Ken LaRoe, a Florida banker, is working to open Climate First Bank in St. Petersburg next year. The goal, he said, is to create a financial institution rooted in environmental principles. He previously led the similar First Green Bank in Central Florida before selling it.
The Tampa Bay Times spoke to LaRoe about his vision and why he chose St. Petersburg for the first branch. LaRoe will be Climate First’s chairman.
This interview has been edited for length and clarity.
What is Climate First Bank?
We will be a Florida state-chartered, FDIC-insured community bank. Community bank is a term of art, just connoting a smaller bank. The Climate First part of it is we will be a full-on, values-based financial institution. Our area or sphere of impact is the climate and environment. My last bank was First Green Bank, and I sold it in 2018 to Seacoast Bank, and all of the mission was lost. I just felt like, I couldn’t just let it die that way, I had to do something that might be a legacy that will actually help reduce atmospheric CO2 (carbon dioxide, a gas emitted by burning fuel that contributes to global warming), and essentially try to up the game of saving the planet.
How can a bank fight climate change?
When I first started hashing the whole concept of Climate First, I thought about: What can a bank do? I just happened to be concurrently reading the book Drawdown. It’s basically the definitive study of what can be done right now. There are initiatives that are technologically possible as well as affordable to draw down atmospheric CO2 , actually reduce atmospheric CO2 and stop the production of CO2 to the point where we can return the planet to atmospheric health. They listed 100 initiatives that can be done, so I thought, well, I’ll just go through there and figure out which of the initiatives can a community bank actually affect (and) came up with a handful. The categories are rooftop solar. At First Green Bank, we had developed a rooftop solar loan program for consumers for your house, residential stuff. Our plan is just to do that again but way, way better and way, way deeper, to where we’ve got a much more automated approval process, completely online application process, all that stuff so we can do a larger volume over a large geographic area. Another area is just renewables (renewable energy) generally at scale. Utility level solar and wind — a community bank, a small community bank, especially a startup can’t do that stuff because it’s too big. The loans would be too big. But we can sure be involved and lead syndications that can do it. Another one is regenerative agriculture. The community banks haven’t really been involved in agriculture in a long time since all the government programs have taken over. The (United States Department of Agriculture) is geared toward the giant, square-state, industrial farmers, but a community bank can really learn the organic space, the small family farm space. Then the last one, which is a combination of a bunch of different initiatives, is basically building retrofits. It can include everything from smart glass to HVAC, to solar, to installation windows, all of that. We did, again, some of that at First Green, but we want to take it to the next level. Plus it’s actionable and measurable, which is probably the most important thing, because I intend to fully report that to all our stakeholders.
What needs to happen financially before you’re able to open, and what are your goals?
My goal really, is to raise $25 million. We can get open with $17 million, but we won’t be able to execute our plan as quickly. The plan from the investor thesis is to grow the bank to the maximum we can in the first three years, and that’ll put us at about $170 million in assets, with the goal of being about $600 million by the end of the fifth year. That’s with an acquisition. We’re going to target purchasing a bank in the $200 million range sometime in the fourth or fifth year. We’ll have to do another capital raise to have the capital to do that. But that’s the plan, and then start paying dividends. Then we want to take the bank public.
Who is your clientele?
From that perspective, we’ll be a regular community bank, and we’ll take care of small businesses and professionals and any consumer that walks through the door. We will basically have an exclusionary policy that we won’t loan to certain businesses or we won’t do business with certain businesses, like anything that’s extractive: water bottling, fracking, mining. We won’t do porn. We’ll have a pretty exhaustive list of business types and industries we won’t do business with. But we’ll finance an office, a new office construction for a dentist, even if that dentist doesn’t want to do a LEED-certified building. If he or she wants to do a LEED-certified building, we’ll do it and we’ll give a rate discount. At First Green, we found that about 15 percent of our customers were there strictly because of our values proposition, but it really wasn’t much more than that. Of course, I think we’re in a different era now, and there’s different demographics we’re dealing with. The millennials, for one, are now of the age where they’re hitting their stride in their career. They’re amassing wealth. They’re high income. They vote with their pocketbook.
Why did you choose St. Petersburg?
The reason we chose St. Pete was because it’s outside of my non-compete area. My non-compete ends in October of 2021. There’s a 15 county area that is basically Central Florida. We looked at a number of different areas, and St. Pete just kept popping up. Not the least of which is I know Mayor (Rick) Kriseman fairly well, and he was highly encouraging of me to come there. The ethos of St. Pete just fits with us. It’s very progressive, climate-centric progressive. Plus, it’s a great market, just from a business perspective. Our objective has always been to bookend the (Interstate 4) corridor. If we can do that with Orlando, maybe Daytona, DeLand, and then all the way across to Tampa-St. Pete.
What happened with First Green? Was it a matter of investors wanting to sell?
Yes, unfortunately. We’d been in it almost 10 years. I couldn’t go into Publix without three people accosting me and saying, ‘Hey, when are you going to sell this bank? I’m tired of having my money tied up.’ Because all my friends and family and customers were all invested. So it just kind of got to the point where we we’ve got to do this.
Are you trying to avoid that this time?
I’d like for this one to be built to last for all the right reasons. I firmly believe in providing investor returns, and I’m one of the largest shareholders. The thesis for this bank is to get it to that point where we can be large enough to be attractive to go public. That’ll provide liquidity for the shareholders and then pay dividends, which will provide cash flow. That’s the thesis.
How do you meet this mission in your own life?
I vote. I guess I’m a multi-issue voter, but it’s really single-issue, and that’s the environment because nothing else matters. It’s pretty easy to show where my politics lean or lie. My house is powered by solar, I’ve got a place in the mountains of North Carolina that’s net-zero energy and net-zero water. All of my buildings in the bank are the deepest energy sustainability as we can be. I drive a Prius, and I’m a car guy so that’s really painful to have to drive a Prius. To me it’s the ultimate appliance but nothing else. We’re vegans. We not only believe that’s best for the planet, but it’s best for the human organism that we are.