First Green Bank Chairman and CEO Ken LaRoe (left) and President Paul Rountree. Photo: Steve Williams

Central Florida’s First Green Bank taps into new lending and customers through an environmentally friendly business model

By Robert Heuer

Ken LaRoe calls himself a “rabid” environmentalist and capitalist. As CEO of First Green Bank in Mt. Dora, Fla., he’s trying to blend both philosophies into a business plan for his de novo community bank.

The three-year-old, $160 million-asset First Green Bank turned a profit within 20 months of opening and has remained continuously profitable. This 39-employee community bank is making money the old-fashioned way—taking in deposits and booking productive loans.

Yet, First Green Bank goes all-in on environmentalism. Marketing is but one example. The bank heavily promotes paperless electronic transactions to customers, and brands its deposit products as “Be Green” checking accounts, “Sustainable” savings accounts and “Renewable” certificates of deposit and IRAs.

First Green Bank’s philosophy—“a local bank with a global mission”—appeals to employees, shareholders and customers, LaRoe says. As the Sunshine State’s economy rebounds, he’s betting that his bank’s preparation for the next generation of building-industry innovation will spur continued profitability. He sees a lesson for community bankers from an uncommon source.

There’s a Native American saying, LaRoe says, that we, the present generation, are not inheriting the earth’s resources from our forefathers but instead are “‘borrowing them from our children.’  

“Community banks enjoy the trust of consumers,” he continues. “I see a lot of benefit from leveraging that trust to support the development of sustainable Main Street economies.”

Building finance

First Green Bank’s website declares its goal involves “changing why America does business.” It’s trying to do this by development of a lending specialty for financing environmentally friendly building and renovation projects. In pursuing this goal, the bank’s lending team has become accredited as professionals in environmentally friendly building standards to help residential and commercial clients complete design and heating-and-cooling system upgrades. The bank also provides low-interest financing for projects built with rigorous Leadership in Energy and Environmental Design, or LEED, construction standards.

First Green Bank has been refinancing at lot of commercial mortgages and several new environmental loans for residential projects but hasn’t booked any such loans for commercial projects yet because of the slowdown in Florida’s construction activity.

According to the U.S. Green Building Council, buildings nationwide are responsible for 39 percent of our country’s carbon dioxide emissions, 40 percent of its energy consumption, 13 percent of its water consumption and 15 percent of its annual gross economic output. Nationwide, energy-efficient building finance totals about $20 billion per year or “less than one-fifth its cost-effective potential.”

The council’s study adds that America’s largest banks are sizing up the opportunity for energy-efficient buildings to become a “mainstream financial asset class with a high degree of standardization, predictability and scale.”

LaRoe knows his community bank can serve the same up-and-coming market better.

Business by example

Walking the walk of its own organizational credo of environmental responsibility, First Green Bank operates the same way it helps its customers operate. The bank’s headquarters building and its branches in Clermont and Ormond Beach are built with environmentally friendly construction, systems and designs. In addition to having a fleet of hybrid vehicles, the bank gives employees who walk or ride a bicycle to work low-interest rate loans. It also gives zero interest-rate car loans to employees who buy cars that get 30 or more miles per gallon, and it gives grants to those who purchase hybrids cars. All employees can also receive a $1,000 salary increase for becoming LEED-accredited.

However, the embodiment of First Green Bank’s green mission and message is its headquarters building. Located a 45-minute drive from Disney World, the building is seeking the highest-rated LEED Platinum certification, which has been achieved by only one other commercial building in Florida.

The design of First Green Bank’s home office is expected to generate significant long-term savings in air conditioning and heating costs as well as reduced water consumption. Numerous benefits are factored into its indoor environmental quality. LaRoe cites a federal study which found that LEED-certified buildings result in a 15 percent increase in worker productivity: Fewer respiratory ailments will mean lower employee health costs.

