressed to the American Bank of Hollywood; however, three of the four items specifically carried American Bank's mailing address. The 1980 Hollywood (Broward County, Florida) telephone directory contains a listing for a First American Bank of Broward County, a bank formerly known as Executive Bank of Fort Lauderdale and now known as Great American Bank of Broward County. 10 . In March, 1979 the American Bank of Hollywood reserved with the Secretary of State's office the corporate name of American Bank of Broward. Other than reserving the name, American Bank has taken no steps toward using that name. The Department takes no position on the requested name change herein and recommends neither approval nor disapproval.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is, therefore, RECOMMENDED: That a final order be entered approving the request of First Bank of Hollywood Beach to change its name to First American Bank of Broward County. RECOMMENDED this 13th day of May, 1981, in Tallahassee, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of May, 1981. COPIES FURNISHED: Leonard L. Levenstein, Esquire 1500 South Dixie Highway Coral Gables, Florida 33146 Walter W. Wood, Esquire Assistant General Counsel Office of the Comptroller Suite 1302, The Capitol Tallahassee, Florida 32301 Robert B. Butler, Esquire Ellis, Spencer, Butler & Kisslan 1909 Tyler Street Post Office Box 6 Hollywood, Florida 33022 The Honorable Gerald A. Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32301 =================================================================
The Issue The following issues are presented for disposition in this proceeding: The effect, if any, of the repeal of Section 494.05, F.S. prior to the filing of the administrative complaint. Whether Respondent committed the violations of Chapter 494, F.S., with which he is charged. What disciplinary action, if any, should be taken against Respondents mortgage broker's license.
Findings Of Fact Robert F. Potts is a licensed mortgage broker, having been issued license number HB0011700 by the Department of Banking and Finance (Department). At the time of hearing his license was in inactive status. Potts incorporated Florida Mortgage Equity Corporation (FMEC) in December 1983. Prior to that time he had worked as a mortgage broker for several companies, including State Capitol Corporation. When employed by State Capital Corporation Potts solicited investors for "equal dignity mortgages". State Capital's investment program offered eighteen percent interest per annum for a fixed period, generally five years. The Department investigated State Capital Corporation in 1982, and filed suit against the corporation, its officers, directors and several named employees, charging them with violations of the Securities Act and Mortgage Brokerage Act. The case was resolved with stipulations for final judgment, and Final Judgment was entered on April 11, 1983. Potts was not part of the investigation or suit. He left State Capital in late 1983 because he felt uneasy with the company. Around the time he left State Capital and incorporated FMEC, Potts solicited individuals with whom he had dealt at State Capital. /1 He sent a form letter on FMEC stationary, including the notation, "Robert F. Potts Licensed Mortgage Broker", as part of the printed letterhead. The letter informed potential investors of his new venture: * * * As you can see, the company is Florida Mortgage Equity Corporation, address and phone listed below. I [sic] pay you an interest check monthly, based on the rate of 18%. All investments are secured with property which is located in the Central Florida area. The terms of investment and amounts are to be discussed individually along with other pertinent information. (emphasis added) * * * (Petitioner's Exhibit 11) When individuals invested in FMEC, they were given a "Trust Account Deposit Receipt", reflecting the amount of deposit and stating that the deposited funds were to be used for purchase of a bond earning 18% for a fixed term, generally five years. The trust deposit receipt also stated that the investor would receive the following documents in approximately forty-five (45) days: - A copy of the Florida Mortgage Equity Corporation Bond. - Verification of full insurance on all corporate properties. - Copy of Appraisal on all corporate properties. - Copy of Financial Statement on Florida Mortgage Equity Corporation. (Petitioner's Exhibit #12) Approximately thirty investors invested in excess of $381,000 in FMEC. (Admitted in Response to Notice dated September 2, 1987.) With the exception of a Potts family friend and one individual referred by another investor, all FMEC's investors were people with whom Potts had recently had business through his mortgage broker activities at State Capital. Five of the investors testified at the final hearing. None had extensive investment experience and most were elderly retired individuals. None received the documents listed in the trust account deposit receipt except for the bond, but they were unconcerned so long as the monthly interest payments were being sent. When one investor inquired about the documents, he was asked to wait until Potts got a computer and could get up to date. He never asked again. Although the FMEC letterhead and Potts' business cards indicated that he was a licensed mortgage broker, Potts was not actually selling mortgages through that company, in contrast to his activity through State Capital. This distinction was lost on his unsophisticated investors, as the schemes both promised the same high yield for the same fixed period. The term, "mortgage", was a prominent part of the company name. He touted his status as a licensee, and the investors had seen his mortgage license when he visited their homes under the auspices of State Capital. To these individuals, Potts' promises of security were backed by his professional license. Potts' activity with FMEC consisted in soliciting funds from investors. These funds were then invested in a separate corporation, Roundtree Development Corporation. In return for its investments in Roundtree, FMEC received an unsecured corporate bond paying eighteen percent interest. The interest was paid back to FMEC's investors. In addition, Potts received a ten percent commission from Roundtree. Potts met Michael Deriemaecker, the president and sole director of Roundtree, in 1982 or early 1983. He learned that Deriemaecker was successfully involved in condominium conversions. After a series of casual meetings over a period of months, Potts decided to "join forces," in his words, with Deriemaecker. Potts never considered placing his investors' money in another investment. Potts felt that Deriemaecker was honest and successful in his ventures and Potts did not consider himself knowledgeable in real estate. Roundtree purchased the properties and conducted the actual work of development and renovation; hired and paid the contractors and completed the projects. Potts, through FMEC, raised the funds. Potts mentioned Roundtree Development Company to some investors, but did not explain to them the relationship between the two companies. The investors understood that their funds were being used for certain real estate projects. At least one investor, J. Daniel Johnson, thought he was supposed to get a mortgage for his investment. Another investor, Evelyn Foley, did not know the difference between a mortgage and a bond but had a clear understanding that her funds were going to be invested in nursing homes, condominiums and apartment buildings - property that was being liquidated - and that the property would be repaired and sold at a profit. The Department's investigation of Potts and FMEC included a review of subpoenaed bank records. These were incomplete, according to Investigator Alice Hampton, as some of the bank's microfilm was faulty. Ms. Hampton determined from the available bank records that approximately $169,450 was disbursed to Roundtree Development Corporation from investor monies in FMEC's accounts from 1983 to 1986. Bonds supplied to Ms. Hampton by Potts' attorney in response to a subpoena indicated that Roundtree/Deriemaecker received $285,000 from FMEC from September 1983 through October 1984. In an interview with Ms. Hampton, Deriemaecker said that Roundtree received approximately $236,000 from Potts/FMEC. At the hearing, Potts said he did not know exactly how much he loaned Deriemaecher. Michael Deriemaecher did not testify at the hearing. However, the account of his interview on April 14, 1987, found in Ms. Hampton's Report of Investigation (Petitioner's Exhibit #9), is consistent with, and corroborates Potts' testimony with regard to the relationship of the two companies, the use of the funds, and the fact that Roundtree stopped making payments to FMEC in January 1985, when a series of projects failed. By April 1986, all interest payments by FMEC to its investors ceased. No payments have been made since that time on principal or interest. Potts' claim that his investors assumed the risk of a risky venture and they got what they bargained for, both oversimplifies and misconstrues the facts. He was aware of the circumstances of the individuals he solicited; he had been to their homes as an employee of State Capital and knew of their financial status, their ignorance and their demonstrated eagerness to supplement their retirement incomes. He falsely promised that the investments would be secured, when they were not; he withheld material particulars of the relationship between FMEC and Roundtree; and he misused the funds of his investors by his improvident and reckless release of their money to Roundtree.
Recommendation Based on the foregoing, it is, hereby RECOMMENDED: That Robert F. Potts be found guilty of violations of Section 494.05(1)(a), (b), and (c) and 494.05(2), F.S. (1985) and that his mortgage broker's license be revoked. DONE and RECOMMENDED this 21st day of April, 1988, in Tallahassee, Florida. MARY CLARK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of April, 1988.
The Issue The general issue to be resolved in this proceeding concerns the entitlement of the organizers of the C&L Bank of Blountstown and the Calhoun State Bank for authorization to organize their respective corporations for the purpose of conducting general banking business in Calhoun County, Florida. See Section 658.19, Florida Statutes. The standards by which the applicants' entitlement to the authority sought is to be measured are set forth in Section 658.21, Florida Statutes, and Chapter 3C-10, Florida Administrative Code.
Findings Of Fact Procedural Background On February 18, 1986, the organizers of the applicant C&L Bank of Blountstown (C&L) 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 Calhoun County, Florida. On April 11, 1986, the organizers of the Calhoun State Bank (Calhoun State) submitted an application for authority to organize a corporation for the same purpose in Calhoun County, Florida. Notice of receipt of the application of the C&L Bank of Blountstown (C&L) was published in the Florida Administrative Weekly on February 28, 1986, under the name "C&L Bank of Blountstown." Notice of receipt of the application of the Calhoun State Bank (Calhoun) was published in the Florida Administrative Weekly on April 25, 1986, under the name "Calhoun State Bank." A Petition for Leave to Become a Party to the Proceedings was filed by the applicant Calhoun State Bank, on or about May 8, 1986, and an Amended Petition for Leave to Become Party was filed by Calhoun on or about May 14, 1986. The Amended Petition for Calhoun contained a request that the applications of both the Calhoun State Bank and the C&L Bank of Blountstown be considered concurrently by the Department and the Hearing Officer. The Amended Petition contained objections to the granting of the application of the C&L Bank of Blountstown on the following grounds: "The proposed C&L Bank of Blountstown would be viewed in Blountstown as a branch of the existing C&L Bank of Bristol, which is located in Bristol, Florida, and the similarity of manage- ment and directorship of the proposed C&L Bank of Blountstown and the C&L Bank of Bristol, would have an extremely adverse effect on the proposed Calhoun State Bank. The proposed C&L Bank of Blountstown would be in possible violation of laws and regulations, both State and federal, which prohibit and/or discourage inter- locking directorships and officers in certain banks, given the proximity of the C&L Bank of Bristol and the proposed C&L Bank of Blountstown and the similarity of identity of management and directorship of the existing bank and the proposed bank." The proposed directors of the C&L Bank of Blountstown then filed a Petition for Public Hearing and Notice of Intention to Appear on or about May 15, 1986. That petition contained the following objections to the granting of Calhoun State Bank's application: "The current economic conditions and growth potential of the proposed primary service area for the C&L Bank of Blountstown was insufficient to support both the C&L Bank of Blountstown and the proposed Calhoun State Bank. The proposed directors of the Calhoun State Bank were lacking the direct banking experience required by law to ensure successful operation of the Calhoun State Bank." The application of the C&L Bank of Blountstown was deemed substantially complete on or about March 12, 1986, and the application of the Calhoun State Bank was deemed substantially complete on May 27, 1986. It was supplemented by additional information requested by the Department on or about July 1, 1986. On or about March 21, 1986, Ben and Faye Eubanks, shareholders of the C&L Bank of Bristol, filed a Petition for Public Hearing with the Department in opposition to the C&L application and on March 24 filed a "Petition for Leave to Become Party to Proceedings..." directed to the C&L application objecting to it on grounds that a grant of it would adversely affect the financial posture of the C&L Bank of Bristol. A Petition for Public Hearing directed to the Calhoun State Bank application was also filed by the Eubanks on or about May 16, 1986. That petition contained an objection to the granting of the application of Calhoun State Bank on similar grounds. On June 4, 1986, the Hearing Officer granted Calhoun State Bank leave to intervene in the C&L proceeding. On June 18, 1986, the Eubanks filed their Notice of Withdrawal of the application for public hearing in the C&L proceeding. On August 15, 1986, the Hearing Officer consolidated the C&L and Calhoun proceedings for final hearing inasmuch as the applications had been filed within 60 days of each other as envisioned by Rule 3C- 9.02(8), Florida Administrative Code. On or about August 26, 1986, the Eubanks withdrew their Petition for Public Hearing in the Calhoun State Bank proceeding. The C&L proceeding had originally been noticed for hearing to be held on July 14, 1986. On or about July 11, 1986, the parties consented to a Motion for Continuance which was granted. The consolidated proceedings were rescheduled for hearing for September 8 through September 11, 1986, in Tallahassee, Florida. The cause came on for hearing as noticed and the trial proceeded for four days. Notice of the hearing was published by the C&L Bank of Blountstown within the time period prescribed by rule in the Calhoun County Record, a newspaper of general circulation. The applicant Calhoun State Bank failed to effect publication of Notice of Hearing in the Calhoun County Record, so that a supplemental hearing became necessary. The parties agreed to a continued proceeding to give them an opportunity to renotice the hearing so as to obviate Calhoun's failure to publish notice and C&L's technically deficient notice. C&L and Calhoun accordingly republished a combined Notice of Continued Public Hearing in compliance with the rules of the Department in the Calhoun County Record on October 2, 1986, and filed the evidence thereof in these proceedings. On October 20, 1986, the final hearing was reconvened, at which time the complete trial transcript of the previous public hearing was made available for review, comment and testimony by members of the general public. No members of the public appeared at this properly noticed hearing and the hearing was concluded. Demographic, Economic and Financial Service Data Applicable to Both Applications Both applicants have proposed primary service areas for their respective proposed banking institutions encompassing Calhoun County. Population trends for that proposed service area (PSA) and, comparatively, for the State of Florida, are as follows: Area 1970 1980 1984 Average Annual Percent Change 1970-1980/1970-1984 Florida 6,791,418 9,739,992 10,930,389 3.67 3.45 County (Calhoun) 7,624 9,294 9,325 2.00 1.45 Unincorporated County 4,817 6,184 6,186 2.53 1.78 PSA 7,624 9,294 9,325 2.00 1.45 Municipalities Altha 423 478 479 1.23 0.89 Blountstown 2,384 2,632 2,678 0.99 0.83 10. Both the State of Florida at large and Calhoun County are comparable in age grouping, while there is a significant difference at the beginning and end of the age grouping scale between Liberty County and the State, as shown by the following table: Age Grouping Area 0-14 15-24 25-44 45-64 65 and over State of Fla. 2,090,624 1,675,790 3,091,078 2,339,183 2,091,257 Percent of Total: 18. 5 14.8 27.4 20.7 18.5 Calhoun County 2,115 1,566 2,297 1,992 1,536 Percent of Total: 22.2 16.5 24.2 21.0 16.2 Liberty County 1,180 764 1,132 897 557 Percent of Total: 26.0 16.9 25.0 19.8 12.3 The number of households in Calhoun County has increased at a rate comparable to that of the State of Florida at large and per capita personal income trends for Calhoun and Liberty Counties and the State of Florida are listed below: PER CAPITA PERSONAL INCOME Compound Annual 1979 1980 1981 1982 1984 Change County Calhoun $4,768 $5,066 $6,082 $6,362 $ 6,374 8.05 percent State $8,257 $9,245 $10,368 $10,927 $11,593 9.12 percent Liberty County $4,759 $5,339 $6,274 $6,794 $7,289 8.90 percent Calhoun County was demonstrated to have a higher unemployment rate than that of the State of Florida at large while Liberty County has a lower unemployment rate than Calhoun but higher than that of the State as a whole as depicted in the following table: ANNUAL UNEMPLOYMENT RATES 1980 1981 1982 1983 1984 County (Calhoun): 9.4 percent 12.1 percent 17.5 percent 17.6 percent 12.9 percent State: 5.9 percent 6.8 percent 8.2 percent 8.6 percent 6.3 percent Liberty County: 6.3 percent 8.1 percent 9.6 percent 9.9 percent 8.3 percent Thus, the population of Calhoun County stood at 9,294 at the time of the 1980 census and was estimated by the University of Florida, in its data in evidence, to be approximately 9,506 persons in 1985. This represents a 0.45 percent average annual growth rate, in comparison to the average annual growth rate for the State of Florida of 2.98 percent over that same time period. The mid-range projection for Calhoun County population derived from this data for 1990 is 9,800, which represents a 0.63 percent average annual growth rate in comparison to the projected State of Florida average annual growth rate of 2.22 percent. Thus, while the Florida growth rate has declined somewhat as projected for 1990, the Calhoun County growth rate, while small, has increased somewhat in the 1990 projection in evidence. This trend belies the prediction made by Dr. Gaines, Calhoun State Bank's expert witness, to the effect that the Calhoun County population will remain static between the years 1990 and the year 2000. It seems highly unlikely that Calhoun County will experience no population growth in that entire decade and to that extent Dr. Gaines' testimony is not credited. In a similar vein, it is noted that Dr. Gaines found that Calhoun County's population growth from 1970-1980 largely resulted from net migration of persons into the County, to the extent of 73.53 percent of the County's growth during that decade, and that no net migration had occurred during the years 1980-1986. His figures show that 91.97 percent of the State of Florida's population growth in the decade 1970-1980 resulted from migration which rate declined to 88.89 percent for the years 1980-1986. If that be the case, it is difficult to conclude that, although the migration rate may have declined in the last six years into Calhoun County, that, as Dr. Gaines opined, no migration into the County resulted. Thus, to this extent also, Dr. Gaines' findings are not credited and are contrary to the preponderant competent, substantial evidence of record. It can thus be seen that the population of Calhoun County currently is approximately twice that of Liberty County or 9,506 residents, as opposed to 4,530 residents for Liberty County. Per capita personal income in Calhoun County was shown to be $7,023 as opposed to $12,773 for the State of Florida at large. The unemployment rate for Calhoun County at the end of 1985 was 11.4 percent compared to the Statewide average rate of 6 percent. As can be seen from the above data, Liberty County's unemployment rate is somewhat lower than Calhoun's, while higher than the State of Florida average. Calhoun County has not shown a pattern of rapid growth in the past or present, but it has demonstrated a stable, steady and somewhat increasing growth pattern. No projected downturn in growth is expected. These economic indicators, considered in conjunction with the rather large number of deposits enjoyed by the sole commercial bank presently operating in Calhoun County, as compared to other commercial banks in Florida operating in similar market areas, reveal that there is room in Calhoun County for a new financial institution based upon these indicators alone. Calhoun County is presently served by three financial institutions, as well as the Calhoun-Liberty County Credit Union, whose membership is made up of County employees. There are two branch offices of North Carolina National Bank of Florida (NCNB), a wholly-owned subsidiary of North Carolina National Bank, which operates hundreds of branch offices in Florida and the southeastern United States. Those two branch offices are located in Blountstown and Altha, which lies approximately 10 miles to the north of Blountstown in Calhoun County. The other institution is a branch office of First Federal Savings and Loan Association of Marianna. Calhoun County had a population per financial institution office of 3,188 during 1985-86, ranking it 29th among the 67 Florida counties. If one additional financial institution was added in the County, its ranking would drop to 44th out of 67 counties. If two additional banking institutions were added to Calhoun County, its ranking would drop to 56. The NCNB branch office in Blountstown is the only full service banking institution in Calhoun County. This office had $34.4 million in deposits from individuals, partnerships and corporations as of September 30, 1985. This figure represents a decline in deposits of $1.5 million in the one year since September 30, 1984. It is unique for a commercial bank with a deposit base on the order of $34 million to have no direct competitor in its primary service area. NCNB acquired its present office in Blountstown when it acquired the Ellis Bank Corporation in 1984 and with it the former Ellis Bank of Blountstown. After that acquisition, the level of service continued to fall as it had during the last several years of the Ellis Bank's tenure in Blountstown. Despite testimony that the level of service of NCNB has improved somewhat since the initial merger period, it is clear that private and commercial customers of NCNB feel a high level of dissatisfaction with that institution, as evidenced by the survey conducted by Dr. Gaines. Twenty percent of the NCNB residential (noncommercial) customers surveyed in the Blountstown and Bristol areas were unable to name any strengths of that institution in contrast to an eleven percent average of customers for other institutions surveyed in and around the proposed PSA. Seventy percent of NCNB customers surveyed were able to cite specific, unaided examples of weaknesses in the institution, the major one being out-of-town ownership and control. Concerning overall quality of service at NCNB, 50 percent of the residential customers indicated that quality of service had declined since NCNB's acquisition of the Ellis Bank. Only 4 percent felt that quality of service had improved in that time period. Commercial customers of NCNB surveyed were also critical of that institution. Seventeen percent of them were unable to name any strengths. Eighty-four percent were able to name specific examples of weaknesses in NCNB. Sixty-five percent of the commercial customers surveyed felt that quality of service had decreased since the purchase of Ellis Bank by NCNB. Although the financial soundness of the NCNB office in Blountstown (as opposed to profitability) would not be severely affected if deposits were reduced by $20 million with the advent of one or more competing new banks, such a dramatic decrease is not initially projected. Both of the applicants project that they would be profitable at deposit levels substantially less that an aggregate of $20 million. The organizers of the applicant Calhoun State Bank project that they will have deposits of $3,082,000 by the end of their first year of operation, with a before-tax profit of $87,000 during the first year. The C&L Bank of Blountstown applicant projects deposits of approximately $4,250,000 and a before-tax profit of $14,024 by the end of its first year of operation. The C&L Bank of Bristol has a significant customer base in Calhoun County, with approximately $1.5 million in deposits coming from former customers of NCNB. Approximately $2,000,000 of Bristol's time deposits are held by Calhoun County depositors and approximately $3.5 million of its loans are to Calhoun County residential and commercial borrowers. In view of the likely close name identification of the applicant C&L Bank of Blountstown with the present C&L Bank of Bristol, a substantial number of the Blountstown and Calhoun residents who presently bank with C&L of Bristol would likely change their deposits and other banking business to the C&L Bank of Blountstown if it were authorized. Thus, a significant amount of the deposits to be attracted by C&L Bank of Blountstown would come from present Calhoun County customers of the C&L Bank of Bristol. This factor, coupled with the C&L Bank of Blountstown being able to attract a reasonable share of the normal growth of the deposit base in Calhoun County and Blountstown, as would Calhoun State Bank, coupled with the large size of the NCNB branch in Blountstown, indicates that although substantial deposits would be garnered by either of the proposed banks, from NCNB, the safety and soundness of that institution would not be placed at risk by the authorization of a new bank in Calhoun County. Nevertheless the testimony and evidence establish that a significant number of depositors in Calhoun County will switch their deposits from the NCNB branches to any new bank or banks authorized in Calhoun County. The publicly perceived deficiencies in service by NCNB involving its out-of-town management and lack of local control and decision-making are significant. A significant diversion of both future potential depositors and present NCNB depositors will occur with the advent