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Jax Daily Record Monday, Nov. 30, 201512:00 PM EST

Community banks dwindling in Jacksonville

by: Mark Basch Contributing Writer

At a time when community banks keep disappearing from the Jacksonville market, one of the few remaining is now looking at other markets in Florida.

Atlantic Coast Financial Corp. announced it is selling off its Garden City, Ga., branch to Queensborough National Bank & Trust Co.

That will leave its Atlantic Coast Bank subsidiary with eight branches in the Jacksonville area and just three in Georgia.

While that move would suggest a renewed focus on Jacksonville, ACFC also said it is expanding its reach in Florida by opening commercial banking and mortgage origination offices in Orlando and Tampa.

“We believe continued expansion in attractive Florida markets will allow us to build our business, increase our visibility with customers and leverage our infrastructure, and we are excited by the opportunities we see in both Orlando and Tampa,” CEO John Stephens said in a news release.

“The sale of our Garden City branch gives us the ability to concentrate on lending in the market area, while streamlining our retail branch operations for greater efficiency,” he said.

Atlantic Coast Bank started out as a Southeast Georgia institution. The bank was actually formed in 1939 as a credit union for Georgia employees of the Atlantic Coast Line Railroad, a predecessor of CSX Corp.

It was converted to a savings bank in 2000 and its parent company went public in 2004, as it put more emphasis on growing in the Northeast Florida market.

The company moved its headquarters to Jacksonville in 2011.

ACFC’s expansion into other Florida markets comes at a time when the bank has an opportunity to stamp its reputation as a Jacksonville community bank, a fact the company highlighted in its third-quarter earnings report a month ago.

Two other Jacksonville-based banking companies, Jacksonville Bancorp Inc. and American Enterprise Bankshares Inc, announced buyout agreements in October. That would have left Atlantic Coast Bank as one of the few remaining independent banks focused on Jacksonville.

The only other true local community bank is FirstAtlantic Bank, which opened in 2007 and has eight offices in the Jacksonville metropolitan area.

FirstAtlantic’s stock began publicly trading in March in the OTC markets.

Florida Capital Bank is a relatively small institution based in Jacksonville, but three of its five branches are located outside of Northeast Florida, according to the bank’s website.

EverBank Financial Corp. is headquartered in Jacksonville, but it courts customers nationally through online banking.

Ameris Bancorp, which agreed to buy Jacksonville Bancorp, is moving its executive offices to Jacksonville. But even after buying the parent company of The Jacksonville Bank, a large majority of its branches will still be outside of the area.

Of course, Atlantic Coast Bank may not remain a community bank forever, as every independent bank in the state is considered a target for acquisition by a bigger institution seeking a share of the lucrative Florida market.

“While the company’s strategy is not dependent on M&A, it would consider transactions that could help accelerate its growth,” FBR & Co. analyst Bob Ramsey said in his most recent report on Atlantic Coast Financial.

“Longer term, we consider ACFC a possible seller and believe that its scarcity value as one of the few community banks in Northern Florida increases its franchise value to potential buyers,” he said.

Ramsey, the only analyst following ACFC, rates its stock at “outperform.”

CBC National Bank also expands in Florida

There is one other bank officially headquartered in the Jacksonville metropolitan area, CBC National Bank in Fernandina Beach. However, CBC is owned by a South Carolina-based public company, Coastal Banking Company Inc.

CBC currently has just one office in Fernandina Beach and two in South Carolina, but the company last week announced an agreement to buy First Avenue National Bank of Ocala.

This will double CBC’s branch network as it adds First Avenue’s two offices in Ocala and one in The Villages.

CBC said the acquisition allows the company to grow its core banking franchise while also bolstering its residential mortgage and government guaranteed lending divisions.

“The acquisition of First Avenue creates value both for our customers and shareholders by combining two strong and complementary banks,” CEO Michael Sanchez said in a news release.

Analyst downgrades Stein Mart’s stock

Although Stein Mart Inc. reported third-quarter earnings that were better than analysts’ forecasts, Johnson Rice & Co. analyst David Mann downgraded his rating on the stock from “buy” to “accumulate” after the earnings report.

Stein Mart’s sales in the quarter were impacted by “a multitude of headwinds,” Mann said in his report.

These included a “highly promotional department store sector, unseasonably warm weather, consumer malaise for apparel and weakness in Texas.”

Mann said Stein Mart’s performance was more like a department store than an off-price retailer.

“We believe that these headwinds will continue to pressure the company’s hybrid model (as an off-price department store) into 2016, with the company likely to continue to deliver performance more like a department store (and the stock likely to be revalued as such),” he said.

The Jacksonville-based chain of fashion stores will also be hurt by the departure of Chief Merchandising Officer Brian Morrow, who left a month ago to become president of the dd Discounts division of Ross Stores Inc.

“Mr. Morrow was at Stein Mart for six years and played an integral role in updating and improving the merchandise mix,” Mann said.

“While Stein Mart has an able merchant team that will be led by CEO Jay Stein, the departure adds uncertainty about continued merchandising execution into 2016,” he said.

Duos Technologies expects growth

After becoming a public company this year, Duos Technologies Group Inc. is expecting at least modest growth in the next couple of years, with the potential to possibly have big growth in revenue.

Duos is a Jacksonville-based company that provides intelligent security analytical technology solutions.

The company two weeks ago said it was increasing its baseline revenue forecast for this year from $6.2 million to $6.8 million, and CEO Gianni Arcaini followed that up with a letter to shareholders outlining Duos’ projections through 2017.

Arcaini said the company’s baseline projection is for $8.9 million in revenue in 2016 and $11.7 million in 2017, but he also gave an “upside forecast” of revenue potentially reaching $18.4 million next year and $30.6 million in 2017, as Duos works on a number of initiatives.

Duos became publicly traded in April through a merger with an existing public company. Arcaini advised stockholders to be patient in his letter.

“The fact that we are a public company does not mean that there will immediately be a market of buyers willing to acquire your/our stock. We are working with market professionals to expand investor awareness of our company,” he said.

“An increasing number of brokers, bankers and investors are becoming aware of our company after the reverse merger and have expressed interest in becoming involved with our company. However, the investment community is closely monitoring our financial performance and execution of our business plan and, while we can obviously provide no assurance of future results, we anticipate such increased interest will become more evident in the trading volume during the next two quarters,” he said.

Duos’ stock currently trades on the OTC market, but Arcaini said the company is working to qualify for listing on a national exchange such as Nasdaq in the next 12 to 18 months.

Drone Aviation raises $4 million

Jacksonville-based Drone Aviation Holding Corp. last week said it raised $4 million in capital by selling $3.725 million in a private placement of common stock and exchanging $275,000 in shares of preferred stock for common stock.

The company said in a Securities and Exchange Commission filing that Chairman Jay Nussbaum, President Daniyel Erdberg and Chief Operating Officer Felicia Hess bought a total of $1.05 million of the stock.

Drone Aviation said it will use some of the proceeds to launch production and sales and marketing efforts of its new line of electric tethered drones.

NAC reports loss

NAC Global Technologies Inc. said in an SEC filing that third-quarter revenue doubled to $254,598, but the company had a net loss of $641,748.

NAC supplies harmonic gearing technology. Its headquarters office is in Jacksonville, but most of its operations are done in Port Jervis, N.Y.

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