When Joe Caballero arrived at Gulfshore Bank in the spring of 2009, he spotted an immediate opportunity and a problem. • The opportunity: The 2-year-old Tampa startup wasn't saddled with a bunch of troubled real estate loans like those choking other community banks throughout Florida. • The problem: The bank didn't have much of a loan portfolio, period. Or much of a working business model, for that matter. • "It had a couple hundred thousand in expenses a month and zero revenue," Caballero said. • Over the past two years, Gulfshore has grown its loan portfolio to $100 million and expanded beyond its initial branch on S MacDill Avenue in Tampa. This month, it's opening its new corporate headquarters and branch in downtown Tampa, just across from the St. Pete Times Forum. • With a background as a CPA, Caballero ran the former Bank of St. Petersburg (later renamed Florida Bank) and had a brief stint in wealth management before being recruited by Gulfshore chairman Mario Garcia to be the bank's CEO and president. Caballero and Ed O'Carroll, Gulfshore's executive vice president and chief operating officer, recently sat down with the Times.
How big of an advantage was it launching a bank without the burden of poor-performing real estate loans that were hurting the competition?
Caballero: Huge. … There were a few (bad) loans that were made, but it was very small. Our portfolio was $17 million when we got here, and we're in the $90s (million) now and will probably be over $100 million at the end of this month. So there really wasn't much. There were a few (problem) loans that we were able to identify right away when we came on board and put aside reserves to deal with.
How difficult is breaking into the market with a new brand name?
O'Carroll: We have to talk about the strength of the bank when we're on a call with a prospect. So there is a concern, but it's really more of an industry concern. Any potential bank they engage with, they're going to have the same questions. Those conversations didn't used to happen. Now we almost lead with, "Let me tell you the bank's story and how strong we are and what our liquidity is."
Caballero: It's less about the name recognition. … In our industry right now, capital is a very important component … and we have sufficient capital. Our capitalization for the bank right now is $14 million including the holding company.
So are you profitable yet?
Caballero: After-tax last year, we ended up making something like $45,000 for the year, so we were actually slightly profitable.
You're opening your second branch. What's next?
Caballero: It's really more of a client expansion than brick and mortar. Our goal is to get to that $700 million to $800 million range. We believe it's better to attract and retain and incent high-quality, experienced people. We don't really have plans for another location for 24 to 30 months.
Despite your size, you were ranked the No. 1 community bank in making SBA (Small Business Administration) 504 loans last year. What's driving that?
O'Carroll: I would say two things. One, the government actually helped; one of the best things in the economic stimulus program was a discount on the 504 loans expenses, so we took advantage of that. No. 2, we actually have a person that's really good at (504 loans).
Caballero: The way the SBA had priced that product, it was definitely the best advice for the client. We were battling. We wanted to grow our loan book. … It's nice to have that in a low-risk loan, but on the other side, this really was in the best interest of our clients.
Are you still pushing it now that the fee discount is gone?
O'Carroll: The price has gone up a little bit, but it's still a good deal, It's not a knock-down great deal anymore.
Florida led the country in bank failures last year. Will it again in 2011?
Caballero: Georgia and Florida are still loaded with these (troubled) institutions. But I think the (bank failures) are a good thing, long term. If you print that, people are probably going to say what a jerk this guy is because he's in the catbird seat and they started after the problems. I don't mean it that way. But when you have 8,000 banks in the United States, you dilute capital. You dilute talent. I don't think we have to go to the British model, but we do need less banks.
Your former company, Bank of St. Petersburg (now Florida Bank), consented to stricter regulatory oversight in March. What will happen with them?
Caballero: I don't think they're a failure candidate in the near future. … At some point, you can't keep losing money period after period. I think a lot of banks that are in (similar) situations are going to have to seek strategic alternatives. (At the Bank of St. Petersburg), we weren't making loans out of policy, but no one anticipated property going down 50, 55 percent in value.
Are you concerned about a double-dip recession?
Caballero: There is always that risk, but I'm a little less concerned. There's going to be an overhang because of the residential market and unemployment. We've probably been in recovery. … There's a lot of heat coming back into the world economy.
Which industries are faring noticeably better?
Caballero: Automotive, absolutely. The dealership side of it. … And the hospitality and restaurant industry. We have a few clients in the industry that did well during the downturn and are doing even better now. People are starting to travel more and go out to eat.
Despite higher gas prices?
Caballero: That will be a long-term challenge for America. Gas has to (eventually) be between $3.50 and $4.50 a gallon. We need to deal with it. I think we're kidding ourselves. … I'm so disappointed to see our high-speed rail get killed. It's very unilateral that one guy can say, "No." I don't care about Democrat or Republican. I'm actually an independent. The federal government (is) going to come back here in 20 years and go, "We're putting this (rail) in now and here's where it's going. Here's how it's happening." We could have actually been in on the front end.