of any new bank. First Federal Savings and Loan Association's branch in Blountstown offers only limited services allowed a savings and loan institution. It does not offer checking accounts or commercial loans. Some of its deposits will transfer to either proposed bank, if authorized, because of customer preference for an institution offering a full range of banking services. The Calhoun- Liberty County Employees' Credit Union is a fairly large institution, but is limited in usage to County employees. Some of these potential bank customers will move their accounts from the Credit Union to either C&L or Calhoun State because of the preference for the full services offered by a bank. This is less likely to occur with the customers of both First Federal Savings & Loan Association and the Credit Union if NCNB remains the only full service commercial banking alternative for the above- mentioned reasons concerning community perception of deficient service at NCNB. Primary Service Areas Both applicants allege that their primary service areas will be Calhoun County. The evidence clearly establishes that any new bank chartered to serve Blountstown and Calhoun County would draw 75 percent of its deposits from that County. Calhoun County is twice as large as Liberty County in population, with 9,506 residents as opposed to 4,530 residents in Liberty County. NCNB, which represents 73 percent of all bank deposits derived from Calhoun County obtains 85 percent of its total deposits from that County. Dr. Gaines, Calhoun State Bank's expert witness, performed a survey of bank customers in Blountstown and Bristol and determined that only 8 percent of the Blountstown population sampled cross over the State Route 20 two-lane road and bridge over the Apalachicola River to bank at the C&L Bank of Bristol. Only 24 percent of NCNB customers actually sampled were residents of Bristol. Although the C&L Bank of Bristol derives approximately 26 percent of its total deposit base from Calhoun County deposits, the vast majority of these deposits were represented by public funds and certificates of deposit or other time deposits greater than $100,000. The C&L Bank of Bristol currently enjoys only about 6 percent of Calhoun County's total deposits and 3-4 percent of that County's core deposits, which in turn represent only 3.5 percent of C&L Bank of Bristol's total core deposits; core deposits being deposits by residential and commercial customers. These factors reveal that, although the more densely populated area of Liberty County of Bristol and its immediate environs might be termed a "secondary service area" that, especially in view of the deposit source experience of NCNB, the primary service area of any bank locating in Blountstown and its vicinity will be Calhoun County, particularly Blountstown and the immediate surrounding area since that is the only significant population center in Calhoun County, which area would include Altha, some ten miles distant. C&L BANK OF BLOUNTSTOWN APPLICATION Reasonable Promise of Successful Operation Calhoun County is a sparsely populated area with residents and businesses engaged primarily in timber and other agricultural operations and the operation of small retail businesses. The County is not growing rapidly, as demonstrated by the above-found indicia of growth, but is expected to enjoy a consistent, steady growth in the reasonably foreseeable future. C&L's deposit base in Calhoun County will primarily consist of household and small business depositors and borrowers. C&L established that it will likely attract some $3,250,000 in deposits captured from existing financial institutions, chiefly NCNB, over a one to three year period after initiation of operations. Additionally, bank deposits in Calhoun County have recently been increasing at a rate of approximately $2.5 million per year and C&L expects to garner approximately $1,000,000 of this deposit growth each year. The deposit projections placed in evidence by C&L were shown to be conservative and reasonable, especially in view of the widespread customer dissatisfaction with NCNB for the reasons found above and which will, for at least the first one to three years of C&L's operation, result in a substantial capture of those present NCNB deposits. The projections of expected expenses and earnings contained in the schedules filed with C&L's application, and in evidence, were shown to be conservative and reasonable and are accepted insofar as they reveal the likely operational experience of C&L in competing with those institutions already operating in the service area. The location of the proposed C&L Bank will offer a greater convenience to potential bank customers in Calhoun County who seek an alternative to the NCNB full service bank, the only other feasible alternative at the present time being the C&L Bank of Bristol. The C&L Bank of Blountstown will likely capture a substantial portion of the small amount of core deposit business of C&L of Bristol originating in Calhoun County because of the convenience to customers of having an additional bank in the primary service area, obviating the necessity of a six mile trip to Bristol for such customers. Dr. Heggestad established moreover, that C&L Bank of Bristol would only lose approximately $250,000 of its deposit base over a three year period to C&L of Blountstown. This diversion of deposits to C&L of Blountstown would in no way jeopardize C&L Bank of Bristol since such a loss of deposits would only reduce potential net profits by approximately $3,750, not a significant amount. Correspondingly, C&L of Bristol's loan volume derived from Calhoun County is approximately the same as its base of "core deposits" and is approximately 3 percent of the Calhoun County loan market. The loan volume of C&L of Bristol would also probably decrease in a rather insignificant amount with the granting of an application to either new bank proposed for Blountstown, based primarily on the convenience factor offered by C&L's being placed in the Blountstown-Calhoun primary service area, as an alternative to the NCNB full service bank and more easily accessible than C&L of Bristol. Capital Structure The capital structure of the C&L Bank of Blountstown is $1,000,000. $800,000 of this amount is stated, paid-in capital. $260,000 is represented by paid-in surplus and $40,000 will be represented by undivided profits. The C&L Bank of Blountstown will issue 100,000 shares of common stock at a par value of $8 per share. Stock ownership will not be widespread, rather approximately 90 percent of the stock will be owned or controlled by members of the Board of Directors and their immediate families in approximately the same ownership pattern prevailing with the C&L Bank of Bristol. The remaining 10 percent of the C&L Bank of Blountstown stock will be initially offered to the shareholders of the bank of Bristol who are not the organizers and/or directors of the C&L Bank of Blountstown. Any stock not so conveyed to the other shareholders of C&L Bank of Bristol will then be offered to the public at large. The proposed capital structure of the C&L Bank of Blountstown satisfies the requirements of Section 658.21(3), Florida Statutes, and Rule 3C-10.051(3)(c), Florida Administrative Code. Banking Site and Quarters The proposed C&L Bank of Blountstown has made arrangements to purchase a parcel of land approximately 191' x 381' located on the corner of Warren and Gaskin Streets in Blountstown, Florida. This location lies at the intersection of Highway 20 and Highway 71, which are the two major transportation arteries into the City of Blountstown. The site fronts on Warren Street, which will give street access on three sides of the property. C&L intends to purchase the land from John Morgan McClellan and has a current option to purchase the site. Mr. McClellan, who is one of the proposed directors, has agreed to sell the site to C&L for $150,000. An independent appraisal attached as Exhibit F to C&L's application establishes the fair market value of the site. The proposed building will contain 2,800 square feet of heated space, consisting of a lobby, two offices and a bookkeeping area. Adequate provision has been made for suitable quarters for the proposed bank which satisfies the requirements of Section 658.21(6), Florida Statutes, and Rule 3C- 10.051(3)(f), Florida Administrative Code, and the site has been specifically designated by street address in satisfaction of the requirement in Rule 3C-10.051(6)(A), Florida Administrative Code. Officers and Directors The proposed directors and officers of C&L Bank of Blountstown all reside or have businesses in or near the PSA except for Jerry M. Smith, who is a native of the Blountstown area. The proposed directors and officers have extensive general business and banking experience in the PSA. The proposed directors have managed the C&L Bank of Bristol since its inception and during their tenure in that capacity that bank has enjoyed a consistent growth in deposits, generally favorable loan to deposit ratios and a steady increase in profitability. Under their management, the C&L Bank of Bristol has enjoyed an increased stock valuation at an average rate of 17 percent per year. The proposed officers and directors of C&L Bank of Blountstown are as follows: A. Gerald Cayson is a lifelong resident of Blountstown and has successfully operated a timber and cattle farming business owned with his father and brother in Calhoun County. He served for twenty years as United States Postmaster for the City of Blountstown. He was an original organizer and a current director and vice-chairman of the C&L Bank of Bristol. He has also served on the Board of Directors of the First National Bank of Alachua since 1971. Douglas R. Davis, Jr. is a lifelong resident of Calhoun County and president and co-owner of a pharmacy and a jewelry store in Blountstown. He was an original organizer of C&L Bank of Bristol and currently serves on its executive and loan committees. Michael R. James, an organizer and proposed director of the C&L Bank of Blountstown is also its proposed Chief Executive Officer. He is a resident of Bristol and currently is the Chief Executive Officer of the C&L Bank of Bristol and has served in that position for a number of years. He is chairman of its loan committee and a member of its executive committee. Previously he was employed as a State banking examiner and as a vice-president and branch manager of another commercial bank. John Morgan McClellan co-owned and operated a building supply business in Blountstown for approximately 21 years and currently is a real estate broker in Calhoun County. He was an original organizer of the C&L Bank of Bristol and currently serves on its Board of Directors. Additionally, he has served on the Board of Directors of the First Federal Savings and Loan Association, Marianna, Florida, for the past ten years. Jerry M. Smith is currently president and chairman of the Board of Directors of the First National Bank of Alachua. He is also chairman of the board of the First Alachua Banking Corporation as well as C&L Bank of Bristol. He was an original organizer of the C&L Bank of Bristol and also serves as chairman of its executive committee. R. Malone Peddie formerly owned and operated a swimming pool construction business in north Florida. He is currently president and chairman of the board of 0PM, Inc. and LBJ, Inc. which are companies engaged in real estate investment. He, too, was an original organizer of the C&L Bank of Bristol and serves as chairman of its audit committee. Gordon P. Revell is a lifelong resident of Bristol and is currently principal of the Bristol Elementary School. He is chairman of the board of directors of Revel and Revell Corporation which owns and operates a 110 bed long-term care facility in Liberty County. He was also an original organizer of the C&L Bank of Bristol and serves on its loan committee. James W. Weaver, Jr. is a lifelong resident of Liberty County and is currently president of Weaver Oil Company in Blountstown. He and his father co-own a convenience food store chain in northern Florida. He was an original organizer of C&L Bank of Bristol and serves on its loan committee. James W. Weaver, Sr. is co-owner of Weaver Oil Company, Inc. and is the former chairman of the board of C&L Bank of Bristol. He served in that capacity from 1975-1979 and currently serves on its audit committee. Mr. Michael James, who is currently president of the C&L Bank of Bristol, is proposed to be the president of the C&L Bank of Blountstown. Sufficient substantial evidence has been presented to establish the qualifications and capabilities of Mr. James to successfully serve the applicant bank in that position. The organizers, proposed directors and officers of the applicant C&L Bank of Blountstown have been established to have reputations in their communities for honesty and integrity. All have significant active business experience so as to establish their capabilities for responsible dealing in financial matters and their abilities to make sound investment and business decisions. They have been demonstrated to have a sufficient understanding of financial affairs. A number of members of the proposed Board of Directors including the Chief Executive Officer have direct banking experience related to establishment of a new bank in the same type of market. Thus, it has been established that the organizers, proposed directors and officers of the proposed C&L Bank of Blountstown meet the requirements of Section 658.21(3), Florida Statutes, and Rule 3C-10.051(3)(c), Florida Administrative Code. Additionally, three of the ten organizers and directors of the proposed C&L Bank of Blountstown are Calhoun County residents and all represent diverse occupational and business interests, in satisfaction of Rule 3C-10.051(3)(D)(4), Florida Administrative Code. Proposed Name The organizers of C&L Bank of Blountstown have proposed two potential names for the new bank, one being "C&L Bank of Blountstown" and the other being "Bank of Blountstown." C&L prefers to use the name "C&L Bank of Blountstown" and no objection to the use of that name is of record. The use of the name C&L Bank of Blountstown will likely cause greater public acceptance of the new bank and enhance to some extent its ability to attract depositors because of the widespread customer satisfaction and name recognition attributable to the C&L Bank of Bristol. Expert Testimony C&L offered Dr. Arnold A. Heggestad as an expert in general banking, bank finance and economics, as well as banking regulation. It was thus established that there are prospects for moderate but steady growth in the economy of the PSA as that relates to population, average income, sales of goods and Services and concomitantly, bank deposits. This moderate growth, coupled with the likely capture of some deposits from NCNB as well as the small percentage of Calhoun County deposits presently enjoyed by the C&L Bank of Bristol, shows that Calhoun County is sufficiently strong economically to support an additional bank. There will be a significant convenience and advantage for the general public in the Calhoun County community served by the entry of C&L into that market. This is especially true in view of the widespread dissatisfaction with NCNB which occupies an essentially monopolistic position in that market and for the further reason that those depositors in Calhoun County now banking at C&L of Bristol will likely show a propensity to move their banking business to C&L of Blountstown for reasons of convenience and its close name identification with the Bristol Bank, which enjoys a high customer satisfaction rating. It was also established through Dr. Heggestad's testimony that the C&L Bank of Blountstown and the C&L Bank of Bristol will not substantially compete with each other since their service areas only overlap in an insignificant way as that is measured by the low percentage of the Bristol bank's core deposits derived from Calhoun County and the fact that Blountstown and Calhoun County residents would be less likely to journey to Bristol to do their banking with the advent of any new bank in Blountstown, to the extent that those customers choose not to bank at NCNB. The overlapping directorships of the C&L Bank of Bristol and the proposed C&L Bank of Blountstown will not serve to significantly restrict competition since, as found above, the two PSAs do not significantly overlap and the Bristol bank is a relatively minor participant in the Calhoun County banking market, especially for core deposits from residential and private commercial customers. The overlapping directorships of these two banks will not create a fiduciary conflict for the directors as to the interests of the respective bodies of shareholders since both institutions will be owned and controlled by the same people in fairly equal amounts. Because of the substantial identity of ownership there would be no incentive for one Board of Directors, in its policies, to do competitive harm to the other bank. The organizers and directors of the C&L Bank of Blountstown do not propose to inaugurate banking policies which would serve to undercut the operations and to d& competitive harm to the C&L Bank of Bristol and in fulfilling their fiduciary duties to shareholders they are unlikely to encounter conflicts of interest in this regard since the two banks will not be competing in any significant way in the same PSA. Dr. Heggestad additionally established that C&L would attract approximately $1,000,000 a year from new deposit growth in the area and over a three year period would attract approximately $3.25 million from existing financial institutions in the market, primarily from NCNB, due to its high level of customer dissatisfaction. C&L can reasonably expect to attract about $8,000,000 in assets based upon the projected deposit growth in the area, together with its capture of a substantial amount of the NCNB deposits, by the end of its third year. In its first year of operation, C&L will show a relatively small after-tax loss. In the second year it should earn a very modest profit and by the third year will earn a profit of approximately $47,000, according to Dr. Heggestad's calculations and projections, which are accepted. In the context of the C&L Bank of Blountstown competing with the NCNB, and the other existing institutions, it has been established that the projection of total deposits at the end of each of the first three years is reasonable and the projected statement of earnings over the three year period, as well as the deposit base, is reasonable. The capital structure of C&L outlined in its application is ample and sufficient to engage successfully in the banking business at the outset of operations and the proposed bank should earn a positive rate of return by its second year of operation and sustain an adequate capital structure. There is a reasonable promise that C&L will be a successful competitor in the Calhoun County market with NCNB and those two banks should be able to sustain themselves at a profitable return on equity. C&L Bank of Blountstown will have success in penetrating the Calhoun County market given the peculiar circumstance of its being occupied to the extent of 73 percent of total deposits by NCNB, the widespread dissatisfaction with NCNB, and the convenience and name recognition factors which will attract present Calhoun customers of C&L of Bristol. Thus, the C&L Bank of Blountstown would be a viable institution if granted a charter. NCNB would remain a stable Calhoun County bank, even though its deposit base will shrink somewhat as the result of the advent of C&L. The deposits and earnings projections of C&L are reasonably based on current economic and demographic conditions and projected growth potential in the PSA. Because it is important to evaluate the ability and experience of a bank's organizers in order to predict its likelihood of success, Dr. Heggestad made an analysis of the past performance of the C&L Bank of Bristol. C&L of Bristol has been in operation approximately eleven years and under the same management which proposes to open and manage the C&L Bank of Blountstown. Dr. Heggestad determined, based upon a comparative analysis of other banking institutions of comparable size in Florida, that the C&L Bank of Bristol has performed quite well in light of the market in which it operates, which is characterized by rather modest growth in the various economic indicators alluded to above. Its costs of doing business, including the amount spent on director's fees, were shown to be well below the average bank in its class. In evaluating the likelihood of successful operation of C&L, Dr. Heggestad also considered the performance of C&L of Bristol as compared to the performance of NCNB, its closest and largest competitor. During the period of time in question, 1978-1984, the performance of NCNB has declined and the performance of C&L of Bristol has improved. The performance of C&L of Bristol surpassed NCNB through the year 1984, thereafter reports for NCNB as an independent bank are no longer available because it became a branch of NCNB of Florida in October of 1985. Dr. George Gaines, testifying as an expert witness for Calhoun State Bank, acknowledged that in his market analysis of all financial institutions located in Blountstown and Bristol he found that the C&L Bank of Bristol had the best rating in the group and that the general satisfaction of residential and commercial customers regarding C&L of Bristol was very high. It is, therefore, reasonable to conclude that the same management group which has operated C&L of Bristol successfully for more than ten years would be successfully able to compete in the Calhoun County banking market by opening the proposed new C&L Bank of Blountstown. This is especially true since it has been established that any new bank opening in Calhoun County would likely attract as much as $1,000,000 of deposits from NCNB the first year of operation due to the customer preference factors mentioned above and this, coupled with the above-referenced name recognition and convenience factors, which will allow it to capture C&L of Bristol deposits from Calhoun County and the successful record of its management group, renders it likely that C&L of Blountstown would be best able to successfully compete in the Calhoun County market. In this connection, it has not been shown that C&L would capture all of the Bristol bank's deposit and loan volume from Calhoun County. In fact, C&L Bank of Bristol would lose only approximately $250,000 of its deposit base over the first three years of operation of C&L of Blountstown, which would result in an insignificant decline in its profitability. Thus, in actuality the C&L Bank of Bristol will not be a substantial competitor with any new bank, or with NCNB, in the PSA. The bulk of the deposits enjoyed by the Bristol bank from the PSA consist of public funds and time deposits of $100,000 or more which are less likely to be shifted to a new bank entering the Calhoun County market because such depositors are less likely to be influenced by the convenience and name recognition factors and loan policy factors discussed above. In summary, it has been demonstrated without question that the C&L Bank of Blountstown would be able to successfully compete with existing institutions in the Calhoun County market. In fact there is a high probability that it would be best able to compete against the existing Calhoun County banking institutions because of the advantages found above. CALHOUN STATE BANK APPLICATION Calhoun has represented in its application and in its evidence at hearing that its primary service area would consist of Calhoun County, Florida. Calhoun's witnesses established that they reasonably expect that any new financial institution in that County could expect to draw 75 percent of its deposit base from Calhoun County residents and businesses. In light of this and the findings made above, it is determined that the Primary Service Area of Calhoun State Bank would be Calhoun County and particularly the immediate vicinity of Blountstown and Altha. See Rule 3C-10.051(12), Florida Administrative Code. Proposed Directors and Officers The proposed directors of Calhoun State Bank are D. Finlay Corbin, Roy H. Golden, M. Brooks Hayes, B. Hayes Leonard, T. Michael Tucker, Jr., J. Max Waldorf and Glenn Terrell Warren. These proposed directors, with the exception of Roy H. Golden and M. Brooks Hayes, have had some direct banking experience. Concerning the business experience of the proposed directors and the diversity of that experience, it has been shown that M. Brooks Hayes has owned and managed timber lands in Calhoun County in excess of 30 years. Glenn T. Warren is engaged in the business of contracting and farming and as a director of the Ellis Bank and NCNB from 1978-1986. B. Hayes Leonard also served as a member of the advisory board of NCNB and as a director of its predecessor, Ellis Bank of Blountstown, from 1978-1986. He is active in the timber production business. D. Finlay Corbin also served as a member of the advisory board of NCNB and a director of the Ellis Bank of Blountstown for the same period of time. Mr. Corbin is a practicing dentist in Blountstown. J. Maxwell Waldorf has served in the same capacity on the board of the Ellis Bank and NCNB. Mr. Waldorf is from Altha, Florida, and owns and operates a hardware store as well as engaging in farming operations. Mr. Roy H. Golden is a pharmacist in Blountstown and has been an active business man in Calhoun County for over 40 years. Mr. T. Michael Tucker also served as a member of the Board of Directors of Ellis Bank and the advisory board of NCNB from 1983 until April 7, 1986. The organizers of Calhoun State Bank expect either Mr. Bowers Sandusky, the current president of the NCNB of Blountstown, or Mr. W. Steven Thames, currently a vice president of the Citizen State Bank of Marianna, to be Calhoun State's president. Both men have significant banking experience. The organizers and proposed directors, as well as the proposed officers of the applicant Calhoun State Bank, have reputations for honesty and integrity. All the organizers and directors have significant experience in business and financial affairs and represent diverse occupational and business interests. At least one member of the proposed Board of Directors, as well as each of the proposed Chief Executive Officers, has direct banking experience. Thus, the proposed directors and officers of Calhoun State Bank meet the minimum requirements of Sections 658.21(4) and 658.33, Florida Statutes, and Rule 3C- 10.051(3)(d), Florida Administrative Code. Corporate Name and Bank Site The corporate name of the proposed "Calhoun State Bank" is reserved with the Department of State, which satisfies the requirements of Subsection 658.21(5), Florida Statutes, and Subsection 3C-10.051(3)(E), Florida Administrative Code. The proposed charter site for the Calhoun State Bank is a parcel of land of approximately 3 acres located at 611 West Central Avenue, Blountstown, Florida. The proposed bank will occupy a building, to be constructed, which will be in excess of 2,500 square feet. The Calhoun State Bank organizers have purchased the lot for $100,000.00. Provision has been made for suitable quarters for the proposed Calhoun State