Observant banking: Beach Bank finds a loyal niche market in the community around it by observing the Jewish Sabbath

South Florida CEO, August, 2004 by Jaclyn Alcantara

Beach Bank president Hans Mueller shutters his Miami Beach branch promptly at 4:00 every Friday afternoon, as women in head coverings and bearded men in black hats walk by on their way to synagogue for Sabbath evening services.

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Mueller keeps the bank closed on Saturdays, too, and has Sunday hours to serve those who need to bank during the weekend. Mueller, a 53-year-old whose mother emigrated from Cuba and whose father is German, is not Jewish. But his bank, like many other businesses whose customers live in the large Orthodox Jewish enclave near Arthur Godfrey Road (in Miami Beach), observes the day of worship because it makes good business sense.

"Everybody likes to do business with businesses that understand their needs," says Mueller, who is quick to criticize larger banks he says take too generic an approach to banking without a mind for the demographics and lifestyles of the communities they operate in.

It is an approach that he says gives his $125 million-asset community bank an edge over competitors, and it is part of a larger strategy for growing the bank into a successful South Florida franchise.

Beach Bank was launched in 2000 on Miami Beach, within a four-block radius of at least five Jewish synagogues. Of the 30,000 Jews living in Miami Beach, approximately 22 percent are Orthodox. Orthodox Jews strictly follow religious tenants, including observing the Sabbath, which mandates that no work or business be done from sundown on Friday through sundown on Saturday.

Darin Diner, director of the Miami Beach Jewish Community Center, says, "The general buzz in the community is very appreciative" that Beach Bank observes the Sabbath. He points out that while other businesses in the area, from Publix supermarkets to Eckerd Drugs stores, cater to the large Jewish community, most that observe religious hours do so because their owners are Jewish.

Mueller says the results of the strategy are clear: "It sends a message to the entire community that we know what our customer wants." On Sundays, 190 to 200 customers visit the Miami Beach branch--numbers typical of a Saturday crowd at an established bank branch, Mueller says.

Still, other community bankers say the mileage Beach Bank gains may not add up to much. "Not many financial institutions open on Saturday anyway. Those hours are not typically profitable in most locations," says Vincent Post, senior lending officer for Miami-based Great Florida Bank.

Beach Bank is still small, even by community bank standards, with just one permanent branch. That will change when two new branches open this year, and two more open by 2006. Post says the expansion is a sign that Beach Bank is on the right course because state and federal bank regulators do not allow banks "to branch out unless they're doing it right," he says.

A familiar refrain among community bankers, and their consultants, is that small banks compete effectively because they offer more personalized service than their larger counterparts. Kenneth H. Thomas, president of bank consultancy K.H. Thomas Associates, has counseled many area banks, including Beach Bank.

"When you put quality over quantity you can compete very effectively," Thomas says, though he concedes, "you'll never be able to outperform [the national banks] in dollars because they're so big." Still, he says, it is possible to build a strong customer base that provides a good value to the community bank's shareholders.

Beach Bank faces the same challenges the industry itself faces: customers today are focused on speed and convenience. While Beach Bank does have online banking, national banks have that, too, as well as extensive branch and automatic teller networks. This is why Thomas says choosing convenient branch locations is key to a community bank's survival.

Beach Bank is preparing to open a South Beach location at the corner of Washington Avenue and Fifth Street--across from the popular China Grill eatery. The branch is set to open this December. Thomas, who helped pick the location, describes it as "the best location in all of South Beach." To draw customers in, Mueller says he and his colleagues are toying with the idea of keeping the South Beach branch open as late as 9:00 p.m. to accommodate busy young professionals whom he describes as "completely involved in their day job." The average South Beach resident is 31 years old, and single.

Beach Bank's South Miami branch, which is currently doing business at a temporary location, keeps standard bank hours. The location on US 1 is in the 33156 zip code--one of the wealthiest areas in South Florida. Forbes magazine noted the median price for a home there was $532,500, in 2002, and the US Census Bureau lists the median household income at $86,823.

Beach Bank's South Miami branch will eventually re-locate to a nearby strip mall under construction. Though not complete, Mueller says, the branch took in $10 million of deposits at its temporary location.