“We have people saying, ‘Just get me out of bank stocks.’ ” — Benjamin C. Bishop Jr., chairman, Allen C. Ewing & Co., Jacksonville [Photo: Kelly LaDuke]

For the gutsy: Buy the stocks of Florida-based banks. Their 15-year bull market ended last year, says Benjamin C. Bishop Jr., chairman of investment banker Allen C. Ewing & Co. in Jacksonville. Valuations plunged, down 44% through the third quarter of 2007. “The Florida banks have just been pummeled,” Bishop says.

Indeed, stock in the largest Florida-based bank, Coral Gables-based BankUnited, Fort Lauderdale-based BankAtlantic, and Sanford-based Federal Trust Bank all could be had for under book value last year.

Buyers in the last bank bear market were rewarded within a couple of years by rising valuations, Bishop says. Many bankers say their non-real estate operations are healthy, and Florida’s continued growth means Florida bank stocks should rebound.

Meanwhile, though, Bishop projects 2008 will be a year of down or flat earnings for banks. “Just about every Florida bank is doing all it can to generate fee income,” he says.

The Trends

Real estate lending losses, though the depth of trouble varies from bank to bank, especially banks with condo-conversion and construction loans
Slower pace of new bank formations
Branch expansions by some existing banks — Naples-based Orion Bancorp, for instance, plans to add six branches this year to its 21.
sset and business growth through the internet from outside Florida
Acquisitions of banks with Florida operations by European and Canadian banks, such as Banco Popular Español’s purchase last year of Miami’s TotalBank
Out-of-state banks raising the bar for the size of Florida banks they’re interested in acquiring — now acquirers generally want only banks with at least $500 million or $1 billion in assets
A healthy level of merger and acquisition business by investment banks
More competition among banks for commercial borrowers, narrowing bank margins, as the residential market continues grinding

VC Trends

VCs investing smaller amounts in companies, which are nurtured to profitability on limited capital
Commercialization of defense and national security technology developed in Melbourne and central Florida
Digital media centered on social network, community building and music catering to the Latin market such as Coral Gables-based Batanga
Healthcare services, whether focused on improving efficiencies for bill handling or on patient care

International Bankers
Unfriendly Environment

International bankers in Miami have been complaining since the Patriot Act was enacted in 2001 that its anti-money laundering and terrorist-tracking measures put too great a burden on the international bank business in the United States. Compliance costs are up 160%, according to the Florida International Bankers Association. But the complaints seemed to have reached new heights recently after regulators imposed large fines, including $65 million heaped on American Express Bank International in Miami (the senior official who signed off on the penalty is a former president of the association) and $10 million on BankAtlantic in Fort Lauderdale. Bowman Brown, a Miami attorney to international bankers, expects some players to exit and the pressure to consolidate to grow. “The environment is very unfriendly” in relation to costs and the risk to institutional reputation, Brown says.

Profits are tumbling, and clients are looking for friendlier banking climes. “We are willing partners with the government. When we do fail, because we’re not perfect, we get hit with huge fines by regulators,” complains David Schwartz, the international bankers association president and a senior vice president and manager of international risk mitigation for Regions Bank. But, says Charles Intriago, founder of Money Laundering Alert, “There’s nothing that can be done unless you want to relax the defenses that this nation has built against the laundering of criminal proceeds and terrorist financing.”