Founder Ken LaRoe of Values-Based Bank Hopes Third Time is a Charm
Ken LaRoe grew up thinking he might become a rock star or a race car driver but certainly not a banker. The self-professed “gearhead” started working as an auto mechanic in high school and loved to fix and race Nissan vehicles, which were called Datsuns back then.
So today, as the Lake County resident launches his third banking venture, he still marvels every time he finds himself sitting at a table in a place like Amsterdam or Nepal with leaders of a small but growing group of financial institutions that have pledged to help change the world. LaRoe is a founding member of the North American chapter of the Global Alliance for Banking on Values, an independent network of banks using finance to deliver sustainable economic, social and environmental development.
His latest venture, Climate First Bank, is being founded as the first financial institution in the United States focused on fighting the global climate crisis. It will open in June with a single branch in downtown St. Petersburg — well outside the 15-county radius of LaRoe’s noncompete agreement from the sale of his second banking venture, First Green Bank, which grew to more than $825 million in assets before Seacoast Bank purchased it in June 2018. The first bank he founded, Florida Choice, grew to more than $400 million in assets before being sold to Alabama National Bancorp in 2006.
He says his experience with First Green set him up perfectly for this new endeavor: “When we opened in 1999, I didn’t know what a values-based bank was. I had always been an environmentalist, but I didn’t really know what that was either — other than, ‘Why would we destroy the stuff we cherish most dearly?’ I hate to admit it, but I was pretty uninformed.”
Climate First explains its mission’s relevance on its website: “The status quo of sustainability is no longer an option. The future demands we work together now to reverse the damage done by our carbon addiction. Climate First Bank will be a full-service community bank offering personal and commercial banking services with a triple bottom line of people, planet and prosperity. We will support customers, communities and our planet by operating as a vehicle for positive change.”
While the home pages of other banks tout traditional customer service options like mortgages, retirement plans, auto loans and business accounts, Climate First’s has an infographic explaining the concept of “drawdown.” Taken from a Paul Hawken book by that name, it refers to a time in the future when levels of greenhouse gases in the atmosphere stop climbing and start to steadily decline, thereby stopping catastrophic climate change.
This is not a normal bank. And that’s just the way LaRoe wants it. This time, he is determined to create a company that will grow beyond its community bank structure into a standalone national financial institution focused on the environment and sustainability.
“I would like to build the biggest, most impactful values-based financial institution in the country,” LaRoe says. “And then, if we’re doing substantial financial performance, it’ll throw off great returns. And we’ve proved with First Green that you can do both: You can be deep-impact and have a tremendous financial return.”
A Budding Career
To see the vision of where LaRoe is going with this new venture, it’s important to understand how he got where he is today.
LaRoe was born and raised in Eustis. His great-grandfather, a railroad blacksmith from Texas, had built a machine shop in the Lake County city in 1926. LaRoe’s great-uncles, grandfather and father worked there, too, and built a much larger building in 1947. LaRoe bought the building in 2006, restored it and got it listed on the National Register of Historic Places.
LaRoe married his high school sweetheart, Cindy, who was born eight days before him at the same hospital where both of their fathers had been born, too. He started working as an auto mechanic while he was still in high school, racing sports cars in his spare time, and was eventually promoted to service manager at a Nissan dealership. Then one day, as he took a bolt off an alternator, a piece of steel flew into his eye. The injury made him think twice about his career choice, and he enrolled in a class at the local community college. He earned an A.
“I didn’t know I was capable of going to college,” he says. “I didn’t think I was smart enough.”
He finished community college and went on to earn a bachelor’s degree in business at Florida State University in Tallahassee. He dismissed job offers from out of state, not wanting to move that far from home. Then he saw a job posting for a bank in Tavares, where he had attended high school.
“I went and interviewed, and the president offered me a job right there on the spot,” he says. “And I thought, ‘OK, well, I’ll take it and then I’ll find the job I really want, but it’ll buy beans and weenies in the interim.’” – Ken LaRoe
The job surprised him. “I got in there, and I realized, ‘This is amazing. This is like business school case studies, one after another.’ I really liked dealing with all the different businesspeople.”
After a while, he realized he wanted to control his own destiny. “Once I was in banking and I was really enjoying it, I decided it would be interesting to own my own bank, and I started going down that path and figuring out how to do it.”
Despite operating a business for decades, LaRoe’s family wasn’t what he would describe as entrepreneurial. His predecessors were great mechanics, but they weren’t focused on building wealth. “I was interested in business because I wanted to make money,” he says.
But life dealt his family a big twist. His wife gave birth to their first child, a son severely developmentally disabled with a rare chromosomal abnormality. She wanted to understand why. She came home one day from work as a civil drafter and announced she was going to become a doctor. She started attending community college and was accepted to the University of Florida for pre-med.
LaRoe decided to go with her, but to attend law school, gearing his studies at UF toward business law. They had their second child, a daughter.
After earning his law degree, his plan was to practice law and eventually establish a bank. “But I was starving to death as a first-year associate,” he says, “and Cindy at that point had gotten accepted to medical school at the University of Miami. So we were living apart, and I was trying to raise two kids by myself, and she’s in med school making hardly any money and with no health insurance. I thought, ‘Yeah, this is nuts.’”
