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Banking
Room for More Community Banks?
The churn in community bank formation and cash-out continues, but bankers looking for an exit strategy are finding themselves in a tough part of the cycle.
Money Market
| Startups | |
| New Banks Chartered in Florida Sales | |
| YEAR | NEW BANKS |
| 1999 | 36 |
| 2000 | 16 |
| 2001 | 11 |
| 2002 | 6 |
| 2003 | 10 |
| 2004 | 14 |
| 2005 | 18 |
| 2006 | 21 |
| 2007 (as of September) | 9 |
| Source: FDIC, Florida Office of Financial Regulation | |
Startup slowdown
» Startups require more capital these days — an average of $15 million to $30 million. That’s up from $6 million to $12 million three to four years ago. Capital requirements, which are set by regulators, are up because of increases in the overall size of Florida’s banking market, competition and general economic conditions.
Mergers and acquisitions
» Over the past decade, the Federal Deposit Insurance Corp. has approved 235 bank charters, known as de novo banks, for Florida. During the same period, according to Tampa boutique investment bank Kendrick Pierce & Co., 194 Florida banks and thrifts have merged or been acquired by other institutions.
Delayed reaction
» It typically takes eight months to a year for a new bank to go through the regulatory process and open. As of early September, 14 of the 21 new banks formed in 2006 had opened.
Bank Shot
This year, nine new banks from Tallahassee to south Florida have filed applications for state charters. Bruce May, 56, is representative of the bankers going out on their own. In January, May will open First Colony Bank of Florida in Maitland.
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May decided to start his own bank last year. “For the last 10 to 12 years, I’ve kind of wanted to get back to the way banking used to be,” says May. That means a bank that focuses on personal service and limits its growth to the local area.
As of early fall, May had his six-member board of directors in place and was working on plans to recruit 30 to 35 shareholders and raise $15 million. May insists he’s not starting First Colony to cash out in a buyout. “We’re not building this bank up to sell it,” he says. There are no ifs, ands or buts from May as he talks about employees and customers who get left behind when banks sell out. Says May, “I think that reputation is everything in banking.”
Links: For updates on Florida bank startups, check the Florida Office of Financial Regulation.
For more articles this month with extra links, go to the Links page.
