When Drew Flott was executive vice president and CFO of Mercantile Potomac Bank, he was four years older than his friend, bank CEO Ken Cook, and, he said, “I wanted to run my own show.”
Cook was firmly entrenched at Mercantile Potomac, and he wasn’t going anywhere. “I investigated a couple of opportunities, and one was a startup bank in Bethlehem, Pa.,” said Flott. “I had several interviews, and I made it down to the final decision, where it was between myself and a gentlemen that lived in the Lehigh Valley area. They ended up choosing the other guy.”
Luckily for Flott, in their effort to raise the capital to start that bank, the organizers raised substantially more than they needed. They decided to form a private equity firm for startup banks, proceeded to raise $50 million, and started looking at promising locations across the country in which to start banks. The Baltimore-Washington region was one of those areas.
The founder of the private equity firm called Flott, who well remembers the conversation: “He said, ‘Hey, Drew, could we convince you to start a bank close to your current market between Washington and Baltimore?’”
The private equity firm invested $8 million in the startup bank, which became Revere Bank. “We raised another $12 million, and we opened our doors,” said Flott, who is now co-president and CEO of Revere.
Five (Not So Simple) Steps
In the early days of Revere Bank, Flott recalls more than one person asking: “How the heck do you open a bank?”
Flott had been involved with a number of de novo banks before Revere, so he had some understanding of the steps involved. For non-bankers, Flott likes to say there are five steps to starting a bank. But each step, he adds, is composed of many sub-steps.
“I don’t want anyone to think it’s simple to start a bank,” he said, “but if we way over-simplify it, there are five requirements you have to accomplish to start a bank in Maryland.”
First, you have to have at least five residents of the state of Maryland who are going to invest in your bank and have the financial wherewithal to do so. Second, Flott said, you have to have a qualified CEO: “And fortunately the state agreed that I was,” he said.
Third, you have to have a location. “This is not as easy as you might think,” he said. “You need a lease and a location but you don’t have a bank yet. So you have to convince a landlord to be on board.” (In the case of Revere Bank, the landlord ended up being an investor and a member of the board.)
Fourth, you have to have capital of at least $12 million. Finally, you have to have FDIC insurance. “Pretty simple,” Flott said, “just not easy.”
Flott left Mercantile in September 2006 to start Revere and, from the moment he left, he focused on building a good team. “A fortunate thing happened,” he recalled. “I started Revere on Sept. 6, and on Oct. 9, PNC acquired Mercantile. A lot of the Mercantile folks had jobs that were going to be eliminated. It gave me an opportunity to have access to some really great people.”
Many de novo banks rise to a certain level and plateau. “In the process, they bring on folks that get them to a certain level,” said Flott. “They might be good technicians that aren’t great managers or good managers but not great leaders.”
At Mercantile, he recalled, when he arrived, the bank had assets of $187 million, and by the time he left, the bank was at $3.2 billion. “I was able to cherry pick the folks who were with me from the $187 million level forward — the associates that had scalability. That has been a very large part of our success, that ability to hire people like that who would grow with us from day one.”
Revere didn’t hit a plateau. “We had people that could first be technicians, then step up to supervision, then move on to leadership,” Flott said. In the process, Revere built superior credit quality, grew in sales, controlled its expenses, built scalable processes and focused on earnings per share.
The Numbers on the Wall
Revere began 10 years ago with what Flott described as “an intentional culture.”
“What I learned is that if you just let your culture evolve, it might evolve into something you don’t want.”
He defined Revere’s culture of more than 200 employees with three words: energy, candor and execution.
Also, “we are a growth and sales organization,” he said. “If you’re going to work here, you’re going to be in sales or you’re going to support sales.”
The day an employee starts at Revere, s/he is assigned an employee number, and that number is the bank’s asset size on the day the person started. “My employee number is zero,” said Flott. “Now we have people whose number is 2,070 — for $2 billion, 70 million.”
Cook and Flott are back together again in a rare partnership as co-presidents and CEOs of Revere Bank.
After 10 years, Revere Bank is celebrating $2 billion in assets, a market that stretches from Washington to Baltimore, thousands of customers and more than 200 jobs created.
If, at the beginning, Flott often was asked how one starts a bank, he still is often asked: Why the name “Revere”? Originally, he said, the founders wanted to choose the name “Affinity Bank.”
But a bank in California had trademarked the name. Flott had a couple of rules about a name: It could not be geographically limiting, and it had to reflect what the bank was about.
“I like the concept of Revere for a bank even with its potential New England feel to it,” said Flott. “We believe in revering our customers, it’s patriotic, and even Revere silver is high quality.”