Wednesday, June 20, 2018
Business

Florida banks getting healthier and healthier

Is it finally safe for Florida bankers to crawl out of their vaults?

Evidence is mounting that banks statewide are not only past the recessionary blues, but more are starting to enjoy a new era of prosperity.

Profits are up sharply, the number of problem banks has shriveled and Florida is far removed from its darkest days just two years ago when it led the country with 29 bank failures.

In an analysis released Thursday, ratings agency Bauer Financial Inc. said the percentage of Florida banks it recommends as financially strong jumped from 21 percent a year ago to 31 percent in the first quarter of this year.

"What we're seeing is bankers being able to shift more to being bankers and less to being problem solvers," said Bauer president and director of research Karen Dorway.

"When you're dealing with so many problem loans to work through, that's just a drain on resources — not only financially but also on employee time to go out and make loans and get new business. … Small businesses are seeing more opportunities now because there are more banks looking to lend to new customers."

With 37 percent of banks statewide still listed as at least relatively weak (down from 40 percent a year ago), Florida isn't out of the woods yet, Dorway said. "But we're certainly headed in the right direction that the workout will keep working out."

Among other signs of encouragement:

• Nearly midway through 2012, only three Florida banks have failed (including two in the first few weeks of the year). Compare that with last year, when Florida had 13 bank failures or 2010 when the state led the country with 29 failures.

• The state's 222 banks made a combined $174 million in profits in the first quarter, reversing a $77 million fourth-quarter loss. Only 27 percent of banks lost money in the first quarter after nearly half lost money for the full year of 2011.

• Bauer, which uses a five-star rating to assess banks' financial strength, says the number of "zero stars," or severely troubled banks, has fallen from 39 to 30 this past year. Only one of the 30 — Heritage Bank of Lutz — is in the immediate Tampa Bay area.

• Credit unions look even healthier. Bauer Financial puts the "recommended" stamp on 78 percent of Florida's credit unions; only 3 percent are cited as troubled and problematic, down from 7.5 percent a year earlier.

Florida's recovery is tethered to a broader, national comeback of the banking industry.

In the first quarter of this year, bank profits nationwide totaled $35.3 billion, the best performance in nearly five years. Moreover, only 16 banks failed in the first three months, the lowest tally since the end of 2008.

Looking ahead, bank capital is near record levels, and the FDIC's list of troubled banks has fallen to 772, the fewest since the end of 2009.

But greater banking stability doesn't necessarily translate into better customer deals or improved access to credit.

That's partly because lending requirements are still stringent. So even though there is more competition among banks, they're often battling for the same high-credit customers.

"It's like the old days: The people who don't need a loan can get them, but the people who really need them can't get them," said Miami economist and bank consultant Ken Thomas.

Banks remain under pressure from shareholders and regulators to improve their bottom line, Thomas said, and if they can't do it through loans that means more pressure to raise fees and service charges, often in subtle ways.

"You have to be very careful" as a bank customer, he said. "When you see a bank with many branches, they pay for it, how? With higher fees."

Another troubling issue keeping down loan volume: The demand side of the equation hasn't rebounded yet.

"Certainly a successful business today is going to have more banks they can talk to than a year ago (but) unfortunately loan demand is still rather tepid," said Sam Davis, president and chief operating officer of Tampa-based American Momentum Bank. "Borrowers are not moving forward with robust expansions. They're being pretty conservative."

American Momentum, with more than $1 billion in assets and 24 branches in Texas and Florida, has been well-capitalized enough to purchase several banks in recent years.

But even with improved profits, the purge of problem loans is still going on for many.

"Many banks are still on the ledge," Davis said. "It will take many quarters of increased capital to build up … before they are jumping back in."

Alex Sanchez, president and CEO of the Florida Bankers Association, thinks the contention that banks weren't lending throughout the recession was overblown. Credit-worthy customers always had access to loans, he maintains.

Sanchez said he remains wary about turmoil in Europe, the roiling stock market and the effect of federal regulation on stifling community banking. Nevertheless, he agrees the litany of stronger banking news has been encouraging.

"As our economy improves, the banks are a reflection of that. If people repay their loans, banks can make more loans," he said.

