Magazine article American Banker

New Banks of Sizzling '84 Now Mostly Gone or Idling

Magazine article American Banker

New Banks of Sizzling '84 Now Mostly Gone or Idling

Article excerpt

The start-up class of '84 was the biggest ever, but a dozen years later its remnants show only a glimmer of the glamour of the go-go '80s.

Three hundred ninety-one of the depository institutions that opened in 1984 were commercial banks. Today only 154 commercial banks from that year (including two that started then as thrifts) remain.

All together the independent survivors earned $104 million last year. Assets totaled $14.2 billion at yearend, but only 35 of the banks had more than $100 million.

Return on equity for 153 of the group (FDIC figures for the 154th seem to be in error) average 10.41%, and return on assets 0.95% - below the industrywide 14.68% on equity and 1.17% on assets. Only 51 of the group had ROEs above 15%, considered a benchmark for good returns to shareholders, according an American Banker ranking of the class survivors by return on equity.

The numbers are unimpressive because the survivors of the class of '84 are the less aggressive of the class, analysts said; most of those that grew fast or were formed for a quick sell are gone.

"Some of these banks were built by people in the community who were only interested in the bank serving the community," said Steven J. Didion, bank analyst with Hoefer & Arnett in San Francisco. "They weren't in it for a big kill. ... Growth didn't mean a lot to them as long as it was serving the lending needs of the area."

With the economy at a peak, the mid-'80s saw some of the most intense activity in new bank ventures in many years. The number of banks hit an all- time high at the end of 1984, at 14,496. Banks had been doing well up to that point, and investors wanted to get in on the action.

"It was one of those periods when you had capital looking for a place to invest," said Rudy Everett Schupp