Bank, which satisfies the requirements of Subsection 658.21(6), Florida Statutes, and Subsection 3C- 10.051(3)(F), Florida Administrative Code. The proposed site has been specifically designated by street address, which satisfies Subsection 3C- 10.051(6)(A), Florida Administrative Code. Capital Structure The capital structure of the proposed Calhoun State Bank would total one million dollars as follow: $800,000.00 to stated capital, $160,000.00 to paid up surplus, and $40,000.00 to undivided profits. The Calhoun State Bank intends to issue 100,000 shares of common stock with par value of $8.00 per share and a selling price of $10.00 per share plus a .25 cent per share organizational expense fee. The proposed capital for the Calhoun State Bank will be adequate to enable it to provide necessary services to meet the needs of prospective customers. The proposed capital structure of the Calhoun State Bank satisfies the requirements of Subsection 658.21(3), Florida Statutes, and Subsection 3C-10.051(3)(c), Florida Administrative Code. There will be a wide distribution of stock ownership, all of which will be within the PSA. The organizers have disclosed the anticipated amount of stock each will retain. The Calhoun State Bank has satisfied the requirements of Subsection 3C-10.051(4), Florida Administrative Code, as well. Projected Operating Experience The applicant Calhoun State Bank presented Dr. George Gaines and Mr. Bowers Sandusky, who testified concerning the projected deposits, income, expenses and the likely operational viability of the proposed bank as a competitor to NCNB. It is thus established that Calhoun State Bank is likely to sustain a loss of $26,000 its first year of operation and a profit in the second and third years of operation of $52,000 and $91,000, respectively. The projection of total deposits for the first three years of operation, as well as the earning statement and the projection that Calhoun State Bank would earn a positive rate of return by the end of the third year and could sustain an adequate capital structure, were shown to be reasonable insofar as it postulates Calhoun State Bank's likely operating experience with only NCNB, the Savings and Loan Institution and the Credit Union as its competitors. Calhoun State Bank's three year projections, like C&L Bank of Blountstown's, relate only to the projected advent of one new bank for the Blountstown area as a competitor, primarily with NCNB. The projected operating experience in the above particulars for either applicant bank with the other applicant bank as a likewise chartered competitor, together with NCNB, has not been established in this record, although Dr. Gaines generally opined that he felt that NCNB as well as both applicant banks could survive in the Calhoun County market and could be profitable, although all three banks would be significantly smaller than the present size of NCNB. That opinion is not credited in light of the evidence in support of the findings made below on this subject. Probability of Success Both Dr. Heggestad and Dr. Gaines opined that a new bank in Blountstown, Florida, with prudent, sound banking practices and good management, would have a reasonable probability of being successful in competing with NCNB and could garner a significant share of the Calhoun County market for bank deposits and loans, given the peculiar circumstances of Calhoun County in having only one full service commercial bank in the PSA. The operating experience in terms of expected deposits, deposit growth, profitability and maintenance and growth of capital for either of the applicant banks, under the scenario envisioned by Dr. Gaines of two new banks competing with NCNB, has not been proven, however. Given the small size of the PSA from a demographic standpoint (9,506 population) together with the low growth rate of the PSA banking market, as measured by the above-referenced economic and demographic factors, it has not been proven that all three banks could remain sound depositories and lenders for Calhoun County area customers and remain profitable and otherwise financially viable competing in such a small market over a significant period of time. Accordingly, it must be determined which of the two applicant banks can more successfully penetrate the Calhoun County market in a successfully competitive way and serve the public convenience and advantage by becoming a strong and profitable financial institution alternative to NCNB as a stable depository for residents of the area, while attaining a sufficiently favorable loan to deposit ratio so as to adequately address the financial needs of potential customers in the PSA who may seek an alternative to the NCNB lending services. The above-named expert witnesses for both applicant banks acknowledge that a new bank in Calhoun County can successfully penetrate the market in the PSA involved, provided it possesses a prudent local Board of Directors familiar with sound banking practices and capable of competent day to day management. Thus, it is appropriate to examine the Boards of Directors and organizers of the two applicant banks to determine which is more likely to most successfully manage a new bank in the Blountstown market, so as to offer a safe, sound depository and lending institution which will grow in profitability and asset base so as to be able to accommodate the financing needs of the banking public in the PSA. In this connection, as found above, the proposed Board of Directors of Calhoun State Bank each served on the Board of Directors of the Ellis Bank of Blountstown from 1978 until it was acquired by NCNB in March 1984, with the exception of T. Michael Tucker. Mr. Tucker served as a member of the Ellis Board of Directors from 1983 until 1984 and each of the proposed directors served on the advisory board of NCNB, albeit with little decision-making autonomy, from the acquisition of the Ellis Bank in 1984 by NCNB until they all resigned on April 7, 1986. The Ellis Bank of Blountstown was a member of a bank holding company and not locally owned. During the time the Calhoun State organizers served on its board, there were two other board members from outside Calhoun County. One of these members was a representative of the Ellis Holding Company which owned the bank. This member traveled to Calhoun County to attend Board of Directors' meetings and, in conjunction with the Chief Executive Officer of Ellis Bank of Blountstown, made the investment decisions and decisions regarding pricing of loans for the Ellis Bank of Blountstown as a representative of the holding company. The Calhoun organizers who served on the Ellis Bank Board thereby acquired little expertise in the independent pricing of loans. The pricing of loans is a key element of the experience of a bank officer or director, as loan pricing is one of the most important tools used by a bank in competing with other banks. The Ellis Bank of Blountstown, during the time the Calhoun organizers served on its board, also received its instructions concerning potential investments for the bank directly from the principal shareholder in the Ellis Holding Company. Such decisions were not arrived at by the local Board of Directors. The Ellis Board of Directors did have significant autonomy, however, in making actual lending decisions to customers. This factor is of significance in evaluating the Ellis Bank's performance in Blountstown during the period when all but two of the Calhoun State Bank organizers served on its Board of Directors, because the Board of Directors of a banking institution by and large sets the institution's lending policy and other aspects of its operational philosophy. In evaluating the performance of the Ellis Bank, later the NCNB branch, with a view toward determining whether its former Board of Directors can most successfully manage a new bank in the Calhoun County market, such factors as return on assets, the ratio of net income to total capital, and the loan to deposit ratio should be considered. The return on assets reflects the ability of the bank's management to manage assets of the bank in order to maximize return on equity invested by shareholders and to allow the bank to adequately meet the financial needs of its customers. It was established that a one percent return on assets is considered a favorable operating ratio for a commercial bank. In this context the performance of the Ellis Bank of Blountstown during the period that the Calhoun directors or organizers served on its board exhibited a marked decline. In 1978, when the Calhoun organizers joined the Board of Directors, the Ellis Bank of Blountstown exhibited a quite favorable return on assets in excess of 2.3 percent. By 1984, when the Ellis Bank was acquired by NCNB, that performance had deteriorated to a level of 0.77 percent. From 1980 to 1984, the Ellis Bank's performance steadily declined from the aforementioned 2.3 percent to 1.52 percent in 1981; 1.41 percent in 1982; 0.98 percent in 1983; until the above mentioned level of 0.77 percent was reached in 1984. An additional performance factor which should be considered is the ratio of net income to total capital, which is a reflection of a bank's profitability and the measure of return realized on share holder equity. When the Calhoun organizers became members of the Ellis Bank's Board of Directors in 1978, the Bank exhibited a 30 percent profit after tax on its equity, which is a very favorable return. That performance level dropped sharply, however, so that by 1981 the bank showed a return of 22.3 percent. The ratio of net income to total capital dropped steadily until it stood at the level of approximately 13 percent in 1984. Perhaps the most significant performance factor to employ in evaluating the success of a bank's operations is its loan to deposit ratio. This factor demonstrates how well a bank services the needs of the community in which it operates since the primary business of a bank is to receive deposits and to make loans. The loan to deposit ratio reflects how well a bank is marketing its product in the community in terms of how much money it lends to enable consumers to meet their personal financial needs and to enable businesses to obtain debt capital for operation, expansion and other legitimate purposes, which, in turn, serves to expand the business base of a community upon which a bank depends for its deposit growth. The former Chief Executive Officer of Ellis Bank of Blountstown acknowledged that in a community such as Blountstown it would be normal to expect a loan to deposit ratio for a commercial bank operating in such a circumstance to be in the neighborhood of 70-75 percent. This witness also acknowledged that, as the Chief Executive Officer of the former Ellis Bank, he and the members of the Board of Directors, which included all but two of the present organizers of Calhoun State Bank, established local bank lending policies. Calhoun State Bank demonstrated that expected loan to deposit ratios for the years 1986-1989 will be 50 percent, 62 percent and 63 percent, respectively. These projected loan to deposit ratios, however, do not reflect the actual historical performance of the Ellis Bank of Blountstown experienced under the stewardship of the Calhoun State Bank organizers while they were in charge of its lending policies and decisions. In fact, from 1978- 1984, the Ellis Bank's loan to deposit ratio declined from a quite favorable level of 78.94 percent to a low level of 44.84 percent. The loan to deposit ratios for those years were as follows: 1978 - 78.94 percent; 1979 - 64.54 percent; 1980 - 63.16 percent; 1981 - 51.01 percent; 1982 - 52.70 percent; 1983 - 51.39 percent; and for 1984 a low of 44.84 percent. Thus, the Ellis Bank of Blountstown experienced, with the exception of a slight increase for 1982, a steady decline in this key determinative indicator of how well the bank used its assets in terms of lending out its deposits so as to earn interest income, as that reflects on profitability. The performance record of the Ellis Bank and its successor, NCNB, is reflected in the results of the customer satisfaction survey mentioned herein conducted by the Calhoun organizers. It was thus shown that 20 percent of the current NCNB customers were unable to name any strengths in that bank, and seventy percent of those surveyed named specific weaknesses in the institution, which was the worst performance rating in the survey. This high level of customer dissatisfaction may be reflected in the declining loan to deposit ratio experienced by Ellis and NCNB and to some extent the declining loan to deposit ratio may be a cause of much customer dissatisfaction. In this connection, Dr. Heggestad established that one of the primary reasons for customer dissatisfaction with the performance of NCNB was the low availability of loans. In any event, the banking institutions for which all but two of the Calhoun organizers served as Directors or advisory board members from 1978-1986, and from whence would likely come Calhoun's Chief Executive Officer, received the highest level of public criticism of the financial institutions surveyed in the area, including the Bank of Bristol, from which the organizers of the C&L, the competing applicant, obtained their banking experience and performance record. Mr. Steven Thames, one of the proposed Chief Executive Officers for the Calhoun State Bank, did not testify in this proceeding, however, the evidence of record establishes his qualifications as adequate to serve as Chief Executive Officer of a banking institution. Mr. Thames, however, has not served as the Chief Executive Officer of any financial institution in the past and the evidence did not reflect that he has served in any official capacity with a de novo bank. Mr. Michael James, the proposed Chief Executive Officer for C&L Bank of Blountstown, on the other hand, has served as a Chief Executive Officer for approximately ten years with the C&L Bank of Bristol and further that experience involved the organization and operation of a newly chartered bank from its initial capitalization and opening through approximately ten years of generally consistent improvement in terms of growth of deposits, loan to deposit ratio, return on equity and profitability. Mr. Bowers Sandusky has served as the Chief Executive Officer of Ellis Bank of Blountstown from 1972-1984. In 1984, when that bank was acquired by NCNB, Mr. Sandusky continued to serve as City Executive for NCNB in Blountstown. Up until the 1984 acquisition, Mr. Sandusky and the members of the Board of the Ellis Bank of Blountstown established the investment and lending policies at the Ellis facility. Mr. Sandusky acknowledged that he and the Ellis Board of Directors had a large amount of local autonomy in terms of investment and lending decisions. In conjunction with that circumstance from 1978, at which point the Calhoun organizers joined the management of the Ellis Bank, through 1984, that facility did not perform well in terms of the above found factors regarding banking performance. Additionally, Mr. Sandusky on two occasions has assisted proposed bank charter applicants who sought to establish competing institutions during the time he was serving as Chief Executive Officer of Ellis Bank and the NCNB Branch. Mr. Sandusky acknowledged that NCNB would lose as much as $1,000,000 in deposits by the end of the first year if a new bank is approved for Blountstown, which would affect his profitability significantly. Despite that fact Mr. Sandusky has made no change in his bank's officer call program or other efforts in the face of the potential advent of a new bank in Blountstown in an effort to forestall a continued decline in his bank's financial strength and profitability. This is especially significant in light of the fact that NCNB enjoys as much as 85 percent of the total deposits from Calhoun County which indicates a substantial likelihood that any new bank entering the presently substantially monopolistic market in that County will attract a very substantial percentage of those deposits. The C&L Bank of Bristol, on the other hand, has performed quite well for a bank of its size in the type of banking market involved herein characterized by very modest growth. It has fairly consistently improved its financial strength and profitability in terms of the various indicia of banking performance discussed above with regard to the Ellis Bank and its successor NCNB. Because Dr. Heggestad found that the probable success of a new bank in Calhoun County depended so much upon the skill and banking ability of the proposed management, he did an analysis of the performance of C&L Bank of Bristol as to profitability and overalls financial performance since the inception of C&L Bank of Bristol because its management team would be the same as that of the proposed C&L Bank of Blountstown. This analysis was performed by comparing that bank with all institutions of the same approximate size in the State of Florida, that is, from $10-15,000,000 in assets. It was thus established that the C&L Bank of Bristol's return on assets, which reflects the ability of management, has been consistently favorable. A standard rule of thumb in the banking industry is that a one percent return on assets is a good return. The C&L Bank of Bristol experienced a 1.78 percent return in 1981, 3.55 percent in 1982, declined to 1.06 percent in 1983, and rose again to 1.42 percent in 1985. In terms of comparison with its peers in 1981, it was in the top 20 percent in this indicia of performance, was ranked at 68 percent of all banks in the comparison for 1982, 53 percent for 1983, 75 percent for 1984, and in 1985 ranked in the 84th percentile, performing better than all but 16 percent of the banks in Florida of its approximate size. In terms of return on equity, there has been some fluctuation. The C&L of Bristol has had as high as a 20 percent return and experienced a 15 percent return in 1985, which still puts that bank in the top 20 percent of banks of its size, or better than four out of five banks in its size class. The capital to assets ratio is a reflection of the safety or financial soundness of a banking institution. A 7 percent capital to asset ratio is the safe minimum for banks of this type, according to Dr. Heggestad. In 1985, the Bristol Bank experienced a 10.37 percent capital to assets ratio. The interest spread reflects the difference between the cost of a bank's funds and the amount it charges as interest on those funds when they are lent to customers. The Bristol Bank has averaged about a 5 percent interest spread over the period of its existence which places it in about the 40th percentile of banks in its class, which means it is about average in terms of how much it pays for and "marks up" its lendable funds which, in turn, has a significant effect on profitability. Shareholders, of course, tend to desire a larger interest spread in order to enhance profitability. From the consumer standpoint, however, an interest spread of this magnitude tends to indicate favorable loan prices as that reflects on the ability of the bank to compete in the lending market in its operating area which, in turn, can enhance its loan portfolio and deposit base over time. In terms of non-interest income, the Bristol Bank experienced a very good performance by increasing its ranking with other banks in its class, from the 41st to the 66th percentile over the life of the institution. In terms of the overhead costs to asset ratio, it ranks in the 81st percentile, which means it is considerably below the average bank in its class in terms of overhead costs as related to total assets. The Bristol Bank's loan to deposit ratio has been declining, but still remains at the average for all banks in its class. It experienced a very unfavorable loan to deposit ratio in 1981 and in 1985 it was in the bottom 15 percent of banks in its class, which suggests problems the bank is experiencing in the low per capita income, low growth market it chiefly operates in Liberty, and, to some extent, Calhoun Counties. In the category of net "charge-off" of loans, the Bristol Bank experienced a negative net charge-off in 1981, which means it collected more money on loans previously charged off than had been initially charged off as uncollectable. The bank ranked in the top 10 percent for banks in its class in that category. In 1982 it experienced a significant decline in collecting charged-off loans and was near the bottom of its class. It rose to about an average position in this category in 1983, and in 1984 was again in the top 10 percent, experiencing another significant decline in 1985. It was established, however, that, as compared to all other banks in its class, the Bristol bank and its management team was performing quite well in consideration of the weak economic market in which it operates. Because of the very small demographic size of the Bristol Bank's market, the slow growth of that market, and the low per capita income of the population, the Bristol Bank has operated at a substantial disadvantage compared to other banks in that analysis group, and yet has still performed quite well, as established by Dr. Heggestad. Dr. Heggestad also compared the C&L Bank of Bristol's performance directly with the Ellis/NCNB Bank. Since 1979, shortly after the present Board of Directors/Advisors of Ellis/NCNB began managing that bank, it has consistently deteriorated in its loan activity as measured by its loan to deposit ratio, going from approximately 77 percent down to approximately 45 percent over that time period, while the C&L Bank of Bristol has consistently increased its loan activity relative to deposits each of those years until 1985 when it registered a slight decline. Thus in terms of the basic function of a bank creating loans from its deposits, the C&L Bank of Bristol and its management team have consistently outperformed the Calhoun State Bank organizers at NCNB. Likewise, since 1978, profitability has declined sharply at Ellis/NCNB. It also declined at C&L of Bristol, but the management of C&L of Bristol has reversed that situation since 1983 and is now showing more profitability percentage-wise than the NCNB Bank. In terms of profitability as measured by net income after taxes against total capital, (in the study period) the Ellis Bank initially experienced a very high return on equity which has consistently declined. The C&L of Bristol profit also declined, but this measure of profitability also registered an increase since 1983, surpassing the rate of return to shareholders experienced by NCNB. Thus, in comparing the management of the Bristol Bank to all other financial institutions in its size class as well as directly to Ellis/NCNB, which operates in the same general geographical and economic circumstance, it has been shown that the C&L Bank of Bristol's management performed quite well and significantly better than that of Ellis/NCNB. Finally, over the life of the Bristol bank, although it has experienced both increasing and declining loan to deposit ratios and profitability, the fact remains that it has averaged a 17 percent annual return on share holder investment, which places the Bristol bank near the top of all banks in its class in terms of return to shareholders. Finally, Dr. Heggestad analyzed the possibility of two new banks entering the Calhoun County market. He established that it would be very difficult for two new banks to successfully begin operations at the same time in that County, given the moderate economic and demographic growth indicators which characterize that banking market. The growth simply is not enough to sustain two new banks. If two new bank charters were issued for Calhoun County, both banks would struggle to obtain an adequate market share in competing with NCNB. To some extent this would be in the consumer's best interest because loan rates would likely drop and deposit rates would increase as each bank attempted to obtain sufficient depositors and loan interest income to be successful. Each of the banks would have to purchase deposits, meaning that in order to sustain any growth, they would have to purchase money outside of the Calhoun County market by buying Certificates of Deposit and other funds in other areas. This is an expensive way to increase lendable funds and it would drive the costs of both banks up significantly. Dr. Heggestad established that if that situation occurred, both banks would have to struggle to survive and neither would thrive, which would mean that neither of them would be viable competitors for the large NCNB institution, which in the long run would not serve the interests of the consumer in Calhoun County very well because it would tend to retard ready loan availability which is necessary in order to finance expansion of the economic base of the County which circumstance would come full circle and tend to retard growth of the banks themselves. In short, Dr. Heggestad established that there is not a reasonable promise of successful operations for two new banks in Calhoun County. In summary, it has been established that the public convenience and advantage would best be served by the approval of one new State bank for the Calhoun County PSA delineated herein. It is determined in light of the factors enumerated above that the approval of a single new State bank will best ensure a strong competitor and healthy competition in that banking market, which presently is somewhat monopolistic. It has been established that the advent of two new banking institutions in Calhoun County at this time will result in all three banking institutions having to struggle to survive, and obtain a modicum of growth in deposits, loan to deposit ratio, adequate return on assets and share holder equity and the other indicia of successful banking performance. Such an eventuality would, in effect, restrict healthy competition and likely result in at least two of the three resulting banks failing to thrive and failing to become successful, truly financially sound public depositories and lending and investment institutions. In consideration of all the criteria enumerated in Section 658.21(1-6) Florida Statutes, it is found that the C&L Bank of Blountstown applicant, in light of its organizers', officers' and directors' proven bank management ability and record of success with a de novo bank, and in consideration of the economic and demographic conditions and growth potential of the PSA, will have the most likelihood of success as a new banking institution. It will represent the strongest potential competitor for the primary existing financial institution, NCNB. Its advent in that banking market will result in stronger competition for NCNB chiefly because of the proven superior management ability of its organizers and Chief Executive Officer and the advent of the C&L Bank of Blountstown in the Calhoun County PSA has been demonstrated to not likely result in destructive competitive effects on NCNB and the C&L Bank of Bristol. Both those institutions are likely to remain sound depositories for public and private funds and to remain effective providers of lending and other services for residential and commercial customers. 1/ DONE and ENTERED this 27th day of January, 1987 in Tallahassee, Florida. P. MICHAEL RUFF 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 27th day of January, 1987.