Anyone can breathe the difference by walking inside First Green Bank’s atrium. Fresh air is a by-product of the bank’s 320-square-foot “living” wall filled with growing plants. The placement of foliage in front of the return air duct enables building-wide distribution of clean oxygenated air as well as the removal of plant-produced humidity. The HVAC water condensation system drains condensate into below-grade cisterns, generating an annual yield of 80,000 gallons of clean water. Municipal code allows the use of this water to flush toilets and irrigate the green roof and interior plants.

First Green Bank had to persuade code administrators to allow the drive-through service window to be positioned in front of the building. The service window’s location allowed the bank to minimize hard surfaces and maximize the potential for rainfall to replenish central Florida’s depleted aquifer.

LaRoe concedes the 12,000-square-foot facility could have been built for less money. But he considers the premium paid as the cost of being an early adopter as well as living up to its mission statement to do “the right thing for the environment, our people, our community and our shareholders.”  

Sustainable business

First Green Bank’s business philosophy is a logical progression for LaRoe.

This 54-year-old, third-generation Floridian grew up on his grandfather’s citrus and cattle farm near Orlando—spending much time fishing, hunting and learning how to fix things in the family’s machine shop. He earned a business degree in college, spent a decade working for banks, received a law degree and became president of a local savings and loan. That executive experience positioned him to launch his own community bank 1999, which he later sold in 2006.

His previous community banking career included his leadership on a county-referendum initiative that resulted in 71 percent of the voters choosing to raise taxes for $36 million in bonds to purchase public land.

After turning down a job with the buyers of his previous community bank, LaRoe bought a motor home and set out for a cross-country journey with his wife, Cindy. Their two children were in their 20s. LaRoe was 49 and figuring out what to do with the rest of his life.

He found inspiration in a memoir by Patagonia founder and owner Yvon Chouinard. The memoir “Let My People Go Surfing: The Education of a Reluctant Businessman” tells the story of a California entrepreneur who built a profitable outdoor-clothing and -equipment company that combines employee-friendly business practices with an environmental mission.

LaRoe pondered how to apply Chouinard’s “holistic business philosophy” to community banking. Shortly before the financial market crash four years ago, he decided to launch his second startup community bank that would allow him to pursue both his passions for responsible environmental stewardship and free-market commerce. He raised more than $17 million over about six months for the venture.

“Some investors wanted to hitch their wagon to the guy who made them money before,” LaRoe recalls. “Some liked the mission. Others told me this is the greatest marketing scheme they’ve ever seen.” First Green Bank was born.

Looking ahead

First Green Bank recently received the business of the year award from a local chapter of the U.S. Green Building Council. The organization’s national chairman, Mark MacCracken, came to Orlando to deliver the keynote speech at the banquet.

MacCracken is CEO of a New Jersey-based thermal energy storage manufacturer. He called First Green Bank “a trailblazer” among community banks that will be “critical in taking sustainability to the mainstream of the marketplace.”

With architects, engineers and general contractors becoming more attuned to energy-efficient building construction, MacCracken anticipates that more banks will be asked to lend to such projects. “The most savvy banks will meet the demand for their services,” he says.

First Green Bank’s philosophy and business plan helps demonstrate how “operational advantages from building upgrades eventually outweigh the costs,” says John Riddle, chairman of U.S. Green Building Council’s central Florida chapter and a regional manager for the building supplier that works with contractors and property owners in the 11-state southeastern United States.

“Financing is a major impediment to market development,” Riddle says. “As more people embrace the green and sustainable building philosophy, the quicker the cost of business will come down.” He cites two examples of incremental forward steps. Last fall, the Appraisal Institute issued an addendum that enables the valuation of green features in standard reporting forms. In addition, resource efficiency measures are becoming a condition for federally funded building projects—a factor that’s compelling many builders to build in environmentally sustainable ways.

First Green Bank’s new building will have “an impactful presence in the marketplace,” Riddle says. “Ken’s success in banking creates a platform for him to present a message. We’re thrilled to have him in our backyard.”

Robert Heuer is a writer in Chicago.