Think Florida's banking industry is fat and slow moving, controlled by two dominating institutions — Bank of America and Wells Fargo? If so, you're missing the bigger picture.
The banking scene here is constantly changing. Just witness the latest wave of financial players — banks coming out of lower-profile states like Arkansas, Alabama and Louisiana — seeking to expand in the Sunshine State.
So let's ring out the old (banks) and ring in the new. Let's first set the scene with five quick takeaways:
1. Not one of the five biggest banks in Florida of 20 years ago, based on market share of deposits in the state, exists any more. From No. 1 First Union on down, they have been merged into other institutions, a clear signal that this market never stands still for long.
2. Today's top five banks in Florida control 52 cents of every $1 of banking deposits here — despite the fact that hundreds of banks have a presence in this state. The five banks are headquartered in North Carolina, California, Georgia or New York. Not one is headquartered in Florida.
3. Twenty years ago, 374 commercial banks operated in Florida. Ten years ago, that number had barely decreased to 365. Then the Great Recession hit. Many banks failed. More were merged into stronger partners. Now the latest FDIC numbers say only 241 banks are operating in Florida. That's nearly a third fewer banks now than 20 years ago — despite having far more people and a bigger economy here than in the mid-1990s.
4. Starting new community banks in Florida used to be a common practice. Now such startups are extremely rare after regulators tightened rules and raised costs. Florida has lost 15 to 25 banks a year without adding replacements, says Gregory K. Bader, a partner and banking specialist at the Gunster law firm. "There are fewer banks out there."
5. For decades, many out-of-state banks have looked longingly at Florida as the promised land. Not only is Florida growing faster than many home markets of northern- and midwest-based banks, but these same institutions like to "follow" their retiring and wealthier customers to Florida to sustain long-term relationships. That trend long ago earned Florida the unflattering nickname of being a "banking colony" — a big state that let banks from afar control how money is used in the state.
Combined, Bank of America and Wells Fargo control a third of Florida's banking deposits. That leaves 239 other banks fighting over the remaining two thirds of the market.
That may sound like too many banks chasing too few customer accounts. But it has never stopped newcomer financial institutions based elsewhere from pouring into Florida, eager to grab even a thin slice of the growing business pie.
In recent years, a flurry of new players with names like PNC out of Pittsburgh, Fifth Third out of Cincinnati, BB&T out of Raleigh and TD Bank out of Toronto have bought banks in Florida and expanded with new branches of their own.
New York's JPMorgan Chase, the country's largest bank, in the 1990s tried but failed to establish a consumer branch network in the state. But the bank returned more recently with deeper pockets, building new branches in many Florida metro areas. Now the bank ranks No. 4 in market share of deposits in Florida. Citi, another New York giant, ranks No. 5. Atlanta's SunTrust — the only large bank brand still around Florida after 20 years — is No. 3.
And then there is EverBank, perhaps Florida's most progressive bank for doing so much of its business over the Internet. Based in Jacksonville, EverBank ranks No. 6 in state deposits share. Its rapid growth caught the eye of New York's Teachers Insurance and Annuity Association, better known as TIAA, which recently offered $2.5 billion for the bank in a deal that should close later this year.
The newest entrants in Florida are from lesser-known metro areas and arriving with brands less familiar to Floridians. These banks are flexing their economic muscle by purchasing smaller local banks in the state. From Arkansas, for example, Centennial Bank is headquartered in the state's seventh largest town, a place called Conway. Another Arkansas insitution, Bank of the Ozarks, hails from Little Rock. IberiaBank, based in Lafayette, La., followed up its 2015 purchase of Florida Bank Group in Tampa by purchasing Miami's Sabadell United Bank this year.
In Alabama, Birmingham's deep bench of regional-sized banks are especially active in Florida. Regions Bank, via purchases of AmSouth Bank and other institutions, has climbed to No. 7 in Florida market share, a rather remarkable rise from obscurity. Another Birmingham bank, National Bank of Commerce this month agreed to buy Trinity-based Patriot Bank, a small community bank in Pasco County, as its first step into the broader Tampa Bay market.
Does all this merger activity suggest major disruption ahead in Florida's banking markets? Hardly. But history suggests banks even as big as Bank of America or Wells Fargo do not last forever. Eventually, they will likely become part of some other rising financial powerhouse. Both institutions have suffered major public relations gaffes. BofA was raked over the coals for hamfisted mortgage lending practices during the recession. And Wells is still taking legal and public relations heat for an out-of-control sales culture. Wells pushed its employees so hard to sell more services that thousands of its staff opened fake accounts just to keep their jobs.
Of the 241 banks operating in Florida, only 17 institutions can claim they control more than 1 percent of the state's market of banking deposits. Area banks whose names are well known in the Tampa Bay market — including The Bank of Tampa and USAmeribank — still hold only tiny shares, less than 0.5 percent, of the overall banking deposit market.
That's part of the beauty for banking customers. There are many choices — big or small, mass convenience or customized service — out there among banks. Not to mention many more options among credit unions and other kinds of financial service providers. Choose wisely.
Contact Robert Trigaux at firstname.lastname@example.org. Follow @venture tampabay.