How did Donald Trump become a Florida bank's client in chief?

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A small bank in South Florida is getting outsize attention because of the notoriety of one of its new clients — President Trump.

Professional Bank in Boca Raton was the subject of two recent articles detailing a loan it made to the president last year to buy a mansion formerly owned by his sister near his Mar-a-Lago resort. While Professional's executives are mum on how the $832 million-asset bank landed Trump, its aggressive push for affluent clients could be part of the answer.

“We’ve got a number of bankers that we’ve hired over the years that have come from many of the brand name banks that have national footprints, or super-regional banks in the Southeast that are used to dealing with much larger transactions [and] more sophisticated borrowers,” said Daniel Sheehan, the bank's executive chairman.

Those bankers are "bringing those relationships and deal flow to our bank,” Sheehan added.

President Trump's banking relationships have been front and center in the news lately. The president and other members of his family are fighting efforts by House Democrats to obtain their financial records from Capital One and Deutsche Bank. And the New York attorney general’s office issued subpoenas to Deutsche and Investors Bank for records tied to the financing of Trump Organization projects.

Professional, founded in 2008, has been in the headlines before. In September 2016, its then-CEO Raul Valdes-Fauli committed suicide by leaping out of the 36-story Conrad Miami Hotel. He was succeeded by Abel Iglesias, the bank's chief lending officer.

Since Iglesias became CEO, Professional's loans, deposits and total assets have more than doubled. It has raised capital in an oversubscribed stock offering, added branches in South Florida and created a digital innovation center in Cleveland. Net income rose 30% in 2018 from a year earlier, to $2.7 million.

While Professional is courting more high-net-worth clients, Sheehan said it would be mistaken to surmise that it is merely a bank for the affluent. Rather, its primary focus is up-and-coming entrepreneurs.

“We have a great connection with small, local businesses ... that have just a couple employees,” Sheehan said. “So, we're not simply a small bank with big-bank ambitions. We still think there's an awful lot of value in enriching connectivity with local businesses, the mom-and-pop stores.”

Now the bank finds itself navigating questions about its ties to Trump. The President's most recent financial disclosure revealed that he borrowed $5 million to $25 million from Professional. He also has a money-market account with the bank with somewhere between $5 million to $25 million on deposit.

Several publications, and a number of vocal Trump critics, have pointed to the timing of the loan and Iglesias' appointment to the board of the Atlanta Fed's Miami branch in January.

But Jean Tate, a spokeswoman at the Atlanta Fed, stated in an email to American Banker that there were no directives from the Trump administration to add Iglesias, adding that the selection process for board members “takes about nine months to complete.”

The appointment is far from lucrative, moreover. Tate noted that members of branch boards receive $1,500 annually, along with a $200 stipend for each meeting they attend.

Kenneth Thomas, president of Community Development Fund Advisors in Miami and a former finance lecturer at the University of Pennsylvania's Wharton School, echoed that view.

Fed officials "want to talk to local businesspeople and get their feedback," Thomas said. "That's where the local boards come in."

Still, the appointments provide visibility in the community, Thomas said, adding that the Atlanta Fed should give more consideration to banks with longstanding ties to low- and moderate-income borrowers.

Thomas, for his part, questioned Professional's effort to court underserved markets despite the bank's "satisfactory" rating under the Community Reinvestment Act. He pointed to Professional's pristine credit quality — the bank had zero nonaccrual loans and charge-offs in the first quarter — as an indicator of its potential client base.

"Investors may love a bank with zero nonaccruals or charge-offs, but that can be a red flag for CRA," Thomas said. "It may indicate that a bank is only making loans to the most creditworthy people and not taking any risks to meet the biggest need in most communities like ours, which is affordable housing."

Mary York, a vice president at the William Mills Agency in Atlanta, said the bank could have an issue on its hands if its Trump ties leave a negative impression in the minds of South Florida residents.

"Most crises boil down to it being a reputational issue," York said. "That's where the most damage comes from. Even if they haven't done anything illegal or wrong, [Professional] could suffer in public perception."

Professional, for its part, is sticking to its knitting. It continues to expand, hiring bankers from SunTrust, Stonegate Bank and Gibraltar Private Bank & Trust since December.

“Florida is a great market,” Sheehan said. “It’s hard to ignore the job formation and migration statistics, and I don’t think the favorable tax treatment and the weather are going out of style anytime soon. There’s been a tremendous amount of people moving down here, job formation, capital formation … so I think all banks in this market, net-net, have been a beneficiary of these forces.”

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