His former boss offered him a chance to come back to the bank in a position where he’d earn twice his lawyer pay. He said yes.
Eight years later, Ken LaRoe started forming his first bank, Florida Choice. It followed the usual path of a traditional community bank, growing until it was acquired and making money for investors. When it sold in 2006, everyone made money.
“But after we sold, I was really pretty despondent. It’s terrible, it’s like selling your baby,” LaRoe says. “My wife and I bought a mini motor home and we circumnavigated the country during my noncompete agreement.”
Before they left, LaRoe’s brother gave him a copy of the book Let My People Go Surfing, the autobiography of Yvon Chouinard, a rock climber and environmentalist who founded the Patagonia brand of outdoor clothing and gear. LaRoe started reading it and a lightbulb went off in his head.
If Chouinard could use a clothing and gear company to bring attention to environmental issues, maybe LaRoe could do the same with a bank. He searched the internet for “green” banks, and two popped up: one in San Francisco and another in the Netherlands. He reached out to both CEOs and spoke with them about how they had made the idea work.
“That was the start of my journey,” he says. “My best friend came up with the name First Green Bank, my wife came up with the logo and that was it.”
But it was 2007, the start of the Great Recession, and new banks were not being approved. LaRoe persevered, and finally, in December 2008, First Green Bank was issued a charter — the last one granted in Florida for nine years.
Ken LaRoe wasn’t sure how the bank would make money for investors and make the world a better place. He started with solar power, offering discounted interest rates for borrowers who were handling projects focused on sustainability. There weren’t many takers because people weren’t interested in saving the planet if it was going to cost them more money.
“We kept tweaking it and tweaking it until at the end, I think it was the best solar loan program for the consumer in the country,” LaRoe says. “We finally got traction, and we were doing a lot of that.”
In 2012, LaRoe was invited to attend the inaugural annual meeting of the Global Alliance for Banking on Values (GABV), founded by Peter Blom, CEO of Triodos Bank in the Netherlands. LaRoe became one of the first 15 members of the group, which has expanded to more than 60 banks worldwide.
“That was the turning point for me in the enlightenment of what it means to be a values-based financial institution,” he says. “I was sitting at a breakout table with CEOs from around the world, talking to them about the issues they were supporting, and I just went away feeling like, ‘Oh my God, I’m not worthy to even be here.’ I’ve got this dinky little bank in Florida and I’m sitting at a table with the CEO from BRAC Bank in Bangladesh that does 8,000 microloans a month. They have 8,000 employees, and their loan officers literally ride bicycles into villages to make new loans and collect payments. They own 400 schools, and they own dairies, egg farms. This one organization is singlehandedly bringing that country out of abject poverty. It opened my eyes that there are more than just environmental issues. We’re sitting here with all these First World problems, and they don’t even compare to what’s going on in
The GABV asked him to serve on the board in 2014. “That was a bucket list dream come true that I didn’t even know I had in my bucket, being able to serve on a board with people from around the world who are incredibly smart, gifted and talented and are making a difference. I just had to pinch myself all the time. How did this redneck boy from Eustis, Florida, get here?”
Making a Difference
First Green Bank was dedicated to green practices, offering members of its team scholarships and annual raises for attaining Leadership in Energy and Environmental Design (LEED) credentials. The bank built its branches to meet or exceed LEED standards set by the U.S. Green Building Council for energy efficiency and environmental sensitivity. It set up a foundation to help with community farms and other initiatives that addressed water resources, hunger and renewable energy.
“We were on the cutting edge, and we tried to use the platform to influence and educate people to do the right thing. But at the end of the day, it just wasn’t enough to make a difference in the climate crisis.”
With the opening of Climate First in St. Petersburg, Ken LaRoe is developing a robust digital platform that allows customers to conduct transactions from anywhere in the country. He looks forward to selecting sites for a limited number of other branches. “My theory on brick and mortar is the location has to be essentially a standalone billboard,” he says. “It’s got to be so visible, iconic and identifiable — you know, where somebody sees it and it’s just obvious there’s something special going on there with solar power and stormwater collection and all that.”
Out of 100 initiatives described in Drawdown that can be done today to reduce carbon emissions into Earth’s atmosphere, LaRoe identified 12 that can be applied by a community bank. “The beauty of it is they are completely measurable,” he says. For instance, if the bank loans a company money for a building retrofit that ends up reducing the structure’s carbon footprint, the bank can count that toward its own metrics. “It will be much easier to quantify and we can know we’re making a difference.”
Some of his advisers tried to talk him out of putting the word “climate” in the name of the bank, saying it might be politically polarizing. He stood his ground. He wants the world to understand the bank’s mission loud and clear.
Most of all, LaRoe wants to build the bank to last and even grow through acquisitions. He has no plans to follow the typical model of growing until it’s time to sell to a larger financial institution. Selling his second bank was emotionally draining.
After that sale, he and his wife bought another motor home and traveled cross-country again, soul searching about whether he should start a third bank. “Finally, Cindy said, ‘You know you can do it, you know you want to do it, you know you need to do it. You’re uniquely situated to pull this off. Just do it — and do it like you know it needs to be done.’
“It was just the inspiration I needed to bite the bullet,” LaRoe says. “It feels so right and so compelling, and I’m so pleased to be doing it.” b