“It was a great day,” Keith Costello says of the January day when Locality Bank received its bank charter from the Florida Office of Financial Regulation. “We also had the FDIC involved to provide our insurance certificate,” adds Costello, the bank’s cofounder and CEO. “You hear people complain about regulatory agencies, but, I’ll tell you, they were great to work with, and we got the charter and insurance in 8½ months, which, in the scheme of things, is not a lot of time to start a bank.”
It’s safe to say that Costello saw an opening in the market and grabbed it. Locality Bank is “the first community bank to open in more than 10 years in South Florida with the capital to lend,” he says, noting that Broward County once had 11 community banks—now, it has two. Locality Bank’s starting capital hit $35 million, far more than the cofounders expected.
Costello didn’t do it alone. He is quick to praise the contributions of his cofounders, Drew Saito, chief lending officer; and Corey LeBlanc, chief operating officer and chief technology officer. Saito, who holds degrees from Florida State (bachelor of science) and Nova Southeastern (MBA), served as senior vice president at Pacific National Bank. LeBlanc, who earned his bachelor’s and master’s degrees from Trident University International, was the chief digital and innovation officer and senior vice president at Origin Bank. Before this ambitious endeavor, Costello, who was educated at the University of Tampa (bachelor of science) and University of Miami (MBA), was the president and CEO of First Green Bank.
For the soft launch in January, Locality began servicing friends and family, employees, board members and shareholders. Now the bank is opening up to the general public. So why the beta test? That’s because Locality is a digital-first bank, intended primarily for users of the app and website. “Since we are using a lot of technology,” Saito says, “we wanted to make sure that the customer experience was very good—and the rollout was smooth.”
A brick-and-mortar space is slated to open on Andrews Avenue in Fort Lauderdale over the summer. “We’re a digital-first community bank, but we still realize that people want to come and see us,” Costello says. Currently, the bank’s founders are set up in the General Provision coworking space in Fort Lauderdale. “It’s filled with entrepreneurs and startup companies, so we feel right at home,” he adds.
The Pandemic Impact
Costello says the need for community banks became abundantly clear during the COVID-19 pandemic, when the federal government’s PPP program, though flush with cash, was clunky in execution, especially when it came to national banks and their arduous processes and approvals. “Larger banks are not really equipped to handle smaller and medium-sized companies, which is most of what our businesses are, when you come right down to it,” Costello says. “Most businesses are locally owned and operated companies. You talk to people about starting a bank, and they say, ‘We don’t need any more banks.’ So, I ask them how PPP went for them, and they say, ‘Oh, it was horrible.’ During times of crisis people recognize the need for that local bank relationship.”
Costello also says that when clients have a relationship with a community bank, they are speaking to the top—or close to it. Instead of a middle manager of a branch of a national bank with its headquarters in another state, “you’re dealing with the CEO or the chief lending officer or the executives of the bank. Now it might not be a $1 trillion organization, but if you need to borrow $5 million or $10 million, or even $1 million, a community bank is probably your best bet. Those are smaller amounts of money that people need when they’re running a local company. There aren’t a lot of banks that are eager to do those smaller loans. But that is our business model. There’s a big market for that kind of customer who wants to work with a local bank. The local decisionmakers are here, the board of directors is here, and your investor group—all these people are living here right in this community.”
Costello says that Locality’s typical business client earns $40 million or less in annual revenue. “That’s what we really cater to,” he says. “We also draw younger clientele who are more accustomed to banking online and on apps.” And Locality reflects its name from end to end, Costello says: “All the money that people deposit in our bank is going to businesses in Miami-Dade, Broward and Palm Beach counties. It’s not going to Charlotte, N.C., or Las Vegas or Pittsburgh. It’s staying right here.”
Building the Team
Costello says LeBlanc is a rock star. “He was really the missing link for me—I recruited him from Louisiana,” says Costello, who connected with the noncorporate-looking, heavily inked LeBlanc on LinkedIn after talking to “about 1,000 other people” about bank technology and financial technology.
“He had worked for an $8 billion publicly traded bank for 14 years,” Costello continues. “I started talking to him about my idea to do a startup, and he was like, ‘I’m in.’ It was so attractive to Corey to start something from scratch. We needed someone who understood digital banking technology. [In previous roles], he was always trying to implement change, fighting those battles, and we gave him a clean slate.” Costello says that Locality isn’t burdened by the antiquated technology that a lot of banks are saddled with right now: “The technology will be a differentiator for us.”
Saito brings his own bona fides. “Having a guy who was born and raised here, he knows a ton of people,” Costello says. “He has a great reputation in Fort Lauderdale and South Florida—20 years of experience in financial services and banking. For us, he’s the main rainmaker of the bank.”
Saito has been involved in community banking in Florida for most of his career, but Locality represents his first startup experience. “Starting any company is challenging,” he says, “but there are so many moving parts to a bank.” What has carried Locality through to its opening and beyond, he says, is the expertise and advanced skills sets of everyone in every role. He credits Costello as “a leader who is constantly learning.”
And focused on growing. “We’ll make around $70 million loans to local companies,” Costello predicts. “In a year, we’ll probably be around a $100 million bank.”