As chief executive of BankAtlantic, the second-largest bank based in Florida, Jarett Levan has been at ground zero for financial upheaval.
His Fort Lauderdale-based bank put the brakes on a rapid expansion in which it had more than doubled its Tampa Bay presence the past three years to 19 branches, giving it 100 locations statewide.
He watched as the only larger Florida-based bank, BankUnited, was seized by regulators two months ago and sold to an investor group.
In the latest quarter, BankAtlantic's parent company reported a $38.4 million loss from continuing operations and set aside another $36 million in reserves for a total of $157 million to cushion against future loan losses.
Today, BankAtlantic has about 1,800 employees after shedding about 1,000 workers the past couple of years, half lost through attrition and half through layoffs.
Yet, Levan remains upbeat. Other than sobering real estate loan losses, the bank is clicking on other cylinders. Deposits have risen to record levels. No more layoffs are planned. And the bank managed to keep its portfolio of troubled commercial real estate loans flat between the first and second quarters.
"We see the proverbial light at the end of the tunnel," said Levan, a second-generation BankAtlantic executive whose father, Alan Levan, is CEO of the bank's holding company.
The Times last week sat down with Levan and Doug Tuttle, the bank's recently named market president in the Tampa Bay area, for insights on what happens next.
You've noted that deposits continue growing through this recession. What numbers are you seeing?
Tuttle: For the last six months, our low-cost deposits are up 15 percent and total deposits are up 18 percent. We're having a phenomenal year in growth of deposits across the whole footprint and Tampa has contributed. Certainly, I'd like to see those numbers in the 25, 30 percent range and eventually we'll get to that level.
Bank of America plans to close 10 percent of its branches and others are retrenching their branch networks, in part because of the recession and in part because more banking is done online. What's your strategy?
Levan: We have 100 locations for BankAtlantic right now, and we feel pretty good about where we're at. But we're sitting tight on branch expansion until the market recovers.
So you're not following Bank of America's lead?
Levan: Banking for BankAtlantic is truly street-corner banking. Our customers live or work near one of our locations. … There's certainly a tremendous amount of areas for BankAtlantic to grow. We have a 1 percent market share in the state of Florida and about 3 percent in the markets that we serve. We've no plans to close locations, but at the same time, no plans to expand.
How key is it that your marketing push was built on keeping some of your branches open longer hours and seven days a week?
Levan: It's been nine years now that we've been known as Florida's most convenient bank and customers have come to enjoy that. The fact is that bankers' hours don't work for our customers. (Working) 9 to 5 doesn't make sense any more.
Many small businesses maintain the credit crunch is alive and well. What are you doing to stimulate lending?
Levan: Generally, there's limited access to capital, but BankAtlantic is lending. Credit terms are certainly different, but we are lending. The problem is there aren't enough projects to lend against. But we are available to lend, and we are making loans in every category. Quite frankly, there's no better time if you do have access to capital to think about expanding your business or partnering with a competitor.
How deep will the loan losses go?
Levan: That's really hard to predict. Our portfolio, which is mostly Florida loans, will mirror the local economy. Unfortunately, we will continue to take losses until the general economy recovers.
What's the shape of your loan portfolio in the bay area specifically?
Levan: We don't break out our loan portfolio by geography. I can say our loan portfolio in Tampa is made up of traditional consumer loans, primarily second mortgage, small business and corporate and commercial real estate loans. We do not have in our portfolio … any of the esoteric products that have been a problem for many of the national and some of the local banks.
Some economists think we're hovering near the bottom.
Levan: I think the good news is Florida is resilient, … and Florida always recovers fairly strong. Now, in this particular recession, Florida will probably lag the national economy because of the huge appreciation we saw during the good years. But there are some green shoots we're hearing about. The housing report that just came out reported that we saw an increased volume in sales and increase in median home prices.
Are you still pursuing TARP (Troubled Asset Relief Program) funds from the federal government?
Levan: BankAtlantic applied for TARP back in October. In the early days, we heard there were some qualifying questions about the applications, but we really haven't heard anything since. We haven't heard anything positive or negative. We believe we're eligible for TARP, but don't know if the funds are available for us.
Many banks have objected to the strings attached with TARP or have already paid the government back. If you were approved tomorrow, would you take the money?
Levan: We'd have to consider the pros and cons of whether we need capital and the requirements involved with accepting TARP. But at this point, our capital remains strong. We don't believe there's a need for TARP.
Historically, Florida's largest banks tend to be gobbled up by out-of-state banks. Do you plan to remain independent? Are you still getting approached?
Levan: Because we've made it clear we're not for sale, we don't get a lot of calls, which is fine with us. What's interesting about our position is that with $4 billion in deposits and 100 locations, we're the second-largest. Ten years ago, Barnett Banks left the market (bought by the future Bank of America), and they had 700 locations and $40 billion in deposits. It speaks dramatically to how the market has changed.
Will you expand out of state?
Levan: No. There's plenty of opportunity for us to grow in Florida — in Tampa and South Florida as well as the markets we're not in now. We could be very busy for several years expanding in the state.
Tuttle: Our biggest opportunity will be to expand our footprint in business banking. Everybody has to have a checking account and that's what I tell my store managers: 'Draw a radius around your store and count the number of businesses.' There'll be hundreds and every single one of those businesses needs checking. The large banks certainly aren't taking care of those small businesses.
Our strategy is to go out … and increase our low-cost deposits of those businesses and at the same time go after the personal accounts of those business owners and cross-sell them with all of our other ancillary products. It's a huge opportunity to increase our market share.
Jeff Harrington can be reached at firstname.lastname@example.org or (727)893-8242.