Boutique Bank Boss

Andy Stein is a successful Panama City banker who raised millions to open his own bank even as many others in the region were failing.

Boutique Bank Boss One bank CEO turns a profit while other banks fail By Wendy O. Dixon

Since 2008, the list of failed banks has grown to a bleak roster. Massive losses forced financial institutions all over the country to shut down, being bought out by bigger banks or taken over by the Federal Deposit Insurance Corp. (FDIC). In 2008, there were 25 failed banks. That number leaped to 140 in 2009 and 157 in 2010, and then dropped to 92 in 2011.

While hundreds of banks across the U.S. continued to suffer, Panama City banker Andy Stein, 57, raised millions, opening his own bank — one that provides a hefty array of basic business and personal services to a small, affluent client base.

Summit Bank, locally owned and run by a board of directors composed of members who are mostly Bay County-based, is a hybrid of private banking and traditional banking created specifically for the area. You could call it a community bank, or a boutique bank, which is usually defined as a relatively small bank that typically offers services in smaller corporate finance. But according to Stein, it’s all about customer service. Summit offers concierge-style service specifically designed for customers who want a personal relationship with their banker, who readily handles financial emergencies at any hour.

Stein shares a recent example: “When customers travel, there are certain security features that are built into Visa and MasterCard networks,” he explains. “We had a customer in Paris who had a security issue because the credit card company shut it down. I got a text at 5:30 in the morning from the customer, who was trying to pay for dinner. Now 5:30 a.m. is not the ideal time I’d like to be working on it, but the customer needed it. We were able to go online from my house and fix it.”

Summit began operations in April 2008 in Panama City with $24 million in assets and has since grown to $140 million. It opened a Pensacola branch in 2009. And in December of 2011, Summit agreed to assume the assets and deposits of Crestview-based Premier Community Bank of the Emerald Coast, which had approximately $126 million in total assets and $112.1 million in total deposits. They also agreed to share a $98 million loss with the FDIC.  
Stein thinks the current environment is perfect for a bank like Summit. “One with a lot of capital to look for expansion through business combination,” he says. “We’ve got to make sure we don’t expose our shareholders to undue risk or any undue problems that the target might possess. Most of the banks that are for sale have problems, so we want to make sure that if we absorb anyone else’s problems, we’re properly compensated for it.”

Stein grew up in Tennessee, attended the University of Florida, majoring in finance, and has lived in Florida most of the time since. He earned his MBA from Florida Atlantic University, as well as the equivalent of a second bachelor’s degree from there. “I say I earned it,” he says with a smile, “but I just never went and got the piece of paper.”

It was while he was dating his wife, Barbara, that he was lured into the banking business during the 1970s. Stein’s then future father-in-law introduced him to some bankers, and thus began his life-long career.

He and his family moved to Panama City in 1986, when he became chief financial officer of a bank that later became Florida First Bank. He was promoted to CEO, and the bank was sold to Regions Bank in 1997.

Stein stayed with Regions Bank for 10 years, eventually rising to regional president for general banking for Alabama and the Florida Panhandle. Later, Regions Bank and Am South Bank merged. “And the management shift took hold,” Stein says. “I retained my position through the merger but the culture of the company changed, and I realized I could be more effective and happier in the market I consider home, which is Panama City.” Finally, he honed in on his entrepreneurial skills and started Summit Bank.

So how has Summit Bank succeeded at a time when hundreds of banks suffer distress? “Several things make us different,” Stein says, referring first to the level of service. “The way we are able to have the resources and understand our clients’ needs.” The bank doesn’t do a lot of advertising and doesn’t solicit business from the general market. “We don’t exclude anyone,” he adds. “But our marketing is more one-on-one, and we target people we want to serve. We are looking for entrepreneurs who are successful.

“We’re in a market where wealth is derived from entrepreneurship. By not looking and acting like a traditional bank, we ensure we can provide the high-end service and consultation the customer needs.”

Stein also carefully selects employees who have a diverse and extensive skill set in banking, and he compensates them accordingly. “We pay more, but we get more,” he says. “Every one of our bankers can handle 100 percent of your needs. You don’t need to go to one person for your deposit needs and another person for a capital loan and another for commercial real estate.”

And all of Stein’s customers have his personal cell phone number. “Or they can send me an email,” he says. “The same with any of our bankers.”
Though the clientele is mainly entrepreneurs, anyone who walks in the door is welcome, Stein says. “We have around 400 clients with around $230,000 of assets under management,” he says. “Whereas the average bank client has $12,000–$15,000. We’re not excluding anyone, we invite anyone to bank with us, but in order to assure we’ve got those resources to deliver on the promise we make to our clientele, our profit model is largely driven through efficiency, with $140 million in assets and 18 employees. There are banks that are smaller than us that have 20, 30 or 40 employees. By having greater assets per customer or client we need fewer employees.”

For anyone who contemplates opening his or her own bank, Stein has some advice. “Surround yourself with the absolute best people you can find,” he says. “And think long and hard about what you can do. We’ve enjoyed great success, but it’s an incredibly difficult time for banks today.”

Stein and his crew had the foresight to sidestep the challenges most other banks faced recently, but he admits he thought the economic environment would have improved by now. “When we started the formation process in July 2007, I would have thought we’d be at $300 million by today, and we’re at $140 million,” he says. “But we were fortunate to open very quickly by raising $24 million in the local market and have around 100 shareholders, most from Bay County.”

Summit Bank is one of only two banks in the Panhandle to receive a 5-Star Rating by BauerFinancial Inc., the nation’s leading independent bank and credit union rating and research firm. To earn this rating, a bank must not only report impressive capital levels, but also an enviable loan portfolio with negligible levels of delinquent loans.

Stein’s goal is to ultimately reach a size where the bank can efficiently create a public market for its stock. “Where our shareholders can have liquidity and the market will place appropriate multiple earnings on the stock,” he explains. “That’s not a practical expectation today, because we’re not large enough and the markets just aren’t receptive to it. But we’re patient. We’re the best capitalized bank in the Panhandle.”

Outside banking, Stein is heavily involved in two community sectors. “Education and healthcare are the most important things that define a community,” says Stein, a board member on both the Bay Medical Foundation and the Gulf Coast State College Foundation. “Work in the community is vital to its success, so that’s what I’m focused on.”

When he’s not at the office, Stein enjoys a round of golf. And spending time with family takes up much of his downtime. “I like to golf, but I’m not very good at it,” he laughs. But with three grown children, getting everyone together is a rare opportunity. “So it’s a great time when we all get together,” he says.

In turbulent times for banks, Stein attributes Summit Bank’s success to his team. But he also suggests the bank’s success is the result of a little luck. “We opened in April 2008, and by late 2008 we understood where the market was and it was easy to sidestep a lot of the issues that cause problems for other banks,” he says. “In 10 years, we can look back and call it genius, but now we call it luck.”