Special Reports

Banks in Florida face another challenging year

BRADENTON -- At first, it looked like 2009 would be the worst year for the banking industry.

And at the time it was. The 140 bank failures of 2009 were the most in 17 years.

But then came 2010, bringing 157 bank failures to date, of which 29 were in Florida. And bank analysts said the pace of failures will continue to be high in 2011 as the Federal Deposit Insurance Corp. has 860 banks on its “Problem List.”

“Certainly, banks are still mired in a lot of what’s been going on in the last couple years with the economy,” said Karen Dorway, president of BauerFinancial Inc., a Coral Gables bank rating firm. “The Florida market is still one of the more challenging markets. There’s still a lot of non-performing loans left on their books.”

Local banks say they are closely monitoring asset quality to keep federal and state regulators pleased.

Gateway Bank of Southwest Florida, based in Sarasota, kept a close eye on assets and stuck to diligent underwriting practices since it opened nearly three years ago.

The bank reported total assets of $146.9 million for the third quarter ended Sept. 30, and has a four-star rating from BauerFinancial. But Shaun Merriman, president of Gateway, says it has been a daunting task.

“It’s been quite challenging because the economy is still not out of this recession,” Merriman said. “We still see small business owners, consumers and various industries still struggling here locally.”

At First America Bank, President Allen Langford says the Palmetto-based bank has seen residential and commercial loans pick up. But unemployment is preventing a speedier recovery to lending in Manatee and Sarasota counties, he noted.

“We still have the challenge of unemployment,” Langford said. “There’s still those challenges we need to work through, and we’re still going to be very cautious and operationally conservative in 2011.”

Many banks along the West Coast have become more conservative as bank failures have populated this side of Florida all too frequently.

Since 2008, the FDIC has closed eight banks based in or with branches in Manatee and Sarasota counties.

The most recent local bank to close was the Bradenton-based Horizon Bank.

Bank of the Ozarks, based in Little Rock, Ark., purchased Horizon Bank in a loss-share transaction with the FDIC.

“Florida continues to be a market that is of high interest to banks that are looking to expand into a new market,” said Frank Knautz, a local bank analyst.

Banks with a high concentration of branches in Florida, including Manatee and Sarasota, have gained strong buyer interest from the out-of-state institutions.

n In 2009, the Lousiana-based IberiaBank took over the Naples-based Orion Bank, which had four local branches, and Sarasota-based Century Bank F.S.B., which had 11 local branches. IberiaBank entered into a loss-share transaction on $2.5 billion of the banks assets combined when both banks failed in November 2009.

n Trustmark Corp. and Cadence Financial Corp. signed an agreement in September to merge in a deal worth $23.8 million. Both banks are based in Mississippi, but Cadence has a higher southeastern U.S. presence with 38 offices across five states, and three branches in Manatee.

n In October, North American Financial Holdings, headquartered in Charlotte, N.C., invested $175 million in TIB Financial, which is based in Naples and has five branches in Sarasota.

n Bank of Montreal on Dec. 17 announced it will acquire M&I Bank, which has 11 branches in Manatee and Sarasota, for $4.1 billion.

n And on Wednesday, New Orleans-based Whitney Bank, which has 18 Tampa Bay area branches, announced a $1.5 billion deal to merge with Hancock Bank, of Gulfport, Miss.

“I do believe that we will see more mergers,” Knautz said.

Knautz, who is also a spokesman for LandMark Bank, said the Sarasota-based bank will continue its efforts to meet federal regulators stipulations to raise new capital or sell. The bank in September received a prompt corrective action directive.

Frank Knautz, spokesman for LandMark Bank, says the bank has a capital effort under way with a common stock offering to help the bank come into compliance.

In addition, LandMark sold its Lakewood Ranch branch to Chase Bank this fall for an undisclosed amount to help cut overhead costs. Knautz said LandMark gained from the sale of the facility, which will be reflected in its fourth quarter financial statement.

“The bank has undertaken a number of initiatives to maintain capital strength from within,” Knautz said.