Take It or Leave It?: Time will tell which banks made the right choice in seeking TARP funds -- or avoiding them.
Impact on Florida
Good luck calculating TARP’s impact on lending in Florida — big banks and small banks alike mix their TARP funds into their overall assets, so it’s all but impossible to say whether a given loan is being made with TARP money. The complaint nationally — that the big banks aren’t lending out the money they got through TARP — is echoed in Florida. Donald Phillips, managing director of Phillips Development & Realty, a Tampa apartment developer who organized a TARP forum in Tampa earlier this year, goes so far to claim that the big banks have “redlined” Florida. Worse, he says, they’re calling business loans even when borrowers can keep up interest payments. “A year and a half ago they were taking us fishing,” Phillips says. “Now they’re feeding us to the sharks. Most of the damage is being done by very large banks.”
Charles Conoley, CEO of Horizon Bank, says he can put TARP money to work lending in Manatee County, but he’s still waiting for an answer on the bank’s application for $4.8 million.
Local banks say demand for loans has fallen as in any recession. Banks can leverage every dollar of capital 10 to 14 times. So theoretically, the $223 million in TARP funding that went to Florida-based banks should be translating into $2.2 billion to $3.1 billion in lending in the state.
But that’s not necessarily new lending. Some banks are holding the money as a safety cushion or putting it into loan loss reserves. That’s allowed some to keep up their normal lending pace but not expand.
And here’s a troubling stat for any business in need of a loan: The combined market share of the 18 Florida banks that accepted TARP funds is just 1.44%. Phillips says he’s noticed smaller banks are aggressively going after business but says they lack the lending capacity for large loans. “We’re trying to fly F-18 fighters on a (Piper) J-3 Cub fuel allocation.”