First Citrus Expanding Across The Bay

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Sunrise Analysis


  • The expansion marks First Citrus’ first new branch in 10 years.
  • The bank is on track to reach $500 million assets in 18-24 months.
  • This expansion should help promote long term growth.

First Citrus (OTCQB:FCIT) is looking to open its first office in 10 years, and its first office outside of Hillsborough County. They are looking to open this new office in Pinellas County, in St. Petersburg. The bank plans to open a loan production office within the third or fourth quarter of this year, and transition to a more permanent location in 2020.

First Citrus 20th Twentieth anniversary

Potential for Further Growth

First Citrus has shown extraordinary growth in its earnings over the past couple years within its existing five branches, with expansion into neighboring St. Petersburg, the company is looking to increase its presence in the Tampa Bay area. This expansion should help increase the bank’s loan capacity and diversify across a slightly large geographic area. The bank is currently poised to reach half a billion in assets in the next 18 to 24 months, so a new source of both deposits and loans is a welcome development for long term growth. First Citrus’ CEO expects continued double digit growth, though also expects this growth to slow some as the bank gets larger.

First Citrus’ CEO Jack Barrett said, “We’ve wanted to be in Pinellas for many years. It’s a deposit-rich market and has about 30 percent fewer banks, so there’s definitely a need,” referring to the bank’s decision to open a new branch in St. Petersburg. This goes along with a larger consolidation going on within the banking industry, which has decreased the number of community banks, which can be stifling for local economies whose small businesses often rely on them. First Citrus, moving across the bay, hopes to fill this need by providing loans in the area. According to the St. Pete Catalyst, there are two banks based in the city as well as two Tampa-based institutions with branches there, yet the city is dominated by national and regional banks leaving room for First Citrus to gain market share.

Technical Information

The bank has hired Leslie Bridges as a new senior vice president to help expand the bank’s brand in Pinellas. She has a previous twelve years’ experience as a vice president at other banks in the Tampa-St. Petersburg area.

It is not completely clear what the cost of opening this new branch will be, but First Citrus seems to have more than enough cash on hand to pay for it, with over $74.35 million in cash and balances due from depository institutions on their balance sheet and overall assets exceeding liabilities by $37.5 million. It is possible that the bank will finance the new branch through another mode, such as a debt issue or borrowing from another bank, but given their strong balance sheet, I find this prospect unlikely. It is also possible that the cost of this new branch prevents another dividend payment in 2020, or a stagnation in dividend growth. This too is an unlikely, but possible, outcome given the company’s low payout ratio of 11.26% based on the figures from the trailing twelve months. The total amount of the $0.25 dividend comes out to approximately $475,000, a small amount compared to the company’s net income of $4.34 million.

The bank plans to open a loan production office within the third or fourth quarter of this year, and transition to a more permanent location in 2020. It may take a few years for the new location to start significantly contributing to earnings, but we should see new loans originating in St. Petersburg by FY 2020. The new branch may be smaller than existing offices, since the bank’s CEO sees an increasing use of online and mobile banking decreasing the need for as much space in brick and mortar locations.


There are risks associated with opening a new branch in St. Pete, including the challenge of gaining a foothold for the bank in the market. The bank’s CEO seems to think this is a good move, however, having said that Pinellas county has 30% less banks than Hillsborough and the bank has hired a veteran banker from the local area with lots of experience to handle the expansion. As mentioned above, the financial cost of developing a new branch could weigh on earnings and possibly lead to a dividend cut. The CEO recognized that the Tampa bay area is a very real estate driven economy, which can lead to a significant impact in the case of a recession or housing bubble, though at present he doesn’t see downturn on the horizon, though the appreciation in the market isn’t predictable and may slow down over the next six years.


First Citrus has achieved significant growth over the past decade while remaining a safe institution to invest in. This new branch marks their twentieth anniversary with the bank closing on half a billion in assets. The new branch will take a few quarters to become fully set up but should provide a new source of loans for the bank and once a more permanent location is set up, more general income from other services and a source of deposits. I believe this is a good move for the bank as their existing branches reached such a high capacity and this expansion can pave the way for more future expansion in the area.

This article was written by

Sunrise Analysis profile picture
I'm an individual investor. I generally invest for the long term and look for companies at an attractive price that have the ability to grow naturally and who stand to benefit from large trends in the economy. I try to provide insight into how new developments at certain companies will affect their long-term prospects. I also try to share other interesting investment ideas with investors where I think there is significant mispricing or potential for growth.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This article is for informational purposes only and should not be regarded as investment advice. This article should not be the sole basis for a financial decision, including the purchase or sale of stock. Any personal financial decision should be made on the basis of your own research and consideration of your unique financial goals and investing ideals.

First Citrus is rarely traded and this leads to a lower asset liquidity, and the possibility for spikes in volatility due to changes in volume.

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