Community banking in Florida used to look a lot like the house flipping that caught fire in the mid-2000s.
Investors could pump money into a tiny startup bank, build its customer base and branches and several years later sell the whole thing to a big out-of-state bank. Sometimes they doubled their initial investment.
The days of a quick flip are over, of course. But a Brazilian investor group now sees big opportunity in Florida's shaky community banking sector. Under the name C1 Bank, the group has acquired four banks in Florida since 2009 and is moving their state headquarters from Lakewood Ranch to St. Petersburg.
They've quickly grown to more than $2 billion in assets through their purchases and are trying to grab attention with quirky marketing tactics. For one thing, they offered to pay people $5 per month, at least temporarily, to open an account.
Trevor Burgess, the only member of the ownership group not from Brazil, quoted legendary investor Warren Buffett throughout a recent interview. Like the Berkshire Hathaway chairman, the Brazilian group plans to hold its bank and other investments for the long term.
"We do not buy things with the idea of selling them," Burgess said.
Burgess, 39, worked for Morgan Stanley bringing private companies public until 2007, when he decided to break off and invest his money privately, teaming up with a Brazilian banker named Marcelo Faria de Lima. Two other unnamed investors also live in Brazil.
Leaving before the Wall Street collapse in 2008 was fortuitous timing.
They looked around and spotted opportunities in the wreckage of banking, particularly in Florida. They formed a holding company, CBM Florida Holding Co., in 2008 to buy struggling Florida community banks and made their first purchase a year later with Community Bank of Manatee, a struggling bank in Lakewood Ranch.
They followed up with two more purchases, First Community Bank of America in Pinellas Park and Tampa's Palm Bank, last year. As of its last regulatory filing in June, C1 Bank had deposits of $734 million, assets of $925.5 million and 21 branches.
Meanwhile, it is trying to give itself an edgy, high-tech vibe. C1 had been called Community Bank & Co., but Burgess thought that was too generic and that too many banks had "community" in their names. So, he rechristened it C1 Bank, short for "clients first, community first."
C1's branch on Beach Drive in downtown St. Petersburg looks more like a modern art gallery than a bank branch. The terrazzo tile floors have emerald-colored sparkles, the snow-white walls are sleek and curved and offices are framed in floor-to-ceiling glass. The branch doesn't have traditional tellers, but rather customers walk up to two customer representatives seated at desks.
Community banking today is as much about online and mobile banking, Burgess said, so C1 is trying to change with the times. Burgess rarely wears a jacket or tie, he said last week.
C1 is making its biggest splash now with its pending purchase of struggling U.S. Century Bank in Miami. The acquisition will more than double C1's size, bring it to about $2.2 billion in assets and give it another 24 branches in South Florida.
Burgess, Lima and their two partners are betting big that Florida will rebound. All told, they will have contributed $150 million of their own money into C1 Bank once the U.S. Century Bank deal is done, Burgess said.
With that kind of money, they've caught the eye of Florida's bruised banking community.
Since January 2009, there have been 93 bank mergers in Florida, 58 of which involved failed banks that the FDIC shut and sold off to healthier banks, according to data from Tampa investment banking firm Kendrick Pierce & Co.
Russ Hunt, Kendrick Pierce & Co.'s president, said he knows of at least two other banks that the C1 Bank partners tried to buy.
"They're very smart guys with a lot of money," Hunt said.
Hunt and another banking industry veteran, Holland & Knight banking attorney Charles Stutts, say they expect the number of community banks to shrink as the industry consolidates. Today, banks really need at least $1 billion in assets to be successful, because the cost of complying with banking regulations has grown so much, among other reasons, Stutts said.
For his part, Burgess said he sees opportunity in Florida's real estate crash. Many accountants, dentists, lawyers and other professionals are leasing space when they could more cheaply buy their own buildings, he said. Getting those professionals to buy their real estate is a key focus for C1 Bank, Burgess said.
He also is betting on Florida's continued growth. A few years ago, he read an article in a New York newspaper that said Florida lost people in 2008 for the first time in decades. The article painted a bleak portrait of the state, but the last paragraph seemed to contradict the rest of the story: Florida was expected to add people the next year.
"If you didn't read the last paragraph, you would never invest in Florida," Burgess said.