Why this Tampa banker is confident community banks can survive

Apr 17, 2017

A Tampa community bank CEO has an answer for industry observers who question if banks under $1 billion can survive.

The answer is yes, according to Jack Barrett, president and CEO of First Citrus Bank, but he added that doesn’t mean there aren’t valuable efficiency gains with quality asset growth.

Barrett outlined a multi-point blueprint for the future of First Citrus Bancorporation (OTC: FCIT), a $324 million-asset bank headquartered in Tampa and with five offices in Hillsborough County, in a letter to friends of the bank late Friday.

His sentiments echo those of many bank executives at smaller local financial institutions, who publicly say community banks can best serve the credit needs of small to mid-size businesses in the area and express confidence about their prospects for success.

Privately, however, officers at larger banks involved in merger and acquisition deals say every bank is for sale and financial publications are full of articles that refer to the “$1 billion in assets survival point.”

First Citrus, founded in 1999, eclipsed $300 million in assets for the first time in 2016. The bank is budgeting 15 percent asset growth this year to $360 million, and has forecast surpassing $400 million in assets next year. Barrett expects to top $500 million in assets in 2019.

The bank posted $561,000 in net earnings, or 34 cents a share, for the first quarter of 2017. That’s nearly half of total profit for all of 2016, when the bank had $1.275 million in net earnings, or 77 cents share.

In his letter, Barrett lists several reasons he’s bullish on First Citrus and the community banking model.

For one thing, deposits in Hillsborough, Pinellas and Pasco counties are at an all-time high, he said, but the number of community banks is at an all-time low. There are 15 banks headquartered in the three-county area, down from 28 five years ago.

Another factor is an expected easing of regulations as new leaders are appointed under the Trump administration to head the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency. “Throw in some tax relief and the opportunity to create meaningful shareholder wealth is no longer the moonshot it was eight years ago,” Barrett wrote.

Capital planning plays a leading role in the bank’s boardroom, he said. First Citrus stock began trading over the counter last year, in a move that provides more transparency and liquidity for shareholders and can serve as a springboard to the Nasdaq, Barrett said.

The stock price has jumped more than 25 percent since Aug. 26, near the time it started trading, when it was $12.95 a share. It closed Friday at $16.30 a share.

See the original article on the Tampa Bay Business Journal Website

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