Barrett has an ambitious plan to grow First Citrus, a Tampa-based bank with $228.7 million in total assets, into a $5 billion publicly traded bank through mergers with banks of similar size.
One impact of that plan would be additional credit for businesses, he said during theTampa Bay Business Journal’s banking roundtable in April.
“I think if we had more larger banks headquartered in Tampa Bay then I think it would have very salutary implications to grow more businesses,” Barrett said.
Barrett may be more optimistic, or simply more candid, than many community bankers about growth plans and there’s no way to know he will succeed, but community banks increasingly are focused on hitting the $500 million asset mark or larger to have the size and scale to cover the increased costs of doing business.
“Most community banks are targeting to be at least $1 billion because industry observers say you have to be that size to gain efficiencies and be profitable and benefit shareholders,” said Paula Johannsen, managing director at Monroe Financial Partners and head of the investment bank’s Tampa office.
Barrett hinted at his growth strategy in a letter to First Citrus shareholders and elaborated on the plan during a recent lunchtime conversation, saying First Citrus had a 180-degree shift in 2013, going from husbanding capital and maintaining the status quo to going on the offense. The bank finished 2013 with a 44 percent increase in staff, mostly in lending or credit underwriting. First Citrus grew its loan portfolio 7 percent in 2013, from $165 million to $177 million, compared to 3 percent loan growth for community banks as a group in Hillsborough County.
The pace continued early in 2014, with business bankers deploying more growth capital to small businesses in the first two months of 2014 than in the first five months of 2013.
While loan growth was up, profit dipped as the bank spent more on staff and boosted its loan reserves. Net income for 2014 was $371,000, compared to $789,000 in 2013, according to reports filed with the Federal Deposit Insurance Corp.
First Citrus currently ranks No. 11, based on asset size, among the 26 banks headquartered in the Tampa-St. Petersburg-Clearwater metro area. To grow into a $5 billion bank, Barrett anticipates mergers of equals. He said First Citrus, with its relatively young senior management team - the average age is 43 - would be a good match for a bank with older managers.
“Management succession is a major reason why banks sell,” Johannsen said.
But the pool of candidates is somewhat limited. In the Tampa MSA, there are seven other banks with assets between about $200 million and $300 million, but one of them - Florida Traditions Bank - has agreed to be bought by Centennial Bank, wile another, Sunshine State Federal Savings and Loan Association, plans an initial public offering.
Barrett’s strategy is to complete one deal this year, then file for an IPO after a second deal.
“We are seeing more IPOs in the banking market these days,” Johannsen said. One of the most recent was by ServisFirst Bancshares in Birmingham, Ala., which suffered the worst first-day trading results of any bank IPO completed since 2010, according to financial research firm SNL Financial.
In February, First Citrus named Roger Moyer, former president and CEO of Sterling Financial Inc., to its board. Moyer was at the helm when Sterling sold to PNC Financial Services Group. He retired from PNC in 2008.