Florida is a national leader in banks with issues, most concentrated among the ranks of smaller community banks. David Brown, a partner at banking consultancy RMPI Consulting, says 34% of all Florida financial institutions are under a regulatory order. One example: In May, the FDIC filed a notice against Marine Bank & Trust, a Vero Beach bank with $145 million in assets, complaining about its levels of commercial real estate loans, capital and earnings. CEO William J. Penney says the bank has been trimming problem loans and working to raise capital. It won't get easier for small Florida community banks. Problem loans have to be worked off. Regulatory pressure is intense. Compliance costs are up and will go up more as the Dodd-Frank regulatory law is implemented. Obtaining capital to rebuild balance sheets is tough and costly. Many private equity players and new investors would rather buy banks after the FDIC takes them down.
Penney discounts some executives' beliefs that the days of smaller community banks — some define those as institutions under $500 million in assets, others as banks under $750 million — are numbered. "There always will be a place for community banks," he says. "The people who want to come in and talk with the decision-makers will come to us."