Findings Of Fact On July 6, 1981, the Applicant submitted to the Department of Banking and Finance (Department) an application pursuant to Section 658.19, Florida Statutes (Supp. 1980), for authority to organize a corporation for the purpose of conducting a general banking business to be located at 1000 Massey Boulevard, unincorporated Palm City, Martin County, Florida. Notice of receipt of the application was published in the Florida Administrative Weekly on December 11, 1981. Protests and requests for hearing were filed by American Bank of Martin County (American), Central Savings and Loan Association (Central), Florida National Bank of Martin County (Florida National), and First National Bank and Trust Company of Stuart (First National) on or before December 30, 1981. On September 27, 1982, Florida National withdrew its protest. Publication of the Notice of Hearing in this cause appeared in The Stuart News on October 1, 1982. A hearing was held in this cause on October 19 through 20, 1982, in Stuart, Martin County, Florida. The pronosed bank will occupy 3,300 square feet of an existing single- story structure located at the west end of the Villa Plaza Shopping Center fronting on Massey Boulevard, also known as Martin Downs Building. The proposed bank will have visibility and access to Massey Boulevard and also to First Street along the rear (south side) of the Villa Plaza Shopping Center, through use of the ingress and egress facilities of the shopping center. (View by Hearing Officer) The site has facilities for three drive-in lanes. The plan of the proposed bank will include a teller line, lobby area, private offices, teller work area, coupon booth area, vault, restrooms and an employee lounge. Adequate parking facilities already exist and there is room for expansion. (T. 48-50; View by Hearing Officer) The facility is adequate to handle the projected business of the bank for a reasonable period of time and is of such a nature to warrant customer confidence in the security, stability and permanence of the bank. The Applicant intends to lease the facilities from R&S Equities, a Florida partnership whose partners are John C. Robinson and Woodrow J. Smoak. The lease terms include a five year term with annual rent of $36,000 payable in monthly installments of $3,000. The lease also provides for renewal options every five years for a maximum of thirty (30) years with specified annual rental payments to be used during each of the five year terms. Applicant anticipates an investment of $174,500 in fixed assets, including $49,500 for leasehold improvements and $125,000 for furniture, fixtures and bank machinery. Temporary quarters for the bank are not anticipated as the existing structure is ready and the planned improvements can be completed quickly. Applicant has no plans to purchase or lease any land, buildings, improvements to be made thereon, or equipment, furniture, or fixtures to be installed therein, from a director, officer or stockholder who owns 5 percent or more of the capital stock of the Applicant or any controlled company of any officer, director or stockholder. The Applicant's primary service area incorporates portions of the City of Stuart, unincorporated Martin County and a portion of unincorporated Martin County known as Palm City. The PSA is a "bedroom community" with shopping, recreational and public school facilities. Included within the PSA are U.S. Census Enumeration Districts 11, 12, 32, 33, 61, 65, 66, 67 and a portion of 10. The PSA's northern, eastern, southern and western boundaries are the St. Lucie County/Martin County Line (along with the St. Lucie River and Frazier Creek), Colorado Avenue (State Road 76), Indian Street, extended to Florida's Turnpike, and Florida's Turnpike respectively, and are located 2.4 road miles, 0.9 miles, 1.8 miles and 2.5 miles respectively from the proposed site. The south fork of the St. Lucie River runs north and south through the eastern protion of the PSA. The Palm City Bridge, a modern fixed span bridge, crosses the river and connects the larger portion of the PSA west of the river with the eastern portion and the City of Stuart. The bridge's western end is approximately 0.2 miles from the Applicant's proposed site. The delineation of the boundaries of the PSA took into consideration the locations of the offices of existing financial institutions, along with the other economic and demographic factors. The ability of PSA residents to reach the proposed site in a convenient and timely manner was likewise a factor considered in delineating the boundaries of the PSA. The northern boundary of the PSA, consisting primarily of the St. Lucie County/Martin County Line, presents a logical and political northern boundary. The eastern boundary, Colorado Avenue, is a major north/south thoroughfare chosen primarily because of its proximity to existing financial institutions. The southern boundary, Indian Street, extended to the Florida Turnpike and the western boundary, the Florida Turnpike, were chosen because they are areas beyond which population concentrations are limited. Also, Florida's Turnpike is a significant man-made barrier. There are no other significant natural or man-made barriers which would restrict the flow of traffic within the PSA. The PSA's major north/south arteries are 18th Avenue, Mapp Road, Palm City Avenue and Colorado Avenue. The PSA's primary east/west arteries are Highway 714, Massey Boulevard, a/k/a Martin Downs Boulevard and Murphy Road. The 1970-1980 population trends for the City of Stuart, Martin County, the State of Florida, and the Applicant's designated PSA were considered. This data was provided by the Applicant and the Department from census data and from data published by the University of Florida's Bureau of Economic and Business Research (BEBR). The PSA population grew from 3,300 in 1970 to 6,350 in 1980 for an average annual increase of 9.2 percent. The City of Stuart grew from 4,820 in 1970 to 9,467 in 1980 for an average annual increase of 9.6 percent. The population of Martin County went from 28,035 in 1970 to 64,014 in 1980 for an average annual increase of 12.8 percent. Over the same ten year period, Florida's population increased an average of 4.4 percent annually from 6,791,418 to 9,746,324. The BEBR projected 1983 Martin County population at 70,600 by its low projection, at 74,600 by its medium projection and at 75,300 by its high projection. For Florida's 1983 population, the BEBR estimated 10,352,200 as its low projection, 10,595,100 as its medium projection and 10,757,200 as its high projection. The average annual 1980-1983 population growth rate projections for Martin County are 3.43 percent, 5.20 percent and 5.88 percent as calculated from the low, medium and high 1983 projections respectively. For Florida, tide average annual 1980-1983 population growth rate projections are 2.07 percent, 2.90 percent and 3.46 percent as calculated for the low, medium and high projections respectively. See "Data Source Packet" of Department's Official File (DSP). One hundred percent of the County's 1970-1980 population growth resulted from immigration, a proportion above the state's 91.97 percent. (DPS) Over the 1970-1979 period, the Martin County population aged somewhat, with the population proportion below age 15 having decreased from 23.8 percent to 18.6 percent; the population proportion within the working age group (15 to 64) increased from 54.9 percent to 56.3 percent; and the population aged 65 years and above increased from 21.3 percent to 25.1 percent. Florida population during the same period decreased from 25.8 percent to 20.4 percent for the group below age 15; increased from 59.6 percent to 61.9 percent in the working age group and increased from 14.6 percent to 17.7 percent for those 65 and over. (DPS) In April, 1980, the Martin County population was older than the Florida population. Martin County's population under age 15 was 16.4 percent; with 59.1 percent in the working age group; and 24.5 percent over age 65. In April, 1980, 19.3 percent of Florida's population was below age 15; 63.4 percent were in the working age group; and 17.3 percent were aged 65 or over. With a higher percentage of people over age 15, there is a relatively higher number of people in Martin County of an age to utilize banking services than exists on the average statewide. The rate of growth in the number of households in Martin County exceeded the rate of growth in the State of Florida during the 1970-1980 period. The BEBR estimated the number of Martin County households in 1980 at 25,863, having reflected at 155.5 percent increase above the 1970 level of 10,122 households. The number of state households increased 63.8 percent during the same period from 2,284,786 to 3,841,356. County and state average household sizes declined 11.8 percent and 12.1 percent, respectively, over the 1970-1980 period with the Martin County average household size having declined from 2.72 to 2.40 persons, and the state average declined from 2.90 to 2.55 persons. Statewide unemployment rates have significantly exceeded those of Martin County for all periods since 1974. During 1975, Florida's 10.7 percent unemployed rate exceeded Martin County's 8.7 percent rate. In 1976, Florida's 9 percent unemployment rate exceeded the 7.7 percent rate in Martin County. Florida's 8.2 percent unemployment rate exceeded the Martin County 6.9 percent rate in 1977. In 1978, Florida's unemployment rate was 6.6 percent which was also well above the 5.5 percent rate in Martin County. In 1979, the margin was even larger with Florida's unemployment rate at 6 percent and Martin County's unemployment rate at 4.8 percent. The margin continued to grow in 1980 with the Florida unemployment rate still at 6 percent but the Martin County unemployment rate having dropped to 4.4 percent. In 1981, Florida and Martin County's unemployment rates were 6.8 percent and 5.6 percent respectively. In 1981, the Florida unemployment rate remained well above the unemployment rate in Martin County. (T. 181) Between 1979 and 1981, average household effective buying income (HEBI) in Martin County grew from $16,339 to $20,119. In 1979, Florida HEBI was $18,613 and in 1981, was $21,301. The increase between 1979 and 1981 was much more significant in Martin County than in the State of Florida overall. HEBI increased 23.1 percent or $3,780 in Martin County while increasing only 14.4 percent or $2,688 in Florida between 1979 and 1981. Net income figures show an even more significant increase in Martin County. Between 1979 and 1981, net income in Martin County increased 73.3 percent from $336,574,000 to $583,448,00. During the same period, net income in Florida increased by only 34.2 percent from $63,889,652,000 to $85,768,756,000. Per capita personal income data (PPI) formulated for the state and county by the United States Department of Commerce, and reprinted by the University of Florida, was in evidence and considered. This data appears in the following table: YEAR 1970 1971 1972 1973 1974 Martin Co. 3861 4258 4773 5246 5363 Florida 3693 4007 4461 4988 5341 YEAR 1975 1976 1977 1978 1979 Martin Co. 5834 6437 7215 8094 9178 Florida 5634 6094 6733 7591 8521 PPI level in Martin County exceeded Florida PPI levels throughout the 1970-1979 period. Between 1975 and 1979, PPI in Martin County increased by $3,344 or 57.3 percent while per capita income in the State of Florida increased by only $2,887 or 51.2 percent. In addition, PPI in Martin County in 1979 exceeded the statewide figure by 7.7 percent. The Applicant submitted data on estimated retail sales in Martin County and Florida for 1975 through 1981. At the time the application was filed, the latest available figures were for 1979. Between 1979 and 1981, estimated retail sales increased 32.3 percent in Martin County while the State of Florida increased by only 28 percent. Five operating commercial bank offices are located in or within one mile of the PSA. Florida National operates a branch office 0.8 miles northeast of the proposed opened 0.2 miles west of the proposed site. The two branches are the only bank offices in the PSA. The following three bank offices are located within one mile of the PSA: Florida National's main office, operating 2.7 miles northeast of the proposed site; First National's main office, operating 2.1 miles northeast of the proposed site; and First National's branch office, operating 1.8 miles northeast of the proposed site. These five bank offices are operated by only two bank institutions, neither of which is a state chartered institution nor has its main office in the PSA. Florida National, the only bank operating in the PSA, withdrew its protest to this application. Seven savings and loan association (association) facilities were cited as operating in or within one mile of the PSA. These seven association facilities include two main offices in operation and five association branch offices. Two offices operate within the PSA: Harbor Federal Savings and Loan Association (formerly First Federal Savings and Loan Association of Ft. Pierce) operates a branch office 0.9 miles northeast of the proposed site. First Federal Savings and Loan Association of Martin County operates a branch office 0.9 miles northeast of the pronosed site.. The following facilities are within one mile of the PSA: Citizens Federal Savings and Loan Association operates a branch office 2.2 miles northeast of the proposed site; Community Federal Savings and Loan Association operates a branch office 2.7 miles northeast of the proposed site; First Federal Savings and Loan Association of Martin County has its home office 2.2 miles northeast of the proposed site; Home Federal Savings and Loan Association has a branch office 2.1 miles northeast of the proposed site; and the recently opened main office of Central Savings and Loan Association is one mile northeast of the proposed site. A period's inflation is most commonly estimated by the period's corresponding change in the consumer price index, which is the only method of record in this proceeding. Each month, changes in the consumer price index from the previous month and for the previous 12 months are published by the United States Department of Labor, Bureau of Labor Statistics. For the year ending September 30, 1981, the rate of inflation was 11.0 percent. For the year ending December 31, 1981, the rate of inflation was 8.9 percent. For the year ending March 31, 1982, the rate of inflation was 6.8 percent. (DSP) Only one bank office (a branch office) was in operation within the PSA in March, 1982. During the year ending March 31, 1982, the Florida National Bank of Martin County branch office within the PSA increased its total deposits from $12,638,000 to $16,307,000 or an increase of 29 percent, a rate more than four times that of the 6.8 percent rate of inflation that existed during the year ending March, 1982. Data is also available for the bank offices operating within one mile of the PSA. The main office of First National increased its total deposits during the period of March, 1981, to March, 1982, from $149,296,000 to $153,845,000 for a yearly increase of 3.0 percent. The branch office of First National close to the PSA increased deposits during the same period from $3,144,000 to $3,587,000 or an increase of 14.1 percent. The Florida National main office had a decrease in deposits from $89,806,000 to $3,587,000 or a loss of 2.0 percent during the year ending March 31, 1982. Total Martin County deposits for the period increased from $402,666,000 to $423,762,000 or a 5.2 percent increase. During the period from March 31, 1981, to March 31, 1982, bank deposits within the State of Florida increased from $41,478,327,000 to $43,933,129,000 or an increase of approximately 5.9 percent. In summation, the rate of growth in deposits within the PSA exceeded the rate of growth in deposits in Martin County and the rate of deposit growth was bore than four times greater than the rate of inflation for the same period. For the period between September 30, 1980, and September 30, 1981, the savings and loan association offices operating in the PSA showed increases in the volume of savings accounts as follows: Harbor Federal increased from $12,287,000 to $14,997,000 or a yearly increase of 22.1 percent; First Federal of Martin County (opened in March, 1980) increased from $2,194,000 to $6,033,000 or a total increase of 175.0 percent in one year. Thus, the increase in the two savings and loan offices in the PSA showed a combined one year gain of $6,549,000 or 45.2 percent. In Martin County as a whole, savings increased from September 30, 1980, to September 30, 1981, from $352,735,000 to $381,625,000 or a yearly increase of 8.2 percent. In the State of Florida as a whole, savings during the same period went from $42,560,303,000 to $45,332,969,000 or a yearly increase of only 6.5 percent. In summary, association deposits at offices in the PSA increased at a rate far in excess of those in Martin County as a whole, and in the State of Florida. In addition, the 45.2 percent increase of association deposits in the PSA during the reporting period was more than four times the 11 percent rate of inflation for the year ending September 30, 1981. The Applicant proposes to offer the full range of banking service offered by full-service commercial banks. No deficiencies in the proposed services were established by any Protestant. However, it should also be noted that there are, at present, only two branches of one multi-bank holding company (Florida National) located within the PSA. No other bank is presently represented in the PSA. No bank is headquartered in the PSA, nor is there a facility of a state chartered bank in the PSA. Also, only Florida National Bank and one other banking organization maintain bank offices in or within one mile of the PSA. Consequently, alternative or competitive choices are limited in the PSA and within one mile of its boundaries at the present time. Applicant projected total deposits of $5,000,000, $9,000,000 and $13,000,000 at the end of the proposed banks' first three years of operation respectively. It also projected a $22,381 net operating loss during the proposed bank's first operating year, and pre-tax net operating income levels of $257,715 and $466,208 during the bank's second and third operating years respectively. These deposit and increase projections were formulated under the assumption that the proposed bank would have: $2,750,000 in total time and savings deposits and $2,250,000 in total demand deposits at the end of the first operating year; $5,400,000 in total time and savings deposits and $3,600,000 in total demand deposits at the end of the second operating year; and $8,450,000 in total time and savings deposits and $4,550,000 in total demand deposits at the end of the third operating year. Applicant's projections are conservative, were unrefuted by the Protestants and are likely achievable. The Applicant's testimony and evidence established that there are nine active residential subdivisions in the PSA totaling 6,576 units of which 416 or 6.3 percent were cited as completed. Home prices range from between $65,500 and $580,000. Five areas are planned for single family units accounting for 95 percent of the total units planned. Prices for the single family units range between $75,000 and $580,000, while prices for condominium units range between $65,500 and $87,900. The single family subdivisions are Canoe Creek, Martin Downs, Mid-Rivers, Pipers Landing and Westgate. Utilities are being installed for 70 new lots in the PSA and there are 15 new rental units recently opened and under construction. Extensive testimony was presented about the Martin Downs project located within the PSA. Martin Downs is a 2,400 acre planned residential development which will contain 5,500 residential units. It will also contain two golf courses, racquet club, resort center, retail shopping center, office park, industrial park, government service center, schools, yacht club, parks and a utility plant. Road improvements have already been made in and around Martin Downs. Further, during 1983, major improvements will be made to Martin Downs Boulevard, the major east/west artery through the PSA. These improvements include widening that portion of Martin Downs Boulevard that runs past the proposed site of the Applicant bank. (T. 23-26) Martin Downs will be built in phases with a final population of 12,000 to 13,000 people. (T. 23) The builders of Martin Downs already have approximately $20 million invested in the project. The Crane Creek area of Martin Downs is one of the most exclusive residential sections in the PSA. (View by Hearing Officer) It consists of 346 lots of which approximately 300 are sold and approximately 150 lots are occupied or have homes under construction. The lots sell for $35,000 to $60,000. Homes sell from around $150,000 to $400,000. Crane Creek also contains a championship golf course, clubhouse and racquet club with thirteen tennis courts. (T. 15) Four condominium projects are presently under construction: Country Meadows, Mapletree Villas, The Crossings, and The Townhomes at Poppleton Creek. Prices range between $49,900 and $87,900. These four projects have 306 total units planned of which 60 were completed in October, 1982, and another 72 under construction. Residents living in all of the single family subdivisions cited and at Mapletree Villas and the Crossings must, as a practical matter, pass the Applicant's proposed site on their way to and from the City of Stuart. In addition to the developments cited, there are a large number of existing residences within the PSA. Many of these are located west of the South Fork of the St. Lucie River and these residents must also pass the Applicant's proposed site when going to and from Stuart. (View by Hearing Officer) Commercial activity in the PSA is primarily centered along Massey Boulevard and Mapo Road in close proximity to the subject site. Downtown Stuart lies approximately 2.5 miles northeast of the proposed site. As of May, 1981, 35 businesses were established within one-half mile of the proposed site. In addition, the Monterey Plaza, a large, modern shopping center within one mile of the proposed site, contained 44 businesses in August, 1981. There are 43 businesses within one-half mile of the site. Manufacturing is limited in Martin County. However, the county's largest manufacturer, Grumman Aerospace Corporation, is located at Witham Field, approximately 2.7 miles east of the proposed site. In addition, there are two areas established for industrial development in the PSA itself. One is a planned industrial park to be located in Martin Downs. The other is a ten acre industrial park known as Heritage Square, located at Palm City School Road and State Road 714, approximately 1.7 miles southwest of the proposed site. There are approximately three acres currently developed in the park which opened in 1978. At the time the application was filed, it had 12 tenants, 11 of which are small manufacturing firms. The proposed bank will be capitalized with a total of $1,500,000. The capital will be divided into common capital of $1,000,000, surplus of $300,000, and undivided profits of $200,000. The bank will issue 100,000 shares of stock, with a par value of $10 and a selling price of $15 plus $.50 per share assessed for the Organizational Expense Fund. All 100,000 shares have been subscribed to. The proposed directors have personally subscribed to 30,000 shares as follows: Herbert-Biggs, 5,000 shares; Stephen Frasier, 5,000 shares; Richard Jemison, 5,000 shares; Charles Pope, 5,000 shares; Donald Ricci, 5,000 shares; and Roy Talmo, 5,000 shares. The proposed Board of Directors is composed of six members with diverse business backgrounds, some of whom have had prior banking experience. Herbert Biggs is an 11 year Florida resident living in Jupiter, Florida. Mr. Biggs has a B.S. degree from Mississippi State University and a J.D. from the University of Mississippi. After a short period as a professional basketball player, Mr. Biggs came to Martin County to practice law. He has since left the practice of law to pursue a career as a general contractor and developer. He is currently the president of Suncastle Homes, Inc., a construction and development corporation. Mr. Biggs holds professional licenses as a realtor, general contractor and attorney. Mr. Biggs is a U.S. citizen. Mr. Biggs has a reputation evidencing honesty and integrity and has an employment and business history demonstrating his responsibility in financial affairs. Stephen Frasier is a 12 year resident of Martin County. He holds a B.S. degree from Florida State University and