Ken LaRoe, the veteran banker and lifelong environmentalist who plans to open Climate First Bank in St. Petersburg, says he can make money for the bank and its investors while also doing good in the world.
“Value is created by values,” LaRoe said. “I will make a bunch of people a bunch of money but we’re going to do a bunch of good in the process.”
LaRoe is in the process of raising up to $25 million for the new bank. Other organizers include Jared Meyers, a St. Petersburg real estate developer.
LaRoe spoke with the St. Pete Catalyst Thursday, a few days after announcing the launch of the new bank. Climate First will be a full-service bank with traditional banking products, enhanced by technology and with a special emphasis on non-governmental organizations and businesses committed to sustainability.
Climate First is the third bank LaRoe has founded. After selling his first, Florida Choice Bank, in 2006, he bought a mini-motor home and went on a road trip with his wife, Cindy. On that trip he read a book his brother gave him, Let My People Go Surfing, by Yvon Chouinard, the founder of Patagonia. It was an “aha moment,” he said.
Reading that book, he realized, “You can do something that makes a difference and make good money doing it,” he said. “During that trip and my soul-searching, I just felt I had to do something with the rest of my life that would give back and do more than just make a bunch of people a bunch of money.”
He googled “green banks” and contacted the CEOs of a couple of institutions. “That was my introduction into values-based banking, corporate social responsibility and ESG (environmental, social and corporate governance), which I was clueless about prior to that. I just knew I wanted to make a difference.”
The philosophy influenced the launch of his second bank, First Green Bank in Orlando, founded by LaRoe in 2009. While at the helm of First Green Bank, he served on the board of directors of the Global Alliance for Banking on Values. “That turned out to be a bucket list dream that I didn’t know I had,” he said.
LaRoe was chairman and controlled about 6.7 percent of First Green’s stock when it was sold to Seacoast Banking Corp. of Florida (Nasdaq: SBCF) in 2018 for about $115 million.
“After I sold First Green Bank, I went through a big bout of seller’s remorse,” LaRoe said. “I thought, I have to do it again … I probably decided 200 times to do it, to not do it, but I finally came to the conclusion I had to do it.”
St. Pete ethos
LaRoe has a non-compete that precludes him from working in banking in a 15-county area in central and part of south Florida.
He chose St. Petersburg for the bank’s headquarters because of the city’s “environmental ethos.”
“I know Mayor Kriseman well, and he strongly encouraged me to come there,” LaRoe said.
LaRoe doesn’t yet have a specific location for the new bank. He’d like to be downtown or near downtown, although the choices are limited and prices are high, he said.
A drive-thru feature also is key, made more so by Covid-19. While existing drive-thrus are permitted downtown, new ones are not.
The minimum capital for the new bank is $17 million, and LaRoe hopes to raise up to $25 million.
“Capital is important in every business but in banking it’s a game-changer. It’s required by regulation. You don’t grow if you don’t have capital,” LaRoe said.
LaRoe has assembled a group of organizers that includes Meyers, chairman of Salt Palm Development, a certified B-Corp, a type of for-profit business that balances purpose and profit.
Other organizers are Chris Castro, director of sustainability and resiliency for the city of Orlando; Dominic Mjartan, chairman of Columbia, South Carolina-based Optus Bank, a bank with a mission of closing the wealth gap created by systemic disparities in the financial industry; Nancy Wolf, a low-income housing tax credit specialist; and Michele Glorie, a woman’s activist who will be chief financial officer and chief operating officer of Climate First.
LaRoe said he gets angry when people question whether a bank that puts values first can also provide value to shareholders.
First Green Bank performed in the top 10 percent of Florida banks in terms of asset quality, and possibly the top 10 percent of banks nationally. The bank also had strong employee benefits, attracting more productive workers who provided better customer service, LaRoe said.
“We made a difference in the community,” he said.
But it’s hard to do, he said.
“You are basically running two businesses. You are running a for-profit and a non-profit at the same time,” he said. “But the shareholder primacy model, Milton Friedman’s ‘profit at all costs, the ends justify the means,’ is total horse-s**t at the end of the day because if you are destroying lives in your community, those are your customers. If you are abusing employees, those are somebody else’s customers. In the long-term those implications are massive, and those externalities are just now starting to be taken into consideration.”
LaRoe turned 63 on Thursday, and said people have questioned why he wants to start a new bank now. But he points out that Colonel Harland Sanders was 65 years old when he launched Kentucky Fried Chicken, and that was a lasting legacy.
“I’d sure like to build a legacy that is good for shareholders, good for the planet and good for the community,” LaRoe said.