Charlie Conoley vows to fight till the end for the community bank he founded and still runs. He's not quite paraphrasing gun-lovin' Charlton Heston — You can have my bank when you pry it from my cold, dead fingers. Not yet. But Conoley is battling every way he knows how to win precious time he says he needs to revive Horizon Bank's role as a respected lender to small businesses in Bradenton, Manatee County and the surrounding area.
"We are profitable and, yes, we are desperately trying to raise new capital," says Conoley. Unlike most bankers struggling under the thumbs of bank examiners, Conoley wants to tell his story — that Horizon can come back from the brink — even as part of him listens for the sound of the FDIC knocking on his door with the message: This bank is closed.
Conoley called urging me "to see a broader perspective" after I wrote a recent column calling for quicker closings of Florida banks too troubled to be fixed. That column mentioned Horizon as a bank likely to fail. Horizon is a bank likely to survive, Conoley insists.
He invited me to Bradenton last week for a first-hand look.
I like Conoley's grit. I admire his desire not to sit around waiting to become one more casualty of this searing recession.
But I still wonder:
Can Charlie Conoley win a battle so many of his fellow bankers already have lost? Can he save his bank?
So far, 118 FDIC-insured banks have failed nationally this year. Of those, 22 are in Florida. And of those, at least a third are in or near Bradenton.
In this case, location is Conoley's curse. Veteran banking experts like Bert Ely in Alexandria, Va., and Miami's Ken Thomas, say bank examiners might be more flexible elsewhere in the country less hard hit by the downturn. But examiners are terrified at looking too soft dealing with struggling banks near ground zero of the burst real estate bubble, where unemployment tops 12 percent. Like Bradenton.
Conoley's got other hurdles. From Bradenton-Sarasota south to Naples, there's been a boom in new banks since 2000, all clamoring for a piece of the real estate boom. The result? Too many banks chasing too little business. And too many local investors turned skittish by so many bank failures.
"I can be sympathetic to a point," Ely says. "But there are a number of bankers out there who are not being coldly realistic."
That's easy to say from afar. From Conoley's view, his bank made some mistakes but still has some capital — the cushion of money all banks need to survive and are required to maintain. The bank was profitable last quarter and expects to be so again in the next quarter. It is still lending some money to customers.
Most of all, Horizon recently signed a deal with a California firm that specializes in raising funds for struggling banks. The bank needs at least $8 million to win some breathing room with regulators. On paper, as much as $20 million could be raised by selling new stock in Horizon.
But it's a race against time. Regulators so far are showing Horizon little leniency. They may yet shut the bank before Conoley's comeback plan can work, and hand a failed Horizon to the FDIC for a quick sale to some bigger institution.
Outside the walls of Horizon Bank, these are the nasty facts. The Federal Reserve tagged Horizon as "severely undercapitalized" and imposed a Sept. 16 deadline to replenish its required cushion of money. In recent years, the bank suffered fraud losses from one customer. It lost more from investing in what rating agencies mistakenly had assured Horizon were "top rated" mortgage-backed securities. Those hits compounded the bank's woes from lending to customers hurt by the downturn.
A boyish 51, Conoley sits in his modest office at Horizon, located on the corner of a shopping center near modest homes and businesses. He points to the inexpensive trappings of his main office, including the Formica surface at the teller windows, as tangible proof he knows the value of a buck.
We lunch at Miller's Dutch Kitch'n, a popular local Amish restaurant with terrific chicken. Big banks denied Miller's a loan to expand because it was not part of some big chain. But Horizon gave the owners a 20-year mortgage, a loan paid back well in advance.
That, Conoley says, is why Horizon makes a difference in a place like Bradenton.
Indiana born and Purdue University educated, Conoley's been a Florida banker for decades. He worked for Barnett Bank — the last big bank to be based in Florida before out-of-state behemoths bought it and dominated the state. He started Horizon in the late 1990s by borrowing startup money on his own credit card because he wanted to control his own destiny and wanted to stay in his beloved Bradenton.
Now he's not sure he will be able to make that happen.
It's hard to tell that Conoley is madder than hell. He smiles a lot and makes jokes, but that is his way of coping. He says he sleeps okay at night but many others who work and worry at the bank do not. Married, he has kids approaching college age. He spends all of his long working hours dealing with regulators, legal issues and efforts to raise capital. He'd rather "be doing banking business," he says.
Last Tuesday, he and about half of his board of directors, all Bradenton area business people, traveled to Tallahassee to press their case in person to state regulators. "Give us enough time" is their mantra. Horizon will rise again.
The regulators listened to the Horizon group but, Conoley says, "I do not sense a lot of leeway from the state. They conveyed that they are getting a lot of pressure from our friends at the Federal Reserve." The Fed regulates publicly traded Horizon Bancorporation, the bank's parent company. Horizon's stock closed Friday at just 23 cents per share. It's traded as low as 5 cents.
Conoley is bitter over what he sees as a double standard. His community bank's capital levels and loan problems are no worse than those at giant Citibank, he says. But Citibank is not going to fail. When the U.S. Treasury unveiled its Wall Street bailout scheme with a plan to lend government money to banks, Citibank was among the big banks to get lots of new capital.
When Horizon applied for nearly $5 million from the feds, Conoley says the Treasury never responded. Later, the banker says, after prodding, the government finally told him to take back Horizon's application. That way, it would look better than the bank being denied funds. Conoley refused.
The banker can't help but feel there's some unspoken conspiracy against community banks. He believes the feds want to close up a bunch and hand them to bigger banks so that the number of financial institutions will shrink. There are about 8,000 FDIC-insured banks nationwide.
Two allies of Conoley are Florida Bankers Association chief Alex Sanchez in Tallahassee and lobbyist Karen Thomas, who heads government relations at the Independent Community Bankers of America trade group in Washington.
Federal policymakers may urge the banks to lend more in this economy, Sanchez says. But it is the bank examiners — the people who physically go into and assess the community banks — who do not give any breaks and insist banks set aside more capital to cover potential loan losses.
"The examiners have careers in those regulatory agencies," Sanchez says. They do not want to be criticized later as being too easy-going. "They come into these banks wearing white gloves looking for dust."
Thomas knows the drill, too. "We have heard from many seasoned bankers, some who have been in the business 30 or 40 years from all over the country," she says. "They say they have never seen such a harsh (bank) examination environment as now. It has a chilling effect on lending."
None of this cheers Conoley in his quest to save Horizon Bank.
If he pulls off this revival and Horizon sticks around, Conoley may be banking's miracle worker. But even if the FDIC stops by at closing time some Friday evening and hangs its "Bank Closed" signs on the doors, this banker will know he gave it his best shot.
Robert Trigaux can be reached at firstname.lastname@example.org.