J.D. from the University of Florida. Mr. Frasier served in the Navy as a Flight Officer and is presently a Lieutenant in the Naval Reserve. He served as the Assistant City and County Attorney in Martin County and is presently engaged in the private practice of law in Martin County as a partner in the firm of Frasier and Bateman, P.A. Mr. Frasier is a member of the Civitan Club, the Masonic Temple, the Elks Club, Martin County Bar Association, on the Board of Directors of the Visiting Nurses Association, Florida Bar, on the Board of Directors for the Paradise Ranch for Boys, and is the Chairman of the Board for the Sailfish District of the Boy Scouts of America. (T. 122) Mr. Frasier is a U.S. citizen. (T. 121) Mr. Frasier has a reputation evidencing honesty demonstrating his responsibility in financial affairs. (T. 80, 113; Exs. 1, 5) Richard Jemison has been a Florida resident since 1939, and presently lives in Stuart, Florida. (T. 102; Ex. 1) He has a B.S. degree in Civil Engineering from the University of Florida. (T. 103) Mr. Jemison was in the printing business in St. Petersburg, Florida, for 13 years and is now the president of Seabridge Associates, Inc. (T. 104) He holds licenses as a real estate broker, mortgage broker, and contractor. (T. 103) Mr. Jemison is a member of the Palm City Chamber of Commerce, Stuart Chamber of Commerce and Kiwanis Club. Mr. Jemison has substantial banking experience in that he served on the Board of Directors of the First State Charter Bank in St. Petersburg from 1968 through 1974. (T. 106; Ex. 1) He is a U.S. Citizen. (T. 102) Mr. Jemison has a reputation evidencing honesty and integrity and has an employment and business history demonstrating his responsibility in financial affairs. (T. 83, 115-116; Exs. 1, 4) Charles Pope has lived in Florida since 1951 and presently lives within the PSA of the proposed bank. He received a B.S. degree from the University of Florida and has completed all of the course work for an M.B.A at the Florida Institute of Technology. Mr. Pope has direct banking experience from his past employment with First National Bank and Trust Company of Stuart, Atlantic Bank Corporation, and First American Bank and Trust Company (formerly First American Bank of Palm Beach) Mr. Pope is the president of Charles Pope & Associates, Inc., an investment banking firm. He holds a mortgage brokers license from the State of Florida, is a Certified Commercial Lender and a Certified Review Appraiser. He is a member of the American Bankers Association, American Institute of Banking and the Chamber of Commerce. Mr. Pope is a citizen of the United States. He has a reputation evidencing honesty and integrity and has an employment and business history demonstrating his responsibility in financial affairs. Donald Ricci has lived in Florida since 1975, and in Martin County for the past five years. After being honorably discharged from the U.S. Air Force, Mr. Ricci was a part owner and general manager of an automobile dealership. Mr. Ricci became interested in the real estate business and worked as the Marketing Director for First Southern Holding Company, the developers of Martin Downs. As Marketing Director, he was in charge of sales and marketing for Martin Downs. Mr. Ricci is a 50 percent partner and manager of Seabridge Associates, Inc., a real estate development firm whose offices are located in the PSA and close to the proposed site of the Applicant bank. Mr. Ricci is a licensed real estate broker and a member of the Palm City Chamber of Commerce and the Stuart/Martin County Chamber of Commerce. Mr. Ricci is a U.S. citizen. He has a reputation evidencing honesty and integrity and has an employment and business history demonstrating his responsibility in financial affairs. Roy W. Talmo has lived in Palm Beach County, Florida, since 1964. He received a B.B.A. and M.B.A from the University of Minnesota. Mr. Talmo has extensive direct banking experience, having been employed as a banker since 1959. Mr. Talmo has been employed by the Continental Bank in Chicago and the First National Bank of St. Petersburg, and is the past Chairman of the Board of Miami National Bank. Mr. Talmo is presently Chairman of the Board of First National Bank and Trust Company in Palm Beach, and has directed its growth from an $11 million bank to its present size of just under $500 million. Mr. Talmo also serves as a Director of First American Bank of Broward County, First City Bank of Dade County, and First State Bank of Broward County. He is a member of the Palm Beach Junior College Foundation, the Palm Beach Festival, and the Tourist Development Committee for Palm Beach County. Mr. Talmo is a U.S. citizen. The Applicant adduced evidence which was not refuted, and which established that Mr. Talmo has a reputation evidencing honesty and integrity and an employment and business history demonstrating his responsibility in financial affairs. As of the date of the final hearing, the Applicant had not selected a President or Chief Executive Officer, nor a Cashier or Operations Officer. The Applicant has selected the name First American Bank of Martin County. There are no Florida financial institutions with a name so similar as to cause confusion with the proposed name. Parenthetically, it should be noted that a cogent discussion and resolution of the issue of "name confusion" is extant in First Bank of Hollywood Beach and Office of the Comptroller vs. American Bank of Hollywood, DOAH Case No. 80-1581, opinion filed May 13, 1981. The Applicant has proven that public convenience and advantage will be served by the approval of the application. The Applicant has proven that local conditions indicate a reasonable promise of successful operation for the new bank. DONE and ENTERED this 4th day of April, 1983, in Tallahassee, Florida. P. MICHAEL RUFF, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 4th day of March, 1983. COPIES FURNISHED: C. Gary Williams, Esquire Michael J. Glazer, Esquire Post Office Box 391 Tallahassee, Florida 32302 Noel Bobko, Esquire Post Office Drawer 2315 Stuart, Florida 33495 James L. S. Bowdish, Esquire Post Office Drawer 24 Stuart, Florida 33494 Walter W. Wood, Esquire Office of the Comptroller The Capitol, Room 1302 Tallahassee, Florida 32301 The Honorable Gerald Lewis Comptroller The Capitol Tallahassee, Florida 32301 ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA DEPARTMENT OF BANKING AND FINANCE DIVISION OF BANKING IN RE: Application of First Administrative Proceeding American Bank of No. 83-5-DOB Martin County DOAH No. 82-034 / FINDINGS OF FACT, CONCLUSIONS OF LAW, AND FINAL ORDER Pursuant to Notice, an Administrative Hearing was held before P. Michael Ruff, Hearing Officer, with the Division of Administrative Hearings on October 19 and 20, 1982, in Stuart, Martin County, Florida. The purpose of the hearing was to receive evidence concerning the application of First American Bank of Martin County for authority to open a new bank in Stuart, Martin County, Florida. At the hearing, the parties were represented by counsel: For Applicant, C. Gary Williams, Esquire First American Bank Michael J. Glazer, Esquire of Martin County: Post Office Box 391 Tallahassee, Florida 32302 For Protestant, Noel Bobko, Esquire American Bank of Post Office Drawer 2315 Martin County: Stuart, Florida 33495 For Protestant, James L. S. Bowdish, Esquire First National Bank & Post Office Drawer 24 Trust Co. of Stuart: Stuart, Florida 33494 For the Department of Walter W. Wood, Esquire Banking and Finance: Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32301 Having fully considered the facts and information contained in the record relating to the application of First American Bank of Martin County for authority to organize a corporation for the purpose of conducting banking business in Stuart, Florida, the Comptroller of the State of Florida, as Head of the Department of Banking and Finance, hereby renders the following FINDINGS OF FACT, CONCLUSIONS OF LAW AND FINAL ORDER in the above-styled case.
Conclusions The statutory criteria set forth in Chapter 658, Florida Statutes, which were in effect at the time the application was filed, are the standards which govern this application. Chapter 3C-10, Florida Administrative Code, which was in effect at the time the application was filed, contains the rules under which this application was considered. As set forth in Rule 3C-10.051, Florida Administrative Code, when an application for authority to organize and operate a new state bank is filed, it is the applicant's responsibility to prove that the statutory criteria warranting the grant of authority are met. The Department shall conduct an investigation pursuant to Section 658.20, Florida Statutes, which was done in this case, and then approve or deny the application in its discretion. This discretion is neither absolute nor unqualified, but is instead conditioned by a consideration of the criteria listed in Section 658.21, Florida Statutes, wherein it is provided that: The Department shall approve the application if it finds that: Public convenience and advantage will be promoted by the establishment of the proposed state bank or trust company. In determining whether an applicant meets the requirements of this subsection, the department shall consider all materially relevant factors, including: The location and services offered by existing banks, trust companies, trust departments, and trust service offices in the community. The general economic and demographic characteristics of the area. Local conditions indicate reasonable promise of successful operation for the proposed state bank or trust company and those banks, trust companies, trust departments, and trust service offices already established in the primary service area. In determining whether an applicant meets the requirements of this subsection, the department shall consider all materially relevant factors, including: Current economic conditions and the growth potential of the area in which the proposed state bank or trust company intends to locate. The growth rate, size, financial strength, and operating characteristics of banks, trust companies, trust departments, and trust service offices in the service area of the proposed bank. The proposed capital structure is in such amount as the department shall deem adequate, but in no case shall the paid-in capital stock be less than $800,000. In addition to the capital required, every state bank or trust company hereafter organized shall establish: A paid-in surplus equal in amount to not less than 20 percent of its paid-in capital; and A fund to be designated as undivided profits equal in amount to not less than five percent of its paid-in capital. The proposed officers have sufficient banking or trust company experience, ability, and standing, and the proposed directors have sufficient business experience, ability and standing, to indicate reasonable promise of successful operation. The name of the proposed state bank or trust company is not so similar as to cause confusion with the name of an existing financial institution. Provision has been made for suitable quarters at the location in the application. If, in the opinion of the Department, any one of the six foregoing criteria has not been met, and cannot be remedied by the Applicant, it cannot approve the application. An Applicant can, however, take corrective action in most circumstances, to meet the criteria set forth in Sections 658.21(3)(4)(5) or (6), Florida Statutes, if any one of these is found to be lacking. For example, if all other statutory criteria are met, the Applicant may increase capital, or make certain changes in the board of directors, or change the name or alter the provisions for suitable banking house quarters, because these factors are, at least to some degree, within its control. It is the Department's policy to allow applicants to make certain changes to meet these criteria if all other criteria are met; to do otherwise would be to subject applicants to unnecessary red tape. However, it is the Department's position that there is little, if anything, that an applicant can do to alter its ability to meet the criteria set forth in Sections 658.21(1) and (2), Florida Statutes, since the applicants cannot easily change the economic and demographic characteristics of an area. Therefore, if either one or both of these criteria are not met, the Department cannot approve the application. For the purposes of applications for authority to organize and operate a bank, Section 658.12(19), Florida Statutes, defines the primary service area (PSA) as: " . . . the smallest geographical area from which a bank draws, or a proposed bank expects to draw, approximately 75 percent of its deposits; the term also means the smallest geographic area from which a trust company or the trust department of a bank or association draws, or a proposed trust company or a proposed trust department of a bank or association expects to draw, approximately 75 percent of the assets value of its fiduciary accounts." The Applicant's PSA which incorporates portions of the City of Stuart, unincorporated Martin County and a portion of unincorporated Martin County known as Palm City appears to have boundaries delineated around a natural market area. The designated boundaries do not unrealistically exclude competing financial institutions or include areas of concentrated population. The Department concludes that a market exists for the Applicant in the PSA and that the Applicant may reasonably expect approximately 75 percent of its business to arise from the PSA. Consequently, the Department deems that the PSA has been realistically delineated and that the criteria set forth in Section 658.12(19), Florida Statutes, for a realistically delineated PSA has been met. It is the opinion and conclusion of the Department that public convenience and advantage will be promoted by the proposed bank's establishment. Therefore, the criterion in Section 658.21(1), Florida Statutes, is met. As set forth in Rule 3C-10.051(3)(a)(1), Florida Administrative Code, the location and services offered by existing financial institutions in the service area are indicative of the competitive climate of the market. The traffic patterns in the area, as well as the area's general economic and demographic characteristics shall also be considered. Because it is recognized that the establishment of a new bank or trust company anywhere would promote convenience and advantage for at least a few people, substantial convenience and advantage for a significant number of people must be shown; otherwise, a new bank could be justified for every street corner in the state. Clearly such a result was not the legislative intent in regulating entry into the banking industry, nor is it in the public interest. Based upon the facts in the record, the Department has determined that the establishment of the proposed new bank will substantially increase convenience to a significant number of residents and workers of the PSA. The location of the proposed site at a shopping center 0.2 miles from the only bridge from the eastern end of the PSA to the western end makes it convenient to residents, shoppers and commuters. The Department, therefore, concludes that the criteria of public convenience and advantage is met. It is the opinion and conclusion of the Department that local conditions indicate reasonable promise of successful operation for the proposed bank and those already established in the area. Therefore, the criterion in Section 658.21(2) Florida Statutes, is met. As set forth in Section 658.21(2)(a) and (b) , Florida Statutes, and Rule 3C-10.051(3)(b) , Florida Administrative Code, current economic conditions and, to a lesser extent, the growth potential of the area in which the new bank or trust company proposes to locate are important considerations in determining its probable success. Essential to the concept of banking opportunity is that there does and will exist a significant volume of business for which the bank or trust company can realistically compete. The growth rate, size, financial strength, and operating characteristics of financial institutions in the primary service area are also important indicators of economic conditions and potential business. It is noted that the statutory standard requires that: " . . . local conditions indicate reasonable promise of successful operation for the proposed state bank or trust company and those banks . . . already established in the primary service area . . ." Banking involves a public trust. Unlike private enterprise generally, banks operate on the public's capital and therefore, the Legislature has vested in the Comptroller the responsibility of protecting the public interest. Furthermore, the failure of a bank, as opposed to private enterprise generally, may have an unsettling effect on the overall economic welfare of the community, and that is why the Florida Legislature and the United States Congress have imposed stringent requirements for the industry. This Department is responsible for enforcing this legislative standard. Public interest is best served by having a banking system whereby competition is encouraged, where appropriate, yet at the same time, ensuring that the financial resources of the residents of the community are stable and safe. That was the obvious intent of the Legislature in regulating entry into the banking industry. The facts in the record show a significant and growing number of residential developments that are not centrally served by any main office, commercial bank, and no state-chartered banks at present. Thus, a significant number of PSA businesses and residents, especially on the western side of the PSA from the St. Lucie River, can be expected to patronize the proposed bank, insuring that there is a reasonable promise of successful operation. The facts in the record show that the rate of growth in deposits within the PSA exceeded the rate of growth in deposits in Martin County and the rate of deposit growth was more than four times greater than the rate of inflation for the same period. Based upon the above, the Department concludes that local conditions do indicate a reasonable promise of successful operation for the proposed bank and for those financial institutions already established in the area. It is the opinion and conclusion of the Department that the proposed capital structure of the proposed new bank is adequate. Therefore, the criteria of Section 658.21(3) Florida Statutes, is met. Capital should be adequate to enable the new bank or trust company to provide necessary services . . ., including loans of sufficient size, to meet the needs of prospective customers. Capital should be sufficient to purchase, build, or lease a suitable permanent facility complete with equipment. Generally, the initial capital for a new nonmember bank should not be less than $1.0 million in non-metropolitan areas and $1.5 million in metropolitan areas. The capital referred to in the Findings of Fact shall be allocated among capital stock, paid-in surplus, and undivided profits in the ratios set forth in Subsection (3) of Section 658.21, Florida Statutes. The proposed capital accounts of $1.5 million are allocated according to the statutory ratios. It is the opinion and conclusion of the Department that the criteria of Section 658.21(4), Florida Statutes, are met. As set forth in Rule 3C-10.051(3)(d), Florida Administrative Code, the organizers, proposed directors, and officers shall have reputations evidencing honesty and integrity. They shall have employment and business histories demonstrating their responsibility In financial affairs. At least one member of a proposed board of directors, other than the chief executive officer, shall have direct banking or trust company experience. In addition, the organizers, proposed directors and officers shall meet the requirements of Section 658.33, Florida Statutes. Officers shall have demonstrated abilities and experience commensurate with the position for which proposed. Members of the initial management group, which includes directors and officers shall require prior approval of the department. Changes of directors or chief executive officer during the first year of operation shall also require prior approval of the department. While it is not necessary that the names of the proposed officers be submitted with an application to organize a new state bank, the chief executive officer and operations officer must be named and approved at least sixty (60) days prior to the bank's opening. The Department concludes that the proposed directors have, as a group, good character, sufficient financial standing and business histories demonstrating ability and experience commensurate with the positions for which they are proposed and at least one proposed director (other than the chief executive officer) has direct banking experience. It should be noted that interlocking directorships involving existing financial institutions competitively near the proposed site of a new institution are discouraged. Such interlocking directorships could possibly restrict competition and create fiduciary problems. The Department concludes that there is no interlock problem in this instance. It is the opinion and conclusion of the Department that the name of the proposed new bank, First American Bank of Martin County, would not cause confusion with the name of a Florida financial institution. Therefore, the criterion of Section 658.21(5), Florida Statutes, is met. It is the opinion and conclusion of the Department that provisions has been made for suitable banking house quarters in the application's specified area. Therefore, the criterion of Section 658.21(6), Florida Statutes, is met. As set forth in Rule 3C-10.051(3)(f), Florida Administrative Code, permission to open in temporary quarters may be granted, for good cause shown. Under the rules of the Department, the permanent structure of a new bank should contain a minimum of 2,500 square feet, unless the Applicant satisfactorily shows that smaller quarters are justified due to the performance of certain auxiliary services off-premises. In addition, it shall meet the Federal Bank Protection Act requirements and be of sufficient size to handle the projected business for a reasonable period of time. The banking house . . . facility shall be of a nature to warrant customer confidence in the institution's security, stability and permanence. Other pertinent factors include availability to adequate parking, adequate drive-in facility if such is contemplated, and possibilities for expansion. Temporary quarters are not contemplated and Applicant's permanent quarters meet the above standards. Rule 3C-10.051(5), Florida Administrative Code, relating to insider transactions requires that: Any financial arrangement or transaction involving, directly or indirectly, the organizers, directors, officers and shareholders owning 5 percent or more of the stock, or their relatives, their associates or interests must he fair and reasonable, fully disclosed, and comparable to similar arrangements which could have been made with unrelated parties. Whenever any transaction between the proposed bank or trust company and an insider involves the purchase of real property, appraisals of land and improvement thereon shall be made by an independent qualified appraiser, and be dated no earlier than 6 months from the filing date of the application. The Department has determined that there is no insider transaction involving the leasing of the proposed bank's office space. Therefore, the criterion in Rule 3C-10.051(5) Florida Administrative Code, is met. RULING ON PROTESTANTS' EXCEPTIONS Section 120.57(1)(b)12, Florida Statutes, provides as follows: " . . . The agency shall allow each party at least 10 days in which to submit written exceptions to the report." The Department's procedural Rule 3C-9.11, Florida Administrative Code, Post-Evidentiary Procedures, follows the wording of the statute and provides that "the Department shall allow each party 10 days from the date of the hearing officer's report in which to submit written exceptions thereto pursuant to Section 120.57(1)(h) 12, Florida Statutes." The Department interprets that the word "submit" means that the Department must receive the exceptions by the 10th day in the same manner as when documents are required to be filed by a date certain. See Sonny's Italian Restaurant v. State of Florida, 414 So.2d 1156 at 1157. In Sonny's Italian Restaurant v. State, the Third District Court of Appeal in a per curiam decision affirmed a final agency order upon a holding that: "Any error resulting from the entry of the Final Order on July 2, 1981, prior to receipt of Appellant's exceptions to the recommended order, is not material in light of the fact that the exceptions, dated July 6, 1981, were not filed within the requisite 10-day period of Section 120.57(1)(b)8, Florida Statutes, when measured from either the date the recommended order was entered (June 19), or the date submitted to the agency and parties (June 23)." The wording in Section 120.57(1)(b)8, Florida Statutes, concerning the time for filing of exceptions is identical to that of Section (1)(b)12 concerning the filing of exceptions for applications for a license or merger pursuant to Title XXXVIII. The Report of the Hearing Officer, C. Michael Ruff, in this case was done and entered on April 4, 1983, with a cover letter dated April 5, 1983, and was received by the Department on April 6, 1983. A copy of Protestant American Bank of Martin County's exceptions was received by the Department on April 21, 1983. A copy of Protestant First National Bank and Trust Company of Stuart's exceptions were received by the Department on April 19, 1983. The Department deems that all exceptions were untimely filed since the last day to file exceptions with the Department was April 15, 1983. Nevertheless, it has been determined that the exceptions that were untimely received would not have had any effect on the final outcome of this matter.