First Green's 'Regenerative Banking' Reaches Beyond Sustainability

Up and running for six years now, First Green Bank taps into banking's deep and self-sustaining roots in local communities while reaching beyond the concept of sustainability.

With financial backing from a diverse group of investors, the company is building a “green,” local and community-focused bank in Central Florida: a bank that prides itself on taking a new, socially and environmentally responsible approach to U.S. banking and finance. Founder and CEO Ken LaRoe and proponents have dubbed it “regenerative banking.”

Adding to the formidable challenge is the location of its regenerative community bank. The area around Orlando is one of the most “conservative” and traditional parts of a state in which speculative real estate developers, “Big Sugar,” citrus and other large business groups long ago captured -- and have since held sway over -- state politics and government.

In serving the banking needs of individuals and businesses in central Florida, First Green Bank employs a holistic business model that aims to spur environmentally and socially responsible growth. It helps that First Green Bank produces financial results significantly higher than those of its peers. That kind of performance has led its industry peers to sit up and take notice. It has also earned LaRoe Ernst & Young's 2015 Florida “Entrepreneur of the Year” award.

Supportive industry experts believe that if First Green Bank can keep it up, LaRoe and team's efforts could go a long way toward restoring public confidence not only in the U.S banking and finance sector, but also in U.S. capitalism.

Banks as powerful agents of beneficial change

The issue of sustainability – environmental and socioeconomic – has grown in stature and prominence to become a hot topic on Wall Street as well as Main Street. Sustainability, however, can imply stasis, or more simply, maintaining. LaRoe, a self-described “avid environmentalist” as well as “avid capitalist,” wanted a term that went beyond sustainability and better captured the core values that guide all aspects of First Green Bank's business.

LaRoe firmly believes that banks and financial service companies can, and should, be powerful agents for beneficial change. Joining the Global Alliance for Banking on Values (GABV), LaRoe discussed this and other issues with, among others, a Greenwich, Connecticut-based think tank and management consulting company called Capital Institute.

Capital Institute's 21st-century take on capitalism and economic growth is set out in a white paper entitled, Regenerative Capitalism: How Universal Principles and Patterns Will Shape Our New Economy. The white paper is authored by the organization's founder and president, John Fullerton, a longstanding banking industry veteran and former managing director at JP Morgan. In addition to leading Capital Institute, Fullerton is a practitioner of impact investing as principal of Level 3 Capital Advisors LLC.

Capital Institute consultants are working closely with LaRoe and his team at First Green Bank to further develop, refine and implement their evolving model of regenerative banking.

Adding another facet to their collaboration, First Green Bank is the subject of a new Capital Institute documentary series entitled, "The Year in the Life of a Regenerative Bank." Launched coincidentally with publication of this feature, you can see it online here.

Finding common cause

Though hailing from very different backgrounds and parts of the U.S., as well as very different types of banks, both Fullerton and LaRoe proved themselves adept at banking and finance. Both have made lots of money in banking, for investors and clients as well as themselves. Yet both believe, and are well aware of, evidence that there's a crisis of confidence on the part of the broad public in the U.S. financial industry, and that it extends more broadly to U.S. capitalism. At the root of this crisis is an essential sense of ethics and civic values -- or more accurately, a glaring lack thereof -- that engenders the broad public trust and credibility that remains a bank's most fundamental asset.

LaRoe was born and raised in a tiny agrarian town not far from First Green Bank's headquarters. Even as fields and citrus farms have given way to residential housing developments and strip malls, the traditional values and experiences LaRoe grew up with including diligence, thriftiness and utilizing an honest, plain-speaking manner, stay with him today.

LaRoe's “green” and socially responsible business model for First Green Bank also aims to correct some of the social inequalities that persist in the south. These values can be seen in First Green Bank's lending and customer engagement policies, programs and products, as well as in its hiring and employee development policies. Hence, the term regenerative banking seems most apt. These and other core social and environmental values are evident in First Green Bank's evolving experiment in regenerative banking.

Banking this way is a new, somewhat radical, notion. Finding businesses to lend to that espouse these principles, values and attitudes isn't easy, especially in places like central Florida. Ingrained, yet slowly changing, ideas about what to expect from a bank, as well as strongly held ideas of what and how to do business, pose a stiff challenge for LaRoe and First Green Bank's workforce.

Building a "green" community bank in central Florida

“The types of businesses and people we lend to, and the products and services we offer them is evolving,” LaRoe told TriplePundit. Progress, though at times halting and hard-won, is being made, however.

For example, LaRoe highlighted, First Green Bank has what he believes is the best home solar energy financing package of any bank in the nation. Homeowners can take out zero-down loans with 9.99 percent interest rates in order to finance installation of solar photovoltaic (PV) systems. With convenience stores prominent among its business clientele, First Green Bank is also working to further refine bank products and services that enable them to enhance sustainability.

Real estate and related lending play a large role in First Green Bank's portfolio. It's helping finance King Grove Organic, a former citrus farm that owner Hugh Kent is pouring his savings into in order to convert it to cultivation of organic blueberries.

More broadly, the LaRoe-led bank puts the values it promotes to customers into practice itself. That includes its LEED Platinum headquarters pictured at the beginning of this article. The LaRoe-led community-focused green bank also devotes a significant percentage of its lending – 15 percent – to cultural, faith-based organizations and NGOs. This year, LaRoe and the First Green Bank team are focusing on a “banking the unbanked” initiative. It's an idea that one of the bank's tellers, Jessica Schwarz, brought to the fore and is now helping develop and carry out, LaRoe explained.

“Twenty-eight percent of the U.S. population is unbanked,” LaRoe pointed out. “How can that be? That means that 1 in 3 Americans isn't being served by a bank and instead has to turn to super high-cost, and predatory, banking and financial services providers.”

This penetrates to the heart of the fundamental challenges confronting the U.S. banking industry. As the number of banks has shrunk and regulatory protections fallen away, the savings of Americans have been concentrated to as great a degree as ever in large money center banks. “Too big to fail,” their primary focus is is all too often serving themselves, multinational corporations and the super-rich. They've become increasingly disconnected from the banking and financial needs of the mass of Americans, as well as the “old school” traditional ethics and values that were more prominent in the past.

Banks were more forgiving and humane in previous generations, LaRoe pointed out. Sixteen percent of the 'unbanked' used to be banked, but dropped out, he noted. "In the old days if, for instance, if your checking account became overdrawn, you could walk away, and the bank would close the account and write off whatever they got stuck with. That's changed.

"Today," he continued, "banks rely on automated third-party credit rating and reporting systems, taking the human relationships, nuanced understanding of different situations and personal judgement out of the process.

"Banks are turning people away because of industry reporting systems. We can help them recover. We've got to stop adding to the problem and help solve it."

*Image credits: 1) Ēdi Architecture, First Green Bank; 2) Capital Institute; 3) First Green Bank