Bay Financial Savings Bank shelves
teller counters

Tampa Bay Business Journal - by Margie Manning Senior staff writer

Friday, October 5, 2007

TAMPA -- The new owner of Bay Financial Savings Bank has undertaken an "Extreme (Bank) Makeover."

Community Bank Investors of America LP, a private equity fund that bought Bay Financial earlier this year, plans to convert the federal savings bank to a commercial bank, change its name and add its first-ever branches.

The branches will look drastically different from virtually every other bank in the Tampa Bay area. Teller counters will be eliminated in favor of cutting-edge technology designed to boost sales of bank products.

"Equity funds know that to be successful, sometimes you have to be different," said Thomas Rummel Jr., president. "They've allowed us the ability to be different here."

The bank will spend $2 million over five years for a new core processing system to handle loan delivery, credit and terminal operations. Rummel declined to say how much the bank would spend on the three branches planned.

Bay Financial is one of the smallest financial institutions in the area with $61.6 million in assets on June 30, down from $185 million in the late 1990s. The bank posted a slim $5,000 net income for the quarter ended June 30, although its year-to-date loss for the first half of 2007 was $59,000, according to the most recent information available from the Federal Deposit Insurance Corp.

Under its new ownership, the bank is performing better, Rummel said. It is growing assets and has a year-to-date profit as of the end of the third quarter, Sept. 30, he said.

'Where the profit is'

Richmond, Va.-based Community Bank Investors purchased Bay Financial April 18 in a cash deal. The private equity group did not disclose the purchase price, but the trade journal American Banker said it was $15 million.

Community Bank Investors recruited Rummel, a 23-year veteran of the banking industry, from Fifth Third Bank, where he was VP and commercial real estate manager for the Tampa Bay area. He also has worked at the former Barnett Bank, SunTrust and GE Capital.

On Oct. 1, the Office of Thrift Supervision agreed to allow the conversion from a savings bank to a commercial bank, a move that still requires approval by other federal and state regulators.

The conversion will free Bay Financial from "antiquated guidelines," including a requirement that at least 80 percent of a thrift's assets have to be mortgages, said Tim Anonick, vice chairman of Bay Financial and a managing partner of Community Bank Investors. "What it will allow us to do is start doing more volume of commercial lending, which is where we believe the profit is," Anonick said.
The new design will bring in more retail deposits that will fund additional commercial loans, Rummel said.

It plans to move its only branch, located in the corner of a small strip shopping center at Hillsborough Avenue and Sheldon Road, to a more visible site in the shopping center in June 2008 and add a drive-through. The existing site will be retained and remodeled, but no longer will be a branch.
Planned branches, opening in October and November of next year, will be on Gandy Boulevard and in the Carrollwood area.

Sales culture

The new branches will have an open floor plan and be staffed by employees trained to handle all lines of business.

For cash transactions, employees on the floor will send money through a pneumatic tube to tellers in a back office area. In the minute or so it takes to handle the transaction, the floor employees can talk to customers about their other financial needs.

"It resolves the argument on whether this is a sales culture. It is," Rummel said. "It puts the customer in contact with the people best able to sell."

The branches were designed by K4 Architecture LLC in Tampa. Designer and architect of record Richard Emerson said he created pods where interaction between the customers and bankers could take place.

"It's a celebration of the event of banking," Emerson said. It also requires hiring a non-traditional banker, Rummel said. He's looking for recent college graduates with business or finance degrees and retail experience. They'll be paid more than the standard customer service representatives, but much of their pay will be in the form of incentive compensation for selling more products.
About six or seven employees will staff each Bay Financial branch. The branches, at just under 1,800 square feet, are about half the size of a traditional bank branch, which typically costs about $4 million to build, said Steve Millard, principal of K4.

Remote tellers also reduce crime and hold-ups, said Ann Roberts, senior VP and CFO at Raymond James Bank, which has had remote tellers in place since 1998.Three video monitors in the lobby are connected to pneumatic tubes and telephones, so customers can access the tellers in a separate location, she said. "It's very secure," she said. "The police love it because there's no direct access to the tellers."

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