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: The applicant Gulf State Bank of Franklin County is located in Carrabelle, Florida, and was established in 1971. There are no other banking facilities in Carrabelle and the applicant presently has no branch banking facilities. The applicant's total asset level is 8.1 million dollars, and it has maintained a capital to total assets ratio which has continuously exceeded seven percent. As of December 31, 1978, the capital to total asset ratio was 7.6 percent. With the exception of the first year of operation, the applicant's net earnings to total assets have exceeded the ratio of 0.5 percent. During the last two years, this ratio has exceeded one percent. As of the June 30, 1978, comparative figures report, the applicant had total deposits of $6,555,000.00, showing a decrease of about 5.4 percent from June of 1977. It has been the applicant's established policy to reinvest all earnings rather than paying dividends. The applicant proposes to open two branch banking facilities - one in Apalachicola and one in Eastpoint. Presently, the only banking facility in these areas is the protestant Apalachicola State Bank. This bank has its main office in downtown Apalachicola and it was established in 1906. It is a full service bank, and increased its total deposits by 18.6 percent between 1977 and 1978. On March 15, 1978, the Protestant opened a branch banking facility in Eastpoint, Florida. Although a $5,000.00 profit was projected for the first year of operation, the protestant's branch in Eastpoint is not presently operating at a profit. The protestant's Eastpoint branch has drive-in windows and offers all services with the exception of trust accounts and large loans. Both the main office and the Eastpoint branch of the protestant began offering Saturday morning banking hours approximately five weeks before the hearing in these proceedings. The only other financial institution in the area is a branch office of the Citizens Federal Savings and Loan Association of Port St. Joe, which was expected to begin operations in early March of 1979. As of July 1, 1977, Franklin County had an estimated population of 8,128, increasing only 1,063 above the 1970 population census. The majority of growth occurred in the unincorporated area of the County, which includes Eastpoint. The source of population growth is net migration. Between 1970 and 1977, net migration accounted for 85.32 percent of the County's growth, leaving about 14 percent attributable to natural increase. The percentage of the 15 to 44 year old age group has increased from 33.9 percent in 1960 to 38.9 percent in 1977. The age group of 65 and older has increased from 13 percent in 1960 to 17 percent in 1977. A medium projection for the county's population is 8,600 for the year 1980, 9,200 for 1985 and 10,200 for 1990. While the per capita income level of the County has grown at a higher percentage rate as compared to the state average, the per capita income level for Franklin County is the lowest in the State. In 1975-76, that figure was $3,061.00 as compared to a state average of $6,021.00. The unemployment rate in Franklin County was the highest in the State in September, 1978, sitting at 16.5 percent as compared to the state average of 7.6 percent. Franklin County's figure was down to 12 percent in October, 1978. Residents and business people in the area gave testimony to the effect that there is sufficient employment available in the area, but that it is difficult to find people willing to work. As indicated above, Eastpoint is among the fastest growing areas of Franklin County. Approximately one-third of the 75 businesses located in Eastpoint have come in or relocated to more modern facilities within the past three years. Another area of large growth is St. George Island. Leisure Properties, Inc. has eight approved subdivisions, three of which are presently completely sold. In 1978, that company realized $3,000,000.00 income from land sales on the Island. A 28-unit motel and a condominium is planned for St. George Island, as is a State park. It is estimated that when the State park becomes operational, 5,000 visitors will come to the Island on a daily basis during the 100-day season. It can be expected that such activity and traffic will promote and attract the existence of service facilities and service personnel. Approximately 80 percent of the construction work on St. George Island is performed by local contractors. The value of residential permits on the Island represented $1,021,360.00 in 1978. The proposed Apalachicola branch banking facility is to be located at 73 Avenue E, or on the northeast quadrant of the intersection of U.S. 98-319 (Avenue E) and Sixth Street. This site is presently owned by the applicant and is located 22.5 miles West of the main Carrabelle office and 6.2 miles West of the proposed Eastpoint branch. The applicant proposes to construct a concrete story and a half building with 1500 square feet on the first floor and 540 square feet on the second floor. The applicant plans to utilize three inside teller stations, one walk-up teller station and one drive-in teller window. In December of 1978, 29 percent (or $2,111,000.00) of the applicant's total deposits represented accounts from the proposed Apalachicola service area. A majority of this amount (22.1 percent of the applicant's total deposits) were deposits of public funds by various county departments located in the courthouse in Apalachicola. In addition, the applicant has $576,000.00 (representing 12.22 percent of its total loan portfolio) in loans to individuals and businesses in the Apalachicola service area. It is projected that the total estimated deposits for the proposed Apalachicola branch will be $1,800,000.00 at the end of the first year of operation, $2,700,000.00 at the end of the second year and $3,300,000.00 at the end of the third year of operation. The management for the proposed Apalachicola branch was hired two years in advance of tee anticipated opening date for training and familiarization with the proposed service area. He is a vice president of the applicant bank and a member of its board of directors. Prior to that, he had an auditing and accounting background. At its February, 1979, meeting, the applicant's stockholders voted to authorize the board of directors to name two additional directors during the year. The board intends to name these two new directors from the new Apalachicola service area after approval is obtained. The proposed Eastpoint branch is to be placed on Lot 8, Block 1, of the David Brown Estate Subdivision located on the Northeast quadrant of the intersection of Island Drive and Avenue C. This site is 16.4 miles West of the main Carrabelle office. This branch is considered to be a drive-in facility of the proposed Apalachicola branch, and only a 12 by 12 foot concrete block building with two teller stations is planned. During December of 1978, the applicant had $415,000.00 in deposit accounts (representing 5.7 percent of the applicant's total deposits) in the proposed Eastpoint service area. The applicant also has $788,500.00 in loans to individuals and businesses in the Eastpoint service area, representing 16.7 percent of its total loan portfolio. The applicant projects for the Eastpoint branch total estimated deposits in the amount of $300,000.00 by the end of the first year of operation, $450,000.00 by the end of the second year and $600,000.00 by the end of the third year. The primary service area of the proposed Eastpoint branch includes St. George Island which is connected to Eastpoint by a causeway. The proposed Eastpoint branch will be managed by a supervisor below officer level, but will be under the office management of the proposed Apalachicola branch manager. The Eastpoint branch will have all standard deposit, withdrawal and clearing services. The names of the proposed branches are Gulf State Bank of Franklin County - Apalachicola Branch and Gulf State Bank of Franklin County - Eastpoint Branch. There was no evidence to illustrate that the applicant was not 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 26th 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: Alfred O. Shuler Post Office Box 850 Apalachicola, Florida 32320 J. Ben Watkins Watkins and Watkins 41 Commerce Street Apalachicola, Florida 32320 Michael A. Gross Comptroller Gerald A. Lewis Assistant General Counsel State of Florida Office of the Comptroller The Capitol The Capitol Tallahassee, Florida 32304 Tallahassee, Florida 32304
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 Respondents committed the offenses set forth in the Administrative Complaint and, if so, the penalties that should be imposed.
Findings Of Fact Petitioner is a state government licensing and regulatory agency charged with the responsibility and duty to prosecute Administrative Complaints related to the real estate profession pursuant to the laws of the State of Florida. Respondent Valyne Batchelor is now and was at all times material hereto a licensed real estate broker in the State of Florida, having been issued license number 0311190 in accordance with Chapter 475, Florida Statutes. The last license issued to Respondent Batchelor was in care of Adventure Properties, Inc., 10800 N. Military Trail, Palm Beach Gardens, Florida 33410. Respondent Adventure Properties, Inc. was at all times pertinent to this proceeding a corporation registered as a real estate broker in the State of Florida having been issued license number 0238654 in accordance with Chapter 475, Florida Statutes. The last license issued to Respondent Adventure Properties, Inc., was at the address of 10800 N. Military Trail, Palm Beach Gardens, Florida 33410. At all times pertinent hereto, Respondent Batchelor was licensed and operating as a qualifying broker and officer of Respondent Adventure Properties, Inc. At all times pertinent hereto, Respondent Batchelor was a one-half owner of Dream Home Builders of Royal Palm Beach, Inc. (Dream Home). Joel B. Wingate was in the land clearing business and had done work prior to September 1988 for Dream Home and Dream Home's subsidiary, Redi Concrete. On September 18, 1988, Dream Home, the owner of a house located at 5510 Royal Palm Beach Boulevard, Royal Palm Beach, Florida, entered into a contract to sell that house to Joel B. Wingate, his wife, Eva C. Wingate, and his mother, Sarah F. Wingate. The contract reflected that the purchase price of the property was $87,400. The contract reflected that the sum of $4,400 was received by Adventure Properties as a deposit. The balance of the purchase price was to be paid by a first mortgage in the amount of $69,900 to be obtained by the Buyers from a lending institution and by a second mortgage in favor of Seller in the amount of $13,100 that was to be amortized over a period of 30 years with a balloon payment at the end of 5 years. Respondent Batchelor executed the contract on behalf of Adventure Properties and on behalf of Dream Home. In addition, Respondent Batchelor signed a statement on the face of the contract which acknowledged receipt of the deposit that was to have been held in escrow. The sum of $4,400 was not paid over to Respondent Adventure Properties or to Respondent Batchelor by the Wingates at the time the contract was executed and there never was a deposit made into the escrow account of Adventure Properties. Instead, Mr. Wingate agreed to pay the sum of $4,400.00 prior to the closing from sums he would earn from work he was performing for Redi Concrete. All parties pertinent to this transaction, including the bank that financed the first mortgage, knew that the Wingates had not paid that sum. The Wingates applied for financing with Security First Federal for financing of the first mortgage. The application for the loan was in the name of Sarah F. Wingate because of Joel Wingate's poor credit. On September 17, 1988, a "Good Faith Estimate of Settlement Charges" was prepared by Security First Federal which estimated that the settlement charges that would be due from the Wingates at closing would equal $4,328.30. On September 19, 1988, the Wingates, as buyer, and Dream Home, as seller, executed an addendum to the contract which provided that the Seller would pay up to $4,400 in closing costs and that the amount of the second mortgage would be increased from the sum of $13,100 to the sum of $17,500. The addendum provided, in pertinent part, as follows: Seller to pay up to $4,400 in closing costs. Buyer agrees to give seller a second mortgage in the amount of $17,500. Said Mortgage to be for a term of one year from date of contract and is to be paid as follows: Buyer agrees to do work for Redi Concrete, Inc. consisting of clearing, digging of necessary fill, building and compact ion of house pads according to Palm Beach County Building Codes, all grading and trash removal at contract price of $2,450 per lot. Of this amount $1,250 is to be applied to second mortgage until mortgage is paid in full. Additionally, any unused portion of the $4,400 allowance for closing costs not used for that purpose is to be applied to the second mortgage of $17,500. If any portion of this agreement is not kept, Redi Concrete, Inc. reserves the option to impose interest at the rate of 10% per annum against any unpaid amount of second mortgage. The fact that the amount of closing costs Dream Homes agreed to pay on behalf of the Wingates ($4,400) was identical to the amount that the Wingates were supposed to pay as a deposit ($4,400) was coincidence. Respondent Batchelor executed the addendum to the contract in her capacity as an officer of Dream Home. There was no attempt on the part of Respondents to deceive the Wingates, who had agreed to this method of financing the purchase. On October 24, 1990, the transaction closed. The buyers executed the first mortgage in favor of Security First Federal Savings and Loan Association in the principal amount of $69,900, and a second purchase money mortgage in favor of Dream Home in the principal amount of $13,100. (There was no explanation as to why the second mortgage that was executed at the closing was for $13,100 instead of for $17,500. Dream Home's letter of October 27, 1988, to the Wingates, signed by Ms. Batchelor, refers to a revised second mortgage that should be executed by the Wingates and recorded. There was no evidence that the revised second mortgage was, in fact, delivered to the Wingates or executed by them.) The second mortgage note required monthly payments commencing November 24, 1988, with a balloon payment of $12,965.22 due on October 24, 1991. The Wingates were aware of the manner in which their purchase of this property was financed. There was insufficient evidence to establish that Respondents dealt with the Wingates in anything other than an honest, straightforward manner. The unusual owner financing involved in this transaction was an attempt to accommodate the buyers. There was no intent by Respondents to deceive the Wingates, Dream Home, Security First Federal, or any other party pertinent to these proceedings. There was insufficient evidence to establish that the Wingates, Dream Home, Security First Federal, or any other party pertinent to these proceedings was, in fact, deceived or tricked by any act of Respondents. The Wingates moved into the premises prior to the closing of the transaction. Ms. Batchelor did not give the Wingates permission to move into the house prior to closing and she did not personally inform the Wingates that they would have to pay rent if they moved in prior to closing. Ms. Batchelor had been told by her business associate, Mr. Vander Meer, that the Wingates would pay a per diem rental fee until the closing. On October 27, 1990, Ms. Batchelor, on behalf of Dream Home, advised the Wingates that they were being charged a rental fee of $27.54 per day that they had occupancy prior to the closing. For the 36 days the Wingates were in the house prior to closing, the total rental claimed came to $920.52. The Wingates disputed the amount claimed for rent and had not, as of the date of the formal hearing, paid that amount. There was no evidence that Respondents were attempting to deceive, trick, or defraud the Wingates in any manner by claiming rent for the period between the time the Wingates moved in to the house and the time of the closing. By letter dated September 20, 1989, Ms. Batchelor, on behalf of Dream Home, notified the Wingates that the second mortgage balloon payment was $12,795.52 and that, according to her records, would become due on May 1, 1990. Although this statement of the due date is inconsistent with the instrument executed by the Wingates, there was no evidence that this statement was anything other than a mistake. The Wingates have defaulted on the first and the second mortgages. When Petitioner's investigator, Sharon Thayer, conducted an office inspection and escrow audit of Respondents' offices on March 13, 1990, Respondents did not have an enclosed room within which negotiations and closings of real estate transactions could be conducted and carried on with privacy. The negotiations between the buyers and sellers in the Wingate transaction were, however, conducted in private. Buyers were prompted to file a complaint against Respondents approximately one year after the closing when an unidentified bank officer told them they may have committed a fraud. Without knowledge or complicity of Respondents, Sarah F. Wingate falsified her loan application with Security First Federal Savings and Loan Association. Respondents received no commission in regard to the Wingate transaction. Respondents moved their offices and have corrected the deficiency related to the absence of an enclosed, private area.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Florida Real Estate Commission enter a final order which finds that Respondent violated the provisions of Rule 21V-10.002, Florida Administrative Code, and consequently, Section 475.25(1)(e), Florida Statutes, which finds that Respondents violated the provisions of Section 475.25(1)(b), Florida Statutes, and which provides for the issuance of a letter of reprimand to said Respondents for such violations and the assessment of an administrative fine against Respondents in the amount of $500.00. DONE AND ENTERED this 3rd day of December, 1990, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON Hearing Officer The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 904/488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of December, 1990. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 90-3587 The following rulings are made on the proposed findings of fact submitted on behalf of the Petitioner. The proposed findings of fact in paragraphs 1-15 and 19-22 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraph 16 are rejected as being unsubstantiated by the evidence. The entry on line 501 of the copy of the closing statement introduced as Petitioner's Exhibit 8 is too faint to read. However, the copy of the closing statement included as part of Joint Exhibit 1 reflects that the entry on line 501 is the figure $4,400 and not the figure of $4,100 reflected in Petitioner's proposed finding. The proposed findings of fact in paragraph 17 are rejected as being unnecessary to the conclusions reached. The proposed findings of fact in paragraph 18 are rejected as being contrary to the greater weight of the evidence. Although the proposed findings correctly reflect Ms. Batchelor's statement to Petitioner's investigator, that statement was made several months after the transaction and before Ms. Batchelor had had the opportunity to review her files. Other evidence regarding the addendum is found to be more credible as reflected by the findings made. The following rulings are made on the proposed findings of fact submitted on behalf of the Respondent. The proposed findings of fact in paragraphs 1-21 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraph 22 are rejected as being unnecessary to the conclusions reached. COPIES FURNISHED: James H. Gillis, Esquire Senior Attorney Florida Department of Professional Regulation Division of Real Estate 400 West Robinson Street Suite N-308 Post Office Box 1900 Orlando, Florida 32802 Lawrence Maxwell Fuchs, Esquire Fuchs and Jones, P.A. 590 Royal Palm Beach Boulevard Royal Palm Beach, Florida 33411 Darlene F. Keller Division Director Department of Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801 Kenneth E. Easley General Counsel Department of Professional Regulation 1940 North Monroe Street Suite 60 Tallahassee, Florida 32399-0792
Findings Of Fact The Applicant, Protestant, and Department submitted Proposed Findings of Fact pursuant to Rule 3C-9.11, Florida Administrative Code. The Applicant's Proposed Findings of Fact are accepted except where they might specifically conflict with the Findings stated in the Hearing Officer's Report or where they may constitute conclusions of law, with the following exceptions: The last sentence of Proposed Finding Number 8 is rejected to the extent that it constitutes a legal argument as opposed to a finding of ultimate fact. Proposed Finding Number 11 is rejected in that it constitutes legal argument as opposed to a finding of ultimate fact. Proposed Finding Number 15 is rejected in that it constitutes a conclusion of law. The Protestant's Proposed Findings of Fact are accepted except where they might specifically conflict with the Findings stated in the Hearing Officer's Report or where they may constitute conclusions of law, with the following exceptions: The first sentence of Proposed Finding Number 6 is rejected in that it is speculative, constitutes legal argument, and is not supported by competent substantial evidence. The last sentence of Proposed Finding Number 6 is rejected in that it constitutes a conclusion of law as to the reason why the Protestant's bank charter was granted. The first, third, fourth and fifth sentences of Proposed Finding Number 10 are rejected, as they constitute legal arguments based upon restatement of testimony, as opposed to findings of ultimate fact. The second sentence of Proposed Finding Number 11 is rejected in that it constitutes a conclusion of law. Proposed Finding Number 14 is rejected in that it consists of argumentative references to testimony and not findings of ultimate fact. Proposed Finding Number 24 is rejected in that it constitutes legal argument and conclusions of law rather than findings of ultimate fact. The first sentence of Proposed Finding Number 26 is rejected in that it constitutes a conclusion of law. The second sentence of Proposed Finding Number 26 is rejected in that it is repetitious and constitutes a conclusion of law. The Fourth sentence of Proposed Finding Number 26 is rejected in that it constitutes a conclusion of law. Proposed Finding Number 27 is rejected in that it constitutes a conclusion of law. Proposed Finding Number 28 is rejected in that it constitutes legal argument rather than a finding of ultimate fact. The last sentence of Proposed Finding Number 31 is rejected in that it constitutes legal argument and a conclusion of law. The Department's Proposed Findings of Fact are accepted except where they might specifically conflict with the Findings of the Hearing Officer's Report or where they may constitute conclusions of law.
