In its early days, Admirals Bank used individually tailored and highly customized concierge banking to bring in deposits it would use to buy pools of commercial loans on the secondary market.

The bank then turned away from this approach and began to focus on consumer lending in the home improvement and residential solar sectors. But after a turbulent 2017 that included regulatory issues and millions in losses, the bank is pivoting again.

In an interview at its headquarters on Clarendon Street, the bank’s executives said the bank has hired a new CEO, is in the middle of recapitalization efforts and is moving forward with a new business model.

“We are completely shifting our model to build a more traditional banking business,” new CEO Marc White told Banker & Tradesman, adding that the bank would focus on community banking, private banking and wealth management. “I feel there is a need to blend first-class products and services and capabilities with a local feel and commitment.”

Admirals Bank has been in a downward spiral for many years. The company hasn’t turned a profit since 2014.

Bram Berkowitz

The U.S. Office of the Comptroller slapped the bank with a consent order in early 2017. Shortly after, a plan to sell off most of the bank’s assets fell apart and former CEO Nicholas Lazares left. After the second quarter, Admirals reported a staggering $15 million in losses, while eating through much of its remaining capital.

White was part of the initial group of investors that had planned to purchase most of Admirals Bank’s assets and spin off into a new institution called Bank & Trust. But when the deal collapsed, Admirals’ board of directors last November asked White to become CEO and quarterback the transition.

A Boston banker for nearly 40 years, the Marblehead native started JPMorgan’s private banking business in Boston in 2005 and built it into an operation exceeding $10 billion in assets.

Making the Transition

The bank now has $287 million in assets and reported $19.7 million in losses in 2017, according to its fourth quarter call report.

“We are eliminating things that are not part of the future,” said White. “Since the beginning of November, I have been shoring up the balance sheet.”

Part of that process involved terminating the Fast Track program, a quick turnaround residential solar loan product. That move cost the company $2.28 million and quite a few employees.

The bank’s staff dropped from 135 employees at the end of 2016 to 77 at the end of 2017. In reducing the team, Admirals has written down excess office space. According to its call report, the bank took roughly $3.1 million in losses from this workforce reduction process.

Marc White, CEO, Admirals Bank

But White said he expects the head count to rise as the bank builds a team of seasoned wealth management professionals that it intends to hire with money it is currently in the process of raising.

The bank must also contend with the OCC’s consent order. The order required the bank to adopt an “independent, internal audit program” of bank-paid expenses including bank-issued credit cards, entertainment and travel expenses of insiders, telephones or electronic devices, cars, legal fees, prepaid assets, insider reimbursements and insider expense-related accounts.

The enforcement action also required the bank to “engage an independent party” to audit senior management expenses between the years 2014 and 2016.

The expenses the OCC requested for audit included entertainment and events, office and facility renovations, aviation, automobile and other transportation expenses, lodging and meals and trips and charges to corporate credit cards.

Admirals Bank racked up millions in expenses in legal fees, consulting, marketing and advertising and entertainment and travel, much more than comparably sized banks, Banker & Tradesman reported last September.

But since the second quarter, the bank has increased its capital ratios and White said the bank has been working closely with regulators. He expects to have all issues in the consent order addressed within the next few months.

After losing $15 million in the first part of 2017, the bank slowed its losses to about $2.6 million in the third quarter and then $1.95 million in the fourth quarter, according to call reports.

White said he thinks the bank could start turning a profit again sometime in 2019. He foresees an institution with the sort of boutique feel that the old Bank of Boston had with capabilities in residential, commercial, wealth management, customization and client services.

“We are refocusing on New England,” he said. “I love this area and I want to build an institution that serves its people and communities.”