What's ahead for Tampa Bay banks and their customers?
• Fewer branches.
• More automated services.
• More small-bank mergers.
• Bunches of banks competing in a slowly improving economy.
• Regulators wary of a sharp rise in lending that may become too risky.
• Bigger banks still fighting lousy public perceptions.
Let's call these the six top banking trends for the Tampa Bay and the Florida markets.
Florida has always been rich with banks but too often poor on their bottom lines. Time and again, the state has proved to be one of the great sirens for banks, luring far-away banking companies convinced the now-third-largest state is awash with wealthy retirees and small businesses panting for the arrival of one more financial institution.
Instead, newcomers often find, too late, that Florida already is overrun with banks. They find cutthroat pricing on loans. They face the mop-up of record housing foreclosures. And banks find it hard to differentiate themselves when rock-bottom interest rates undermine traditional marketing of CDs hyped with laughably low returns below 1 percent.
In earlier times, Florida was famous for the pace at which new banks were started, typically by serial community bankers backed by wealthy local dentists and lawyers. The formula was simple. Start a bank. Grow the bank for about five years. Sell the bank to a larger institution at a healthy profit. Repeat process.
No more. Bank startups these days in the Tampa Bay area are rare indeed. The biggest banks dominating Florida no longer need to buy tiny Florida banks. And small banks, facing a fresh round of tougher federal rules from the Dodd-Frank Act (passed after the financial meltdown in 2007-2009), will likely start to merge to trim the rising overhead costs of complying with that law.
Since 2000, about 600 U.S. banks have failed. Of those, 75 failures were based in Florida, forcing federal takeovers and the financial remains to be auctioned off to healthier institutions. Eight of those 75 failures were banks with headquarters in the Tampa Bay area, with four more failures of Bradenton banks.
The good news is the weaker banks (and bankers) have been largely weeded out, and the modest upswing in the area economy has improved the health of surviving institutions. The Tampa Bay Times examined 26 commercial banks still based in the Tampa Bay market. Using one measure of health — Bauer Financial's quarterly 0- to 5-star ratings (5 stars healthiest, 0 stars extremely weak) — the vast majority of banks with headquarters in this metro area are strong and prosperous. No banks in this area received 0- or 1-star ratings, though there are nine 0-star-rated banks across Florida, based on the latest available data compiled from the FDIC.
The bad news is that the biggest banks here, those that control the vast majority of the Tampa Bay and Florida markets, are duds when it comes to pleasing their own customers.
An annual J.D. Power survey that measures the satisfaction of retail bank customers was released Thursday. It ranked Bank of America, the state's largest bank by market share, lowest among 10 banks. Is it any wonder? The Charlotte, N.C., behemoth has seemingly careened from one bad-news fiasco to another in recent years, from ham-fisted bullying of mortgage borrowers to agreeing this past week to pay $180 million to settle a lawsuit by private investors who accused the bank and others of manipulating foreign-exchange rates.
Wells Fargo Bank, another large player in Florida, also ranked below average in the J.D. Power results. New York's JPMorgan Chase, operating as Chase Bank, ranked highest in Florida, though the bank recently called a halt to its recent binge of building area branches. Chase was followed in the J.D. Power Florida rankings by Canada's TD Bank, Pittsburgh's PNC Bank (heavily advertising in this market lately) and Atlanta's SunTrust Bank.
Regions Bank, based in Birmingham, Ala., ranked just below SunTrust, but recently ran into bad publicity. The bank will pay a $7.5 million fine for improperly charging overdraft fees to hundreds of thousands of customers. The Consumer Financial Protection Bureau, a recently created federal regulator, said the bank charged the fees to customers who had not opted in to overdraft coverage. Such charges are not allowed.
But let's not rely just on J.D. Power findings.
Miami's Ken Thomas, a longtime independent banking analyst at K.H. Thomas Associates, LLC, has prepared the "Florida Bank Complaint Analysis" since 2008. It looks at the complaint data of banks, as well as credit unions and other financial institutions compiled by the Florida Department of Financial Institutions. Some highlights of the 2014 analysis:
• Total complaints against banks and credit unions were up 7 percent from 2013, but still about half the number from 2009, the peak complaint year in the thick of the mortgage crisis.
• Consumer-friendly banks based on this analysis include SunTrust and BB&T, both with a small share of total complaints relative to their deposit market share. (Curiously, BB&T ranked slightly below average in Florida in the J.D. Power rankings.)
The analysis also found that for the first time since 2008, Bank of America did not have the largest number of complaints. The title goes to Wells Fargo, the state's second-largest bank.
Who says banks do not know how to share?
Contact Robert Trigaux at rtrigaux@tampabay.com. Follow @venturetampabay.