Findings Of Fact At all times material hereto, Gold Coast Mortgage Corporation (hereinafter "Gold Coast") was and is a corporation organized and existing under the laws of the State of Florida and conducting business in this state. At all times material here to, Southlantic Mortgage Corporation (hereinafter " Southlantic") was and is a corporation organized and existing under the laws of the State of Florida and conducting business in this state. At all times material here to, Thomas J. Boylan (hereinafter "Boylan") was and is the principal mortgage broker and president of Gold Coast and of Southlantic. At all times material hereto, Respondents were and are licensed as mortgage brokers by Petitioner and were and are conducting mortgage brokerage business in the State of Florida. For approximately two years, Janice L. DiBella was employed by Gold Coast. Although she became licensed as a broker, she was throughout that time period responsible for the bookkeeping functions at Gold Coast. Although she wrote and posted the company's checks, she was not authorized to sign them. Rather, the checks were required to be signed by Boylan and Sol Klein. Although DiBella believed that Boylan, Sol Klein, and Joel Pinsky each had a one-third interest in the company, Boylan was the head of the company, and DiBella took orders from him and worked only for him. Boylan ran the company on a day-to-day basis, Sol Klein was rarely in the office, and DiBella had only met Pinsky. In late June 1952, DiBella received a telephone call from Boylan, who was at the office of Attorney Pollack. Boylan instructed her to take the checkbook and ledgers to her mother's house, which was located near the office of Gold Coast. DiBella did so. After retaining the books and records of Gold Coast in her possession for approximately two to three hours and after extracting a promise to be paid $1600 in cash before she would return them, DiBella met Boylan and Sol Klein in the parking lot of the Deli Den located across the street from the office of Gold Coast. After Sol Klein handed her $1600 in cash in a white envelope for which she signed a receipt, DiBella watched Boylan and Sol Klein put the books and records she gave them into the trunk of Sol Klein's car. They then asked her to return to the office with them to locate any other important documents they should have, and DiBella did so. DiBella then went to Pan American Bank and removed documents from a bank vault and turned them over to Sol Klein. She made no list of the documents which she removed from the vault. Although none of the checks prepared by Janice DiBella payable to herself ever bounced, on occasion she wrote checks which exceeded the balance in the account at the time and informed Boylan that the amount of the check exceeded the balance in the account. When Alfred E. Klein responded to Gold Coast's ad for mortgage investors, he met Boylan. In his dealings with Gold Coast thereafter, Al Klein dealt with Boylan who acted in his capacity as president of Gold Coast. As a result of that relationship, on behalf of himself and family members Al Klein invested approximately $600,000 to $700,000 with Respondents. He even began acting as an independent broker buying and selling mortgages on behalf of Gold Coast, and discussions began regarding Al Klein becoming an owner of Gold Coast. Those discussions terminated in February 1982. On June 22, 1982, Al Klein went to Gold Coast's office and demanded that Boylan return to him $80,000 which Al Klein had given to Boylan for investment purposes. After a lengthy and heated "discussion" between Al Klein and Boylan, Boylan gave him two checks, one for $60,000 and one for $20,000. Both checks were written on the Gold Coast Mortgage Corp. escrow account, and both were notated that they represented an investment refund. When Boylan handed the checks to Al Klein, he told Klein that there was insufficient money in the escrow account to cover those checks but that if Klein put the checks through in the normal course of banking procedures they would be covered. After Al Klein deposited the checks, they were returned marked "insufficient funds." Those checks have never been subsequently honored, and Al Klein has never received from Gold Coast or from Boylan the money to cover those checks. Al Klein contacted Petitioner, and investigation of Respondents' books and records was authorized. Representatives of Petitioner went to Gold Coast on two different occasions to commence auditing the books and records but could not gain entrance to the office. They contacted complainant Al Klein to advise him of their lack of progress, and Al Klein advised them that he was in possession of the records. Accordingly, Paul Richmond, a financial examiner for Petitioner, went to Al Klein's office in Pompano Beach to conduct his audit. Richmond spent approximately one week in Al Klein's office auditing the books and records and copying various documents. The following week the office files were given to Attorney Pollack; therefore, Richmond followed the books and records and continued his examination in Pollack's office for approximately three or four additional days. At the time of Richmond's audit, the books and records of Gold Coast were totally inadequate for examination to determine compliance with the Mortgage Brokerage Act. However, no evidence was offered as to what documents might remain in the office of Gold Coast, as to what documents went from the bank vault to Sol Klein, or as to what documents went from DiBella's mother's house to Sol Klein's automobile trunk. Further, no evidence was offered as to how the records got from the trunk of Sol Klein's car in the parking lot of the Deli Den to the Pompano Beach office of complainant Al Klein or as to the dates of transfers between persons in the unidentified chain of custody. On June 17, 1951, John H. and Charlotte White executed a mortgage in the amount of $37,000 in favor of Gold Coast. Gold Coast thereafter executed a series of assignments, so that by the end of July 1951 the total amount of the $37,000 mortgage had been assigned by Gold Coast to various investors. On December 10, 1981, Gold Coast again assigned the White mortgage to seven different investors, which documents reflect that the White mortgage was in the amount of $37,700. The original group of investors did not reassign the White mortgage to Gold Coast until April 30, 1982. Boylan executed the assignment documents on behalf of Gold Coast as its president, as he executed the documents on behalf of one of the investors, Cius Corp., as its president. On March 18, 1981, Jean and Nadine Laham executed a mortgage in the amount of $90,000 in favor of Gold Coast. On April 14, 1981, Gold Coast assigned that $90,000 mortgage to four different investors. On December 10, 1981, Gold Coast again assigned that $90,000 mortgage to seven investors. The original group of four investors did not reassign the Laham mortgage to Gold Coast prior to Gold Coast's reassignment. On October 19, 1979, Clifford R. and Eileen Lockwood executed a $50,000 first mortgage in favor of Chase Federal Savings and Loan Association. On April 2, 1982, William L. and Jane C. Hubschmitt executed a $72,000 first mortgage on that same property in favor of Gold Coast. On May 5, 1982, the Lockwoods executed a warranty deed on that property to the Hubschmitts. On June 11, 1982, Gold Coast assigned its $72,000 mortgage to Marvin and Ann Tanner, who immediately reassigned $50,000 worth of that $72,000 mortgage to three investors. The assignment from Cold Coast to the Tanners and the assignments from the Tanners to those three investors are on the same Ramco form, were all witnessed and notarized by DiBella, and were all recorded simultaneously. DiBella also prepared the Hubschmitts' mortgage to Gold Coast, which mortgage instrument reflects it is a first mortgage. Al Klein was one of the investors to whom the Tanners partially assigned the mortgage assigned to them by Gold Coast. At the time, Boylan specifically represented to Al Klein that Klein was investing in a first mortgage. The records of Gold Coast examined by Petitioner's representatives were incomplete in that individual files lacked mortgage loan applications, closing statements, and title insurance policies. Additionally, a portion of the escrow account records have not been located. Petitioner did subpoena the records of Gold Coast's escrow account at Flagship Bank. According to those records, prior to June 17, 1982, that escrow account was overdrawn on 25 different occasions during 1982. From June 17, 1982, until the end of June, five additional overdrafts passed through that account. The balance in that account as of July 1, 1982, reflected that the account was overdrawn by $49,834.49. On June 17, 1952, a $55,000 check written on the Gold Coast Mortgage Corp. trust account at Pan American Bank of Broward was deposited in the Gold Coast Mortgage Corp. escrow account at Flagship Bank and was returned with the notation that the account on which it was written had been closed. On July 7, 1982, Boylan, as president of Gold Coast Mortgage Corp., filed a voluntary petition with the United States Bankruptcy Court for the Southern District of Florida.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED That a Final Order be entered dismissing with prejudice Counts II, III, IV, V, VI, VII, XI, XII and XV of the Administrative Charges and Complaint; finding Respondents Gold Coast Mortgage Corporation and Thomas J. Boylan guilty of the allegations contained within Counts I, VIII, IX, X, XIII and XIV of the Administrative Charges and Complaint; and revoking all licenses issued to Respondents Gold Coast Mortgage Corporation, Southlantic Mortgage Corporation, and Thomas J. Boylan pursuant to the Mortgage Brokerage Act. DONE and RECOMMENDED this 31st day of October, 1983, in Tallahassee, Leon County, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of October, 1983. COPIES FURNISHED: Brian H. Brody, Esquire Office of the State Comptroller 201 West Broward Boulevard, Suite 510 Fort Lauderdale, Florida 33301-1885 Robert C. Stone, Esquire 2450 Hollywood Boulevard Hollywood, Florida 33020 The Honorable Gerald Lewis Office of the Comptroller The Capitol Tallahassee, Florida 32301
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: The applicant's proposed banking facility is to be located at the intersection of Southeast First Street and Federal Highway in Boca Raton, Palm Beach County, Florida. The designated primary service area (hereinafter referred to as PSA) encompasses the southern portion of Palm Beach County, including all of the City of Boca Raton, a portion of the town of Highland Beach and unincorporated areas west of Boca Raton. The applicant's PSA was determined and identified by considering traffic patterns, shopping, retail, professional services, business industries, geographical barriers and competitive financial institutions. The PSA is bounded on the north by the C-15 Canal, on the south by the Palm Beach/Broward County line, on the east by the Atlantic Ocean and on the west by the Florida Turnpike. The east/west boundaries are located 6.2 air miles apart, and the north/south boundaries are 7.1 air miles apart. The proposed site is located 5.2 air miles from the northern boundary of the designated PSA, 1.9 air miles from the southern boundary, 1.1 air miles from the eastern boundary and 5.1 air miles from the western boundary. According to one source, the entire PSA is within an average twelve minute driving time distance. One witness conducted a survey travelling on main traffic arteries from different points within the PSA to the proposed site. This experiment was conducted on February 4, 1980, during the winter tourist season, and involved some lunch time traffic. The driving times from nine different sites ranged from four minutes to nineteen minutes. The center of the downtown Boca Raton area is located approximately two blocks from the applicant's proposed site. The PSA contains six north/south traffic arteries and six east/west traffic arteries. Interstate 95 (I-95) separates the PSA approximately in half. The area east of I-95 is densely populated with limited vacant land available for development. The area west of I-95 is significantly less populated than the area east of I-95, with substantial vacant land available for future growth. Most new construction is taking place in the area west of I-95. This includes several large residential developments, a regional mall and office plazas. According to the applicant, there are 334 commercial establishments within one- half mile of the proposed site. The largest of the 86 light industries in Boca Raton is IBM, with approximately 3,600 employees. The IBM plant is located approximately 4 1/2 miles from the applicant's proposed site. According to data obtained from the Area Planning Board of Palm Beach County, the applicant estimates the 1979 population of the PSA to be 56,178. It is projected that this figure will be increased by 77.9 percent over the next seven-year period and that the population of the PSA will reach almost 94,000 by the year 1985. In mid-1978, there were 18 residential projects underway within the PSA with plans to add 30,662 new dwelling units to the area. As of September, 1979, according to the applicant, 4,967 single-family dwellings and condominium units had been completed and another 2,187 were presently under construction. The majority of the units are located west of I-95. Gulfstream's economic expert was of the opinion that I-95 would be a barrier beyond which persons residing or working west of I-95 would not cross to do their banking business. Two of the protesting banks located very close to the proposed site of the applicant have the same southern and eastern PSA boundaries, but smaller northern and western boundaries. These PSAs were designated in 1959 and 1971, at a time when there was little activity west of I- 95. According to data compiled by the Bureau of Economics and Business Research, Division of Population Studies at the University of Florida, the population of Palm Beach County as of April 1, 1979, was 564,447. This represents an annual average growth rate of 6.6 percent between 1970 and 1976, 3.6 percent between 1976 and 1977, 5.7 percent between 1977 and 1978, and 5.6 percent between 1978 and 1979. The same source shows Boca Raton's population of 49,744 to represent average annual growth rates of 8.5 percent between 1970 and 1976, 4.7 percent between 1976 and 1977, 4.2 percent between 1977 and 1978, and 2.4 percent between 1978 and 1979. The population of the unincorporated areas of the county showed similar patterns of growth rates -- a high growth rate between 1970 and 1976, a drop to almost half between 1976 and 1977, an upward trend between 1977 and 1978 and another drop between 1978 and 1979. The average annual growth rates in the population of Highland Beach for the same four periods of time were 34.2, 26.4, 9.8 and 2.2 percent. The growth in the County's population results almost exclusively from net migration, which is favorable to a new banking institution. Net migration accounted for 99.08 percent of the population growth in 1978, and for 99.21 percent in 1979, leaving only .79 percent due to natural increase. The labor group (ages 15 through 64) constitutes some 59 percent of the County's population, and retirees (older than 65) comprise some 20 percent of the population. The average annual unemployment rate declined from 9.1 to 7.1 percent between 1977 and 1978. These figures are somewhat higher than the State averages. Since 1969, the per capita personal income figures for West Palm Beach and Boca Raton have been consistently higher than the state averages. The median family incomes for the PSA have, since 1969, exceeded both the county and the state median family income figures. Approximately ten commercial banking facilities presently exist within the applicant's designated PSA with about six more having been approved, but unopened. Three of the existing facilities are main offices and they are the petitioners herein. The main office of Gulfstream is located 0.2 miles northeast of the proposed site. The main office of the Boca Raton National Bank is located 0.5 miles south of the proposed site and the main office of Citizens National Bank is located 1.0 mile northeast of the proposed site. The branch office of the intervenor is located 1.7 miles northeast of the proposed site. There are also over twenty existing and/or approved but unopened savings and loan offices within the applicant's PSA. There are presently no state chartered independent banks within the PSA. The petitioners Citizens National and Boca Raton National Banks are independent national banks affiliated through common ownership of stock. As of June, 1979, the total deposits of all existing commercial banking facilities located within the PSA increased from the previous year. The total deposits of the individual savings and loan institutions within the PSA ranged from $3.5 million to $118.5 million in March of 1978, to $4.7 million to $127 million in March of 1979. Of the 36 reporting banks in Palm Beach County, between June of 1978 and June of 1979, the following increases were noted: a 20.7 percent increase in loans, a 12.7 percent increase in time deposits, a 3.2 percent increase in demand deposits and an 8.5 percent increase in total deposits, which total deposits amounted to $2,253,491,000. The most recently opened full service bank located nearest to the applicant, though outside the applicant's PSA, experienced large increases in loans and total deposits. This bank, the Florida Coast Bank of Palm Beach County, opened in May of 1978 and grew by 286 percent in loans over a year's period and had total deposits in the amount of $11.8 million by November 30, 1979. It is proposed that the new bank will be capitalized with a total of $1.5 million, composed of $750,000.00 common capital, $450,000.00 surplus and $300,000.00 in undivided profits. There will be 150,000 shares of stock sold. As of the date of the application, 117,500 shares had been sold to 45 individual purchasers. Some 83 percent of the subscribers are residents of Palm Beach County. Of this figure, approximately 78 percent are residents of Boca Raton and reside within the PSA. Saul Slossberg, an organizer and proposed director, has subscribed to ten percent of the stock. In addition, he holds the remaining unsubscribed stock as trustee. It is intended that these shares held in trust will be distributed to the public. The proposed board of directors is composed of six members. Only one of the six, Charles A. Heeg, has been a bank officer, and that was in the trust department of another local bank. The applicant does not intend to offer trust services. Two other proposed directors have served as directors of other financial institutions. Norman I. Stone, who is presently in the brokerage business, served as a member of the board of directors of a New York bank for seven or eight years in the 1950's. Sy Reece, a real estate broker and warehouse developer, presently serves as a director of a savings and loan institution in Miami and is on the advisory board of the First American Bank of North Palm Beach. The principal organizer, Saul A. Slossberg, is a developer and general contractor with no prior direct banking experience. The other two proposed directors are Karl Enselberg, a medical doctor, and Melvin Schwartz, an attorney who has been involved in corporate banking matters. The organizers have not yet made a determination as to the identity of any of the key officers of the proposed bank. The chief executive officer will not be anyone from the organizing group. The proposed banking quarters will consist of a 4,000 square foot single-story building with twenty-three parking spaces and drive-in teller facilities. Both the land and the building are owned by Saul Slossberg, a proposed director. Initially, the bank will be housed in 3,000 square feet at an annual rental of $36,000.00. After the first year, the bank will have an option to lease the additional 1,000 square feet for an added annual fee of $12,000.00. Utility costs will be paid by the lessor. The bank will have a ten year lease, with an option to purchase. An appraisal from an MAI appraiser indicates that the market value of the land and the building will be $400,000.00. All of the proposed directors have been informed that Mr. Slossberg is the lessor for the proposed banking quarters, and Mr. Slossberg intends to make a full disclosure of the transaction terms to all subscribers of stock. If the lease or rental terms are unacceptable to the Department, Mr. Slossberg is willing to change it or to sell the property to a third party. While the interior layout has not been determined yet, it is anticipated that there will be four teller stations, with room to expand to eight. Citizens National Bank is presently operating in a 4,000 square foot building and services some $14 million in accounts. Citizens does utilize some off-site services, such as electronic data processing. Mr. Slossberg has also purchased a strip of land containing 6,800 square feet adjacent to the proposed site for the express purpose of making expansion possible, should it be needed. This space could be used to provide 15 to 18 additional parking spaces. The applicant intends to offer the prevailing banking services, prices, interest rates and hours of business as other banks in the area. It intends to be competitive in basic and ancillary services. It will not have a trust department. It is intended that the proposed new bank will offer more personalized services and will cater primarily to individuals and small and medium-sized businesses. The applicant expects to make primarily smaller loans under $50,000.00, for which it feels there is a demand. The loan portfolio of the Boca Raton National Bank indicates that as of September 28, 1979, 1,102 out of its 1,108 loans were loans under $50,000.00. Other banks in the downtown area do not have on-site drive-in teller facilities. The applicant projects total deposits of $4 million, $7 million and $10 million for the first, second and third years of operation. It also projects a loss of $69,834.00 during the first year of operation, a loss of $11,289.00 during the second year and a profit of $78,170.00 during the third year of operation. Due to higher income and expense figures occurring since the date of its application, these loss and profit estimates may need to be adjusted. The name of the proposed new bank is Royal Palm Bank. This name was selected because the words "Royal Palm" appear in a nearby street, a shopping center, a yacht club, and a dinner theatre and it was felt by the organizers that people could easily relate to the proposed name and it tends to express an affiliation with the City of Boca Raton. The applicant did not consult with any expert or studies regarding bank names. No expenses have been incurred with respect to the proposed name, and there would be no economic hardship to the organizers if they are required to select a different name for the bank. The intervenor Royal Trust Bank of Palm Beach, N.A. is a branch office and member of the Royal Trust Bank Corporation. It is located 1.7 miles northeast of the proposed site. The Royal Trust Bank Corporation has a registered service mark which has been in use since 1976, and the intervenor utilizes this trade mark. The service mark contains a palm tree. The Royal Trust Bank Corporation also publishes a periodical entitled the "Royal Palm News." For the years 1977, 1978, and 1979, the statewide advertising campaign of the Royal Trust Banks resulted in an expenditure of $1,080,000.00. Of this figure, $803,005.00 was expended in Dade, Broward and Palm Beach Counties. In Palm Beach County, the intervenor has engaged in television, radio, magazine and newspaper advertising activities. Other advertising materials utilized by the intervenor such as matches, service literature and things of that nature, also include the logo containing the palm tree. The intervenor intends to continue the use of the name Royal Trust Bank and the logo containing a palm tree. It is felt that the palm tree in connection with the registered service mark plays an important part in the identification of the intervenor and Royal Trust Banks. 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 13th day of March, 1980, in Tallahassee, Florida. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings 101 Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Gerald A. Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32301 Robert I. MacLaren, II, Esquire Osborne and Hankins Suite 200, Weir Plaza Bldg. 855 South Federal Highway Post Office Drawer 40 Boca Raton, Florida 33432 David B. Van Kleeck, Esquire Buchanan, Ingersoll and Van Kleeck Suite C, Plaza II Bldg. 301 West Camino Gardens Blvd. Boca Raton, Florida 33432 Walter A. Engdahl, Esquire 140 East Palmetto Park Road Boca Raton, Florida 33432 Karlyn Ann Loucks Assistant General Counsel Office of the Comptroller The Capitol Tallahassee, Florida 32301 Robert Paul Paul, Landy and Beiley Penthouse, Peninsula Federal Bldg. 200 South East 1st Street Miami, Florida 33131 Mark E. Pollack and Edward A. Stern Pollot, Stern and Pollock, P.A. 627 South West 27th Avenue - Suite 300 Miami, Florida 33135 =================================================================
