Observing the gap in pandemic relief in south Florida due to a lack of local community banks, a trio of banking veterans teamed up to form a digital-first community bank—and were granted a charter in record time to support local businesses.
By Katie Kuehner-Hebert
Fort Lauderdale, Fla.
Locality Bank, a digital-first community bank serving south Florida that opened in January, is run by industry veterans with such successful track records that regulators signed off on their application for a charter in less than a year. That’s no small feat for any de novo, especially during a pandemic.
While the $55 million-asset community bank has one brick-and-mortar branch in Fort Lauderdale, Locality Bank will serve customers primarily through its online and mobile applications. In partnership with Nymbus, the bank’s custom digital platform is built on a secure cloud-native core banking system with an open API architecture. The aim is to “empower local businesses to maximize their potential through a digital-first experience that is simple, empowering and personal,” according to the bank’s website.
What also sets Locality Bank apart from existing financial institutions in its market is that its board and management have a “first principles mindset, one where we set out to create the bank from the start to serve the needs of the local business community,” says Keith Costello, president, CEO and one of Locality Bank’s cofounders.
“We saw a problem with PPP when local companies were unable to be served properly. After looking at the consolidation in our market, we concluded that the lack of community banks was the reason.”
—Keith Costello, Locality Bank
“We are questioning everything and not just accepting ‘the way we did it before,’” Costello says. “While many banks are utilizing technology and trying to be innovative, they are doing so on an existing legacy structure that is too expensive, painful and ingrained in their culture to change.”
Serving Miami-Dade, Broward and Palm Beach counties, Locality Bank is focusing on serving small businesses and others in the restaurant and hospitality sectors. Featured offerings include commercial banking, commercial real estate lending for both owner-occupied and investment, SBA lending, and deposit and business treasury services.
Filling a need
Costello and Locality Bank’s other two cofounders, Corey LeBlanc and Drew Saito, seized an opportunity to serve small businesses in south Florida after witnessing what was happening to many who took out loans during the federal government’s Paycheck Protection Program during the pandemic.
“We saw a problem with PPP when local companies were unable to be served properly,” Costello says. “After looking at the consolidation in our market, we concluded that the lack of community banks was the reason. Most successful companies solve a problem, and that was what motivated our focus on local companies.”
Built on a solid foundation
Regulators were so impressed with the founders’ track records and their vision for the institution that Locality Bank, south Florida’s first new community bank to open in more than a decade, received its bank charter mere months after applying for it.
Costello previously served as president and CEO of $798 million-asset First GREEN Bank, a community bank headquartered in Orlando, Fla., from 2016 until its sale in 2018. Prior to that, he was president, CEO and an organizing director of $200 million-asset Broward Bank of Commerce, based in Fort Lauderdale. Costello has also held senior roles at Bank of Florida, City National Bank and Nations Bank during his 30-year banking career.
LeBlanc, Locality Bank’s co-founder, chief operating officer and chief technology officer, previously served 14 years as CTO and chief digital and innovation officer at $8 billion-asset Origin Bank in Choudrant, La. His career has focused on aligning technology and banking services.
Saito, another cofounder who is chief lender for Locality Bank, has two decades of banking and financial services experience in south Florida. He began his career in the securities business and specializes in commercial banking, real estate lending and treasury.
The road to a charter
In March 2021, Costello and LeBlanc filed an application with regulators for a new bank charter, with Saito joining the two as a cofounder in October. The next month, Locality Bank received final approval for a state charter and FDIC-secured deposit insurance. In December, the founders completed a capital raise, netting a total of $38 million after increasing the maximum amount from $23 million in subscriptions for stock.
Obtaining regulatory approval was successful because they had prior experience with the process and regulators knew them, Costello says.
“The process is not easy, but we were able to work effectively with both the FDIC and our Florida Office of Financial Regulation to get through the process in about eight months,” he says.
For others planning to launch a de novo, Costello emphasizes that one of the most important tasks is to secure the backing and support—both in concept and with capital—of business leaders in their community.
“If they don’t believe you will be successful, they will not invest,” he says. “One of the keys to success for our group was the early support of these local business leaders.”
Katie Kuehner-Hebert is a writer in California.