"No one is screaming, 'Happy days are here again,' but there's no question things are getting better."

Jeff Harrington can be reached at [email protected] or (727) 893-8242.

Comments
Developer proposes Sprouts Farmers Market for Land O’Lakes

Developer proposes Sprouts Farmers Market for Land O’Lakes

LAND O’LAKES – A Sarasota developer is proposing to turn a vacant Winn-Dixie store in central Pasco into a Sprouts Farmers Market.Benderson Development filed preliminary plans Monday with Pasco County to redevelop the former Winn-Dixie store at the n...
Updated: 1 hour ago
Clearwater’s Clegg Insurance Group buys Advanced Insurance Brokerage

Clearwater’s Clegg Insurance Group buys Advanced Insurance Brokerage

CLEARWATER - Clegg Insurance Group of Clearwater announced on Wednesday it has bought Brandon-based Advanced Insurance Brokerage.The merger creates a firm with more than 2,000 customers and more than $10 million in annual premiums. Terms were not dis...
Updated: 2 hours ago
Wine dinners, beer projects and more will wet your whistle this summer

Wine dinners, beer projects and more will wet your whistle this summer

FILIPINO FOOD: WELCOME CHISMISHave you been to the Heights Public Market at the 73,000-square-foot Armature Works yet? It’s the buzzy food market in Tampa Heights with more than a dozen vendors offering up everything from rolled ice cream to Cuban sa...
Updated: 2 hours ago
Citizens considers hiking homeowners insurance rates about 8 percent

Citizens considers hiking homeowners insurance rates about 8 percent

Citizens Property Insurance Corp.’s is weighing another round of hefty rate hikes.Staffers with the state-run insurer of last resort have proposed raising the average rates for homeowners by 7.9 percent — just under the legislative cap of 10 percent ...
Updated: 3 hours ago
A tight supply cuts into Tampa Bay homes sales while prices keep rising

A tight supply cuts into Tampa Bay homes sales while prices keep rising

Tampa Bay’s two largest counties showed anemic home sales in May as prices continued to rise due to a tight supply.In Pinellas, sales of single-family home plunged nearly 12 percent from the previous May, the second-worst showing in a year. Prices, t...
Updated: 3 hours ago
Pinellas County files suit against companies who built Public Safety Complex

Pinellas County files suit against companies who built Public Safety Complex

CLEARWATER –– The Pinellas County Public Safety Complex was built to withstand a Category 5 hurricane, but officials now say the $81 million fortress has water leaks and cracked walls.The county filed a lawsuit this month against Harvard Jolly, the S...
Updated: 4 hours ago
CEOs are calling the separation of children and families at the border ‘inhumane’ and ‘tragic’

CEOs are calling the separation of children and families at the border ‘inhumane’ and ‘tragic’

Democratic and Republican lawmakers have spoken out about the Trump administration’s hard-line "zero-tolerance" immigration policy that has resulted in a sharp rise in children separated from their parents at the southern U.S. border. The president o...
Updated: 4 hours ago
Demolition looms for old Bromley office building at Midtown Tampa

Demolition looms for old Bromley office building at Midtown Tampa

TAMPA — Over the past month, demolition crews have gutted the old five-story Bromley office building at the future site of the $500 million Midtown Tampa project.On Sunday, the remaining skeleton of the building is scheduled to come down.The demoliti...
Updated: 4 hours ago
What historically high lumber prices mean for Florida home buyers

What historically high lumber prices mean for Florida home buyers

Blame a lack of rail cars in Canada or not enough semi trucks in the United States. Forest fires didn’t help. Tariffs played a big role, too. Even the buoyant economy takes part of the rap for frothy lumber prices, which hit all-time highs las...
Updated: 7 hours ago
What historically high lumber prices mean for Florida home buyers

What historically high lumber prices mean for Florida home buyers

Blame a lack of rail cars in Canada or not enough semi trucks in the United States. Forest fires didn’t help. Tariffs played a big role, too. Even the buoyant economy takes part of the rap for frothy lumber prices, which hit all-time highs las...
Updated: 8 hours ago