South Florida Bank

Within five years, William Valenti miraculously turned a $3 million deficit into an expected $1.3 million profit for 1997 at South Florida Bank, Lee County's only independent bank.

To understand just how rare a locally owned and operated bank is-let alone a profitable one-the following mergers in Southwest Florida alone.

Over the years, Heritage Bank was acquired by Southtrust Bank; First National Bank of Florida was acquired by Colonial Bank Group of Alabama; Lee County Bank was acquired by First Florida Bank and then by Barnett Bank; NationsBank bought Citizens & Southern Bank (C&S), which had bought Landmark Bank. This is but a mere glimpse into the merger mania so prevalent in the 1980s.

Taking off Like a Rocket

In 1988, Jerry Hussey and Don Lazenby formed South Florida Bank. The bank enjoyed tremendous success and opened two additional branches in as many years. However, by 1991 severe repercussions of bad loans resulted in a loss of $3 million. Bill Valenti was hired in February 1992 to turn the bank around.

The minute you step into its main branch on McGregor Boulevard in Fort Myers, you know this bank's different. Located in the historic Towles house (the oldest residence in Lee County, which was built in 1885 for $2,300), the local landmark served for many years as the Englehardt Funeral Home. Indeed, still intact is the old elevator that was used to lower coffins to ground level.

The charm of the classic Old Florida design endures. Spacious porches with white wicker rockers offer customers a gracious welcome. Which is somehow fitting for a bank that exudes old-fashioned neighborliness. And that's just the way Valenti wants it.

It is also fitting that this native of Staten Island, New York, a close-knit immigrant community, is at the helm of South Florida Bank. In a neighborhood where many residents were related and houses stood at practically a foot apart, running a "hometown" bank seems second nature for Valenti.

Rising Through the Ranks

Valenti graduated St. Francis College in Brooklyn with a history degree. Armed with a liberal arts background, he worked part-time at the Irving Trust Co. (now part of Bank of New York). "When I returned from the service in 1969 and worked in the bank, that's when I realized I needed to go to grad school." He received his MBA in finance from Long Island University in 1974 while working at Empire Bank, headquartered near Newburgh, New York. The 125-mile commute to the city for graduate school was accomplished-with much trepidation-n a Fiat Spyder.

Within 10 years, Valenti rose through the ranks to become president of Flagship Bank of Titusville, Florida in 1979. SunBank acquired Flagship in 1984.

The path that led Valenti to the FDIC was a prophetic one. He was regional president of American Pioneer Bank in Stuart, which was taken over by the RTC in 1990. He remained an employee of American Pioneer for a year until he accepted a job with the FDIC.

Banks in distress were Valenti's calling card in the days when he was managing agent for the FDIC's Resolution Trust Corporation. "When we took over a bank, my job was to go in and run the bank until we sold it."

The Road Ahead

When Valenti arrived in Fort Myers in February 1992, he faced a daunting task as he and the board of directors ruminated over a $3 million loss. Under his guidance, that loss shrank to $2.5 million in 1992. By 1993 the bank reported a loss of only $650,000; 1994 showed a marginal profit and the next year made $625,000. Valenti expects to end 1997 with a 30 percent increase from 1996's incredible $1 million profit.

How do you increase the bottom line by $4 million in five years? "We did a number of things," says Valenti. "One positive thing was that we had a loyal customer base. Our local customers stayed loyal to us, and that was very instrumental in our success.

"What I tried to do was to focus on what was good here and make it even better." The bank went on a campaign. "We did not want to give our customers 'good service,' because everyone was trying to give good service; we wanted to give extraordinary service. So we tried to focus on that. That also helped to hold our staff together," says Valenti. Not surprisingly, substantial changes were made in management and in the lending staff. Most other employees remained.

Even with personal service, these sagging numbers couldn't be ignored. "We spent countless hours examining each individual problem rather than taking a wholesale approach," Valenti says. Focusing on every loan individually, "we tried to find good in the loan, if there was good to be had. If there was no good, we took a very aggressive posture toward getting back our collateral."

The bank also held a stock offering. "Our directors and a number of other people had sufficient faith in the future of the bank that they invested additional money when we were losing money, and that took a great deal of courage."

This move allowed the bank to maintain its leverage ratio, that is the relationship of assets to equity. Although the bank was never considered insolvent, regulators issued a Memorandum of Understanding that put requirements on the bank to remedy the problems. Valenti explains, "The regulators maintain certain ratios, and once you drop below those ratios, you get in pretty serious trouble."

In continuing to keep an eye on assets, the board scrutinized deposits and found that a number of large deposits were domiciled outside of Lee County. "These were people who made a deposit here because the rates were high or because the bank actively sought the deposit, for example, from the credit unions. So we stopped taking those, and we focused on Lee County business, Lee County customers," says Valenti.

So committed was this board that they were forgoing their board fees and meeting on an average of six to eight hours per week.

When a business is in trouble, it can be difficult to focus on and understand the real problems. Valenti was able to sort out the different threads that made up the fabric of the bank. "When things were the darkest, we focused on delivering good service, and we focused on what tomorrow would be like. And I think that made a difference."

Back on Top -- Again

Valenti is totally immersed in the community, involving himself with several organizations. "By being active, it certainly allows me to network and meet new people, but at the same time it allows our bank to be a part of the growing community and to know what is going on. Had we focused only on our problems, I believe we would not have survived."

But survived they have. And thrived. The bank has just implemented ATMs, and all branches have drive-through windows. Plans are in the works to build a new facility to replace the Colonial Boulevard branch and also to build a larger building on Metro Parkway.

Virtually every figure in their annual report is an increase over last yea