ABOVE: The founders of Paradise Bank were (l-r) Bill Burke, founding president, vice chairman and chief operating officer; David Englert, founding chief business development officer and executive vice president; Ward Kellogg, founding chairman and CEO; and Dennis Gavin, founding chief credit officer and executive vice president. Here they are together for the bank’s 20th birthday party. Photo provided BELOW: The new home office of Paradise Bank opened Aug. 25 at 3800 N. Federal Highway in Boca Raton. Jerry Lower/The Coastal Star
By Jeffrey Cassady
The founders of Paradise Bank started the Boca Raton company two decades ago with the intention of keeping it locally owned and community focused. Though much has changed in the industry since, they say their goals for the bank remain the same: stay local, small and flexible.
“We started with the idea that we would stay independent long term,” said Ward Kellogg, the bank’s CEO and co-founder. “Fast, flexible, personal service is probably what puts us ahead of the large banks.”
That seems to be the case when it comes to helping local businesses. Paradise approves more than $30 million in U.S. Small Business Administration loans per year, said Kevin Rafferty, who runs the bank’s SBA lending division. The bank, which has approved more than half a billion dollars in SBA loans since 2010, is one of the largest SBA lenders in Florida by number of loans and dollar value, he added.
Paradise is the last community bank based in Boca Raton and one of the few remaining in Palm Beach County. It celebrated its 20th anniversary earlier this summer, and, recently, it moved its headquarters to a new 24,000-square-foot building at 3800 N. Federal Highway. It also maintains branches in Delray Beach and Fort Lauderdale.
Spacious new digs notwithstanding, bank leadership views staying small as key to its profitability.
“We’re not looking to buy another bank,” Kellogg said. “We’re not looking to expand to another market. We’re not looking to grow to a billion dollars, ever.
“We’ve proven you can be very profitable and very efficient without needing to be so big.”
A bank of their own
Business partners Kellogg, Bill Burke, David Englert and Dennis Gavin founded Paradise Bank with its board of directors in 2005. In the 1990s, the founders worked together at 1st United Bank and Admiralty Bank, local banks that were eventually sold to larger financial institutions. Kellogg and Burke have known each other longer than that, having met when they were students at Florida International University.
The founders struck out on their own with Paradise Bank because they wanted a bank they could keep — and keep local — for the long term.
“Florida has always been, for banking, ‘build it up and sell it,’” Kellogg said. “We didn’t want to do that. We wanted a long-term opportunity for our careers and beyond — to be able to keep the bank.”
Kellogg said the bank’s local ownership and workforce help differentiate it from larger institutions. When customers have an issue, local bank employees are available to assist.
“Business owners prefer community banks because they get their loan decisions faster and easier — more flexibility,” Kellogg said. “On the deposit side, it’s personal service and fraud detection.”
Paradise Bank started with about 30 employees working out of a double-wide trailer while the bank’s original head office was being built, Kellogg said.
Today, the bank has about 50 employees, Englert said.
The bank raised about $25 million to start operating — selling stock for $10 per share, with earnings being paid out in dividends, Burke said.
“Our original investors have gotten their money back twice, and they still own the asset,” he said.
Kellogg said the bank has fewer than a hundred shareholders. Almost all own homes in Florida, with most of them in Palm Beach County, he said.
“Nobody owns more than 6%,” Kellogg said. “So, we don’t have one large shareholder.”
Weathering a storm
Paradise survived the Great Recession of 2008 that drove many small banks out of business or led to their being acquired by larger institutions.
Kellogg said the recession presented challenges to the founders’ relatively young bank, prompting them to engage in an additional round of fundraising — about $19 million worth — over the next few years.
“Those were bad times,” Kellogg said. “They cast doubt as to whether we would achieve our goals for the bank, but we ultimately did.”
The bank then began devoting additional resources to small businesses, especially through the SBA loan programs. Paradise Bank participates in the SBA’s Preferred Lender Program, which grants the bank discretion in loan approval and streamlines the application process for businesses seeking federally backed SBA loans.
Running a small community bank keeps the owners close to their business customers, Burke said. “Our early customers’ kids have taken over, and sometimes their grandkids have gotten involved,” he said. “It’s generational now.
“But what’s really interesting about banking is that we have to learn about those businesses we’re lending to in all those different industries,” he added. “That’s interesting stuff.”
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