Conclusions As set forth in Rule 3C-10.051, Florida Administrative Code, when an application for authority to organize and operate a new state bank is filed, it is the applicant's responsibility to prove that the statutory criteria warranting the grant of authority are met. The Department of Banking and Finance (hereinafter referred to as the Department) shall conduct an investigation pursuant to Subsection 659.03(1), Florida Statutes, which was done in this case, and then approve or deny the application in its discretion. This discretion is neither absolute nor unqualified, but is instead conditioned by a consideration of the criteria listed in Subsection 659.03(2), Florida Statutes, and wherein it is provided that: The department shall approve or disapprove the application, in its discretion, but it shall not approve such application until, in its opinion: Public convenience and advantage will be promoted by the establishment of the proposed bank or trust company. Local conditions assure reasonable promise of successful operation for the proposed bank or the principal office of the proposed trust company and those banks or trust companies already established in the community. The proposed capital structure is adequate. The proposed officers and directors have sufficient banking and trust experience, ability and standing to assure reasonable promise of successful operation. The name of the proposed bank or trust company is not so similar as to cause confusion with the mane of an existing bank. Provision has been made for suitable banking house quarters in the area specified in the application. If, in the opinion of the Department, any one of the six foregoing criteria has not been met, and cannot be remedied by the applicant, it cannot approve the application. An applicant, can, however, take corrective action in most circumstances, to meet the criteria set forth in Subsections 659.03(2)(c), (d), (e), or (f), Florida Statutes, if any one of these is found to be lacking. For example, if all other statutory criteria are met, the applicant may increase capital, or make certain changes in the board of directors, or change the name, or alter the provisions for suitable banking house quarters, because these factors are, at least to some degree, within its control. It is the Department's policy to allow applicants to make certain changes to meet these criteria if all other criteria are met; to do otherwise would be to subject applicants to unnecessary red tape. However, it is the Department's position that there is little, if anything, that an applicant can do to alter its ability to meet the criteria set forth in Subsections 659.03(2)(a) and (b), Florida Statutes, since applicants CANNOT easily change the economic and demographic characteristics of an area. Therefore, if either one or both of these criteria are not met, the Department cannot approve the application. For purposes of applications for authority to organize and operate a new bank, Rule 3C-10.051(1), Florida Administrative Code, defines the primary service area (PSA), as "the smallest area from which the proposed bank expects to draw approximately 75 percent of its deposits. It should be drawn around a natural customer base and should not be unrealistically delineated to exclude competing banks or to include areas of concentrated population." Based upon man-made traffic barriers, population concentrations, commercial activity, traffic patterns and the location of existing offices of financial institutions in the area, the Department concludes that the Applicant's designated PSA is unrealistically delineated. The Applicant extended the western boundary of its designated PSA to the Florida Turnpike to include an area of high growth potential west of Interstate 95 (I-95), a limited-access highway. In conjunction with the residential and commercial development of this area, numerous offices of financial institutions have located or have been approved to be located nearby. It is unrealistic to expect the population living west of I-95 to drive past these financial institutions, cross I-95 (at the limited number of available crossings) and drive to the other side of Boca Raton to bank at the downtown location of the Applicant's proposed site, especially when no new services are being offered by the bank. Likewise, residents north of 40th Street, N.W. (Spanish River Boulevard) generally would not drive past the numerous financial institutions located there, cross two heavily traveled east-west arteries, and travel through Boca Raton to the downtown location of the proposed bank. By including these areas, Applicant's designated PSA is not drawn around a natural customer base which can reasonably be expected to bank at a financial institution located at the Applicant's proposed site. The Department concludes that based on traffic patterns, man-made barriers and location of other financial institutions, the northern and western boundaries of a realistic PSA of the Applicant's proposed site are 40th Street, N.EW. (Spanish River Boulevard), and I-95, respectively. It is the opinion and conclusion of the Department that public convenience and advantage will not be promoted by the establishment of the proposed bank in this case. Therefore, the criterion in Subsection 659.03(2)(a), Florida Statutes, is NOT met. As set forth in Rule 3C-10.51(2)(a), Florida Administrative Code, the location and services offered by existing banking and financial institutions in the service area are considered as indicative of the competitive climate of the market. The traffic patterns in the area, as well as the area's general economic and demographic characteristics are also considered in evaluating this statutory criterion. Because it is recognized that the establishment of a new bank ANYWHERE would promote convenience and advantage for at least a few people, SUBSTANTIAL convenience and advantage for a SIGNIFICANT number of people must be shown; otherwise, a new bank could be justified for every street corner in the state. Clearly, such a result was not the legislative intent in regulating entry into the banking industry, nor is it in the public interest. The record indicates that access to the proposed site is inconvenient due to difficult ingress and egress caused by a heavy and continuous flow of traffic on South Federal Highway and the lack of a traffic light to regulate the traffic for the benefit of users of the proposed site; that the proposed site is located in downtown Boca Raton east of I-95, a mature area housing mainly offices and relatively small retail trade establishments; that there is only limited room for growth in its vicinity without major reconstruction and rehabilitation projects; that the Applicant's designated PSA already has ten commercial banking offices and thirteen savings and loan offices serving it; that the more realistic PSA, as delineated by the Department, still has nine banking offices serving it, of which three are main offices, two are branches which were formerly full-service banks, and fourteen savings and loan offices; that five of these banking offices and eight of the savings and loan offices are located in proximity to the proposed site and are more conveniently accessible from the main centers of commercial activity within the realistic PSA; that of the three bank main offices within the realistic PSA two are located within 0.5 of a mile from the proposed site and the third is within one mile from it, and, that in addition, there are three branch offices of three other banks located within a 1.7 mile radius of the proposed site; and that the proposed new bank would not offer any new services or improve on existing services. Due to the number of existing banking and savings and loan offices in or near the realistic PSA, their locational distribution, and the fact that the record does not reflect inadequate or an insufficient variety of financial services, it appears that the banking needs of the PSA's resident and working populations are being conveniently and adequately served at this time and that competition in the realistic PSA would not be significantly enhanced by the establishment of the proposed new bank, which will not offer any new services. Located within the central portion of the realistic PSA, the proposed site could offer some convenience for businesses and residents situated nearby, but the existing banking and savings and loan offices, which are presently serving most of them, are more easily accessible and more conveniently located for most of the PSA residents and businesses. Furthermore, because of the population density within the realistic PSA and the fact that it is a mature area with little room for expansion, rapid population growth is unlikely. In view of the above, the Department concludes that the criterion in Subsection 659.03(2)(a), Florida Statutes, is not met. It is the opinion and conclusion of the Department that local conditions do not assure reasonable promise of successful operation for the proposed bank and those banks already established in the community. Therefore, the criterion in Subsection 659.03(2)(b), Florida Statutes, IS NOT met. As set forth in Rule 3C-10.051(2)(b), Florida Administrative Code, current economic conditions and, to a lesser extent, the growth potential of the area in which the new bank proposes to locate are important considerations in determining the bank's probable success. Essential to the concept of banking opportunity is that there does and will exist a significant volume of business for which the new bank can realistically compete. The growth rate, size, financial strength, and operating characteristics of banks and other financial institutions in the PSA are also import indicators of economic conditions and potential business for a new bank. It is noted that the statutory standard requires that ". . .local conditions ASSURE reasonable PROMISE of successful operation for the proposed bank and those already established in the community. . ." (E.S.), NOT merely that local conditions INDICATE a POSSIBILITY of such success. Banking involves a public trust. Unlike private enterprise establishments generally, banks operate on the public's capital and therefore, the Legislature has vested in the Comptroller the responsibility of protecting that public interest. Furthermore, the failure of a bank, as opposed to private enterprise establishments generally, may have an unsettling effect on the overall economic welfare of the community, and that is why the Florida Legislature and the United States Congress have imposed stringent requirements for the industry. This Department is responsible for enforcing this legislative standard. Public interest is best served by having a banking system whereby competition is encouraged, where appropriate, yet at the same time ensuring that the financial resources of the residents in the community are stable and safe. That was the intent of the Legislature in regulating entry into the banking industry. The record indicates that between June 30, 1978 and June 30, 1979 the rates of growth of the total deposits of the existing offices of commercial banks located within the PSA were uneven, ranging between poor to good, although all of them showed increases. These increases ranged between $1.9 million and $23.4 million. There is no evidence in the record that the performance of these banks can be duplicated by the Applicant. As was already pointed out in the discussion of the criterion of convenience and advantage, both the resident and business populations of the realistic PSA are conveniently and adequately served by this PSA's existing offices of financial institutions. Since the Applicant does not plan to offer any new services, no significant transfer of customers, if any, from existing institutions to the proposed new bank can be expected. This is especially true of those customers with loan or other commitments to one or more of the existing institutions. As to new and uncommitted customers, the realistic PSA is a densely populated mature area in downtown Boca Raton and the Applicant is not likely to benefit to any significant degree in the near future from the population growth in other parts of the City or in Palm Beach County. Although the record also shows that the total deposits and loans of Florida Coast Bank of Palm Beach County, N.A., the most recent bank to open in Palm Beach County (May, 1978) but which is located outside of the Applicant's designated PSA, grew significantly during its first 18 months of operation, this bank serves a different PSA. There was no evidence in the record that the rate of growth of that PSA's population and its demographic and economic characteristics, as well as the number, nature, and competitive climate of the offices of financial institutions serving it are analogous to the Applicant's realistic PSA. It cannot, therefore, be reasonably assumed that the Applicant will be able to duplicate its performance. It should also be noted that this bank is more conveniently located to and accessible from that section of the Florida Turnpike which serves the southern portions of Palm Beach County. Based on the above considerations, the Department is of the opinion that the feasibility of materialization of the Applicant's deposit projections remains inconclusive. In view of the fact that the statutory standard requires that ". . .local conditions ASSURE reasonable PROMISE of successful operation for the proposed new bank. . .", the Department concludes that the criterion in Subsection 659.03(2)(b), Florida Statutes, is not met. It is the opinion and conclusion of the Department that the proposed capital structure of the proposed new bank is adequate. Therefore, the criterion in Subsection 659.03(2)(c), Florida Statutes, IS met. Capital should be adequate to enable the new bank to provide the necessary banking services, including loans of sufficient size, to meet the needs of prospective customers. It should be sufficient to purchase, build or lease a suitable permanent banking facility complete with equipment. Generally, the initial capital for a new nonmember bank should not be less than $1.0 million in nonmetropolitan areas and $1.5 million in metropolitan areas. However, greater capital may be required of a new bank which is a member of the Federal Reserve System because of the more restrictive uses of capital imposed by that body. The capital referred to be allocated among capital stock, paid in surplus, and undivided profits in the ratios set forth in Section 659.04(3), Florida Statutes. The Applicant's proposed capital accounts total $1.5 million and are allocated according to the statutory ratios. Therefore, the criterion in Subsection 659.03(2)(c), Florida statutes, is met. It is the opinion and conclusion of the Department that although the proposed directors have good character, have reputations of financial responsibility, ability and good standing in their community, they do not have sufficient direct commercial banking experience to assure reasonable promise of successful operation for the proposed new bank. Therefore, the criteria in Subsection 659.03(2)(d), Florida Statutes, ARE NOT met. As set forth in Rule 3C-10.051(2)(d), Florida Administrative Code, the organizers, proposed directors, and officers as a group shall have reputations evidencing honesty and integrity. They shall all have employment and business histories demonstrating their responsibility in financial affairs. At least one member of a proposed board of directors, other than the Chief Executive Officer, shall have direct banking experience. In addition, the organizers, proposed directors, and officers shall meet the requirements of Sections 659.11 and 659.54, Florida Statutes. Officers shall have demonstrated abilities and experience commensurate with the position for which proposed. Members of the initial management group, which includes directors and officers, shall require prior approval of the Department. Changes of directors or Chief Executive Officer during the first year of operation shall also require prior approval of the Department. While it is not necessary that the names of proposed officers be submitted with an application to organize a new state bank, the Chief Executive Officer and operations officer must be named and approved at least sixty (60) days prior to the bank's opening. The Department concludes that the proposed directors have, as a group, good character, sufficient financial standing, business experience and responsibility, but the board lacks in-depth experience in commercial banking to assure reasonable promise of successful operation. Were this the only requirement not met, the Department would generally allow the Applicant to correct this deficiency by adding at least one director other than the Chief Executive Officer, with direct commercial banking experience. It should be noted that interlocking directorships involving existing financial institutions competitively near the proposed site of a new institution are discouraged. Such interlocking directorships could possibly restrict competition and create fiduciary problems. In this instance, one of the proposed directors is presently a director of a savings and loan association in Miami which, because of its service area, is not considered a directly competitive financial institution. The Department concludes, therefore, that the interlocking directorship in this instance will not restrict competition or create fiduciary problems. It is the opinion and conclusion of the Department that the name of the proposed new bank, Royal Palm Bank, is so similar as to cause confusion with the name of existing banks. Therefore, the criterion of Subsection 659.03(2)(e), Florida Statutes, IS NOT met. As set forth in Rule 3C-10.051(2)(e), Florida Administrative Code, in determining whether an applicant meets the requirements of this statutory criterion, the Department will consider the names of all existing banks in the state. This provision shall not apply to affiliates of bank holding companies. In addition to the foregoing criterion an applicant shall meet the requirements set forth in Section 607.024, Florida Statutes. The Applicant's proposed name, Royal Palm Bank, begins with the same word as the Royal Trust Bank, which has a branch located 1.7 miles northeast of the proposed site. In addition to the similarity of name, the Royal Trust Bank uses a registered trade mark containing a palm tree in all of its advertising and service literature, which plays an important part in the identification of the Royal Trust Bank. In view of the similarity of the names, the identification of the Royal Trust Bank with a palm tree and the monies expended by the Royal Trust Bank in advertising over the last three years, the Department concludes that the Applicant's proposed name, Royal Palm Bank, is so similar as to cause confusion with the name Royal Trust Bank. It should also be noted that the Applicant did not incur any expenses in the identification and promotion of the proposed name or consult with any expert or perform studies regarding the bank's name. It is the opinion and conclusion of the Department that provision has not been made for suitable banking house quarters in the area specified in the application. Therefore, the criterion of Subsection 659.03(2)(f), Florida Statutes, IS NOT met. As set forth in Rule 3C-l0.051(2)(f), Florida Administrative Code, permission to open in temporary quarters may be granted, generally not to exceed one (1) year. An extension, generally not to exceed six (6) months, may be granted for good cause shown. The permanent structure of a new bank should contain a minimum of 5,000 square feet, unless the applicant satisfactorily shows that smaller quarters are justified due to the performance of certain auxiliary services off the premises. In addition, it shall meet Federal Bank Protection Act requirements and be of a sufficient size to handle the projected business for a reasonable period of time. The facility shall be of a nature to warrant customer confidence in the bank's security, stability, and permanence. Other pertinent factors include availability of adequate parking, an adequate drive-in facility if such is contemplated, and possibilities for expansion. Temporary quarters are not contemplated by the Applicant. The proposed banking quarters consist of a 4,000 square foot single-story building, of which the Applicant intends to initially occupy 3,000 square feet. The record does not indicate that any auxiliary services will be performed off- premises. Therefore, the provisions of Rule 3C-10.051(2)(f), Florida Administrative Code, and the criterion of Subsection 659.03(2)(f), Florida Statutes, are not met. Were this the only requirement that had not been met, the Department would generally allow the Applicant to correct the deficiency. Rule 3C-10.051(3), Florida Administrative Code, relating to stock distribution and financing, provides that To encourage community support, wide distribution of stock ownership is desirable. The majority of the stock should be issued, whenever possible, to local residents of the community, persons with substantial business interests in the community, or others who may reasonably be expected to utilize the services of the bank. Subscribers to 5 percent or more of the stock may not finance more than 50 percent of the purchase price if the extension of credit is predicated in any manner the stock of the new bank, whether or not such stock is pledged. The Department concludes that the initial stock distribution among 45 subscribers, most of whom reside or have businesses in the PSA, is acceptable, although generally a wider distribution is desirable to encourage community support. Rule 3C-10.051(4), Florida Administrative Code, relating to insider transactions requires that Any financial arrangement or transaction involving the proposed bank and its organizers, directors, officers, and shareholders owning 5.0 percent or more of the stock, or their relatives, their associates or interests should ordinarily be avoided. Should there be transactions of this nature they must be fair and reasonable, fully disclosed, and comparable to similar arrangements which could have been made with unrelated parties. The Department concludes that there is an insider transaction involved in the lease of the proposed bank building from Saul Slossberg, a proposed director and subscriber of more than five percent of the stock. The transaction has been disclosed to all of the proposed directors, however, it is not apparent from the record that the transaction has been disclosed to all the subscribers. Information has been submitted to indicate that the terms of the transaction are comparable to similar arrangements which could have been made with unrelated parties. 12. Rule 3C-10.051(5), Florida, Administrative Code, sets forth that In all cases appraisals of land and improvements thereon shall be made by an independent qualified MAI appraiser, and be dated no more than six (6) months prior to the filing date of the application. Based upon comparable information submitted to the Department, the Department concludes that the proposed leasing arrangements are reasonable and competitive.
