Why is BB&T's Kelly King so bullish on Florida? "It's still warm in January"
Wake up and good morning. "I know there’s still concern about the Florida market but again, I’ll remind you that there are 18 million people there and it’s still warm in January. We are very bullish on the long term for Florida when we get through this correction."
So sayeth BB&T CEO Kelly King in a discussion Monday of third quarter earnings (which fell due to credit losses) with analysts. Read the entire conversation here. (King photo: St. Petersburg Times files.)
So why do we care so much about what BB&T's King says? Because BB&T, with the FDIC's thanks and blessings, recently bought the failed Alabama-based Colonial Bank and in the process boosted BB&T's presence in Florida. That means BB&T is no longer a casual player in FLorida and that the banking company, win or lose, has chosen to tie its future closely to the economic fate of the Sunshine State.
Strategically, the Colonial deal improved BB&T's market share in Florida from 16th to 5th which, says King, "is very, very important from a long term point of view... We are very bullish on the long term for Florida when we get through this correction." BB&T signs are starting to replace Colonial signs on Florida branches, and King said BB&T's top management in Florida is in place, led by Bill Klich out of St. Petersburg. (Klich photo by Lara Cerri of the St. Petersburg Times.).
That's the least of it. King said the "next step" is to reinvigorate a sales mentality in the former Colonial branches. Early returns are "very positive," King saud:
"Remember that the last two years, particularly the last year, they were just on hold. They couldn’t sell anything. They were just really held back."
Then comes a lending overhaul. King told analysts that Colonial lenders were "totally focused on real estate lending and in many cases the kind of real estate loans we don’t want to make."
In Monday's discussion, Morningstar senior analyst Jamie Peters asked King for more details about the economic outlook for Florida, including the recent net loss of population. King delivered:
"My understanding is in the last two or three months, it is now reversed back to positive in-migration. Remember the out-migration was a function of the general economy but also the storms. And memories are short. The storms subside and people start moving back in. So I may be wrong, but I was told recently about some people in Florida that it is turned to (in-)migration.
"The values down there have been so deeply discounted that for baby boomers that want to end up living in a place that’s warmer, it’s inconceivable to me that Florida will not come back fairly strong. Now I personally think it will be kind of spotty. Let’s take Tampa for example.
"For example, the people in Florida tell me that the market actually deteriorates and then improves from the south to the north. So you have already relatively more improvement in the Gulf Coast, for example, than you do in the north because it hits the north later. So you’ve got that phenomenon.
"Then you’ve got the phenomenon of the nature of the market. For example, Miami has more high-rise condos and most of the biggest problems are still in those condo projects. I think I would project that 2010 would be kind of a year of finding a solid bottom in Florida and then in 2011 you’ll begin to see some steady improvement.
"I don’t think Florida is going to be some kind of whip-around, turnaround in 18 months. I don’t mean to imply that. I just think over the next few years its going to be a solid steady improvement and for the long term it’s going to continue to be one of the most important states in the country."
-- Robert Trigaux, Times Business Columnist