A small private bank in New York opened its first Miami office last week, but it has no plans to target Florida's growing community of affluent retirees.
Instead, Interaudi Bank, until last week known as Bank Audi, aims to serve its international clients better - and to do that it needs an outpost in Miami, said Nabil Achkar, the Miami branch's manager.
Many of Interaudi's clients are from Latin America, particularly Mexico, Brazil, and Argentina. For them, Miami is an important financial and commercial center, Mr. Achkar said.
Chairman and chief executive officer Joseph G. Audi said his 20-year-old bank serves a group often passed over by other banks.
"These days private banking means catering to the ultrarich," he said. "We like to work with people who are in between" the middle class and superwealthy. "Their accounts may not hold $50 million, but they're not small either. They're people in the $100,000 to $1 million range - that's big for a community bank."
Because Florida law does not permit out-of-state banks to open branches there without a state charter, to open a branch in Miami, Interaudi first had to acquire a local bank. In October it bought Schroder Trust Bank, a small Miami-based trust company, and converted it to a bank. (The purchase price was not given.)
With a charter in hand, Interaudi opened its Miami office May 1.
Interaudi, with assets of $755 million, has no immediate plans for further expansion in Florida, even though such companies as the $1.9 billion-asset Boston Private Financial Holdings Inc. and $11 billion-asset Mercantile Bankshares Inc. in Baltimore, which has a fast-growing private banking unit, are moving rapidly into new markets.
"You lose a lot of what you're doing by becoming huge," Mr. Audi said. "We're trying to grow without growing our number of clients. The whole idea behind this bank is personal service. We'd lose that if we got too big."
David Ross Palmer, a high-net-worth analyst in Boston with the Chicago-based Lobue Associates financial services consulting firm, applauds Interaudi's choice of target market. "Most private banks ignore that niche," he said.
At the same time, he characterized Mr. Audi's determination to keep his bank small - at least as measured by number of clients - as unorthodox, noting that "most if not all private banks are attempting to be in a growth mode.
"A strategy that says 'I'm not really too interested in adding lots of new customers' " puts Mr. Audi in a minority, he said.
Mr. Palmer said the approach could succeed, though, as long as Interaudi picks clients with solid growth potential. "Certainly it has some benefits from the point of view of speaking to your client base and saying, 'You're part of a select group.' "
The Lebanese-born Mr. Audi was the chief executive of a Swiss bank before founding his own company, and he retains a fundamentally conservative approach. Interaudi's deposit franchise may have an international flavor, but it does most of its lending in the United States: the New York City area, as well as California, Texas, and Florida.
About three-fourths of Interaudi's $275 million-asset loan portfolio is in commercial and industrial real estate, and all of it is secured by cash pledges and property.
"We don't make unsecured loans," Mr. Audi said. "We don't do anything fancy, just old-fashioned banking."
The trade-off for pristine asset quality - Interaudi reported zero chargeoffs in 2002 - has been underwhelming returns on assets and equity. Last year its ROA was 0.97% and its ROE 8.8%, both well below average for banks with assets of $500 million to $1 billion.
"People have criticized me for not taking enough risk," Mr. Audi said. "I guess they were right in a way, but these days nobody is telling you you're not taking enough risks."
