The new shape of the Florida banking industry is emerging. All sectors aren't being created equal.
Notes and Trends
» The Lag. Florida banks in the second quarter had their best aggregate profit since December 2007. Small banks, with less than $100 million in assets, continued to lose money overall. The tiny aggregate profit posted in the early part of the year by Florida banks would have been a loss if the banks had set aside reserves against problem loans as conservatively as banks nationally do, says Miami independent bank consultant and economist Ken Thomas. Florida remains a real estate state, and its banks will flourish when the real estate business gets healthy again, he says. "We go in cycles. As goes the Florida real estate market, so goes the banking market — with a lag. We will come back. The smart money realizes that," Thomas says.
» The Rules. Tougher regulators and tougher regulatory requirements impact lending, says banking attorney Bowman Brown of Shutts & Bowen in Miami. "What's happened in bank regulation from a macro standpoint has been anti-stimulus. If the banks aren't healthy and in an expansionist mode, I don't think the economy is going to be healthy and in an expansionist mode," Brown says. Still to come is implementation of the Dodd-Frank legislation, which, Brown says, imposes a "terrifically punitive regulatory burden."
» The Turnaround. Good news: Banking fortunes mirror the economy, and bankers uniformly report economic activity is slowly picking up. "We're seeing strong growth in our businesses," says Shelley Freeman, Wells Fargo regional president of Florida community banking.
» The Evolution. In short, expect more banks to fail. Expect the large to get larger. Expect consolidation. Florida had 286 institutions in 2009. Now, it has fewer than 240. "The industry will continue to evolve," says Mike Fields, Bank of America's Florida president. "The industry I started in, in 1967, and the industry today, you could not have imagined. In the next decade the changes will be equally dramatic. It's incumbent on all of us to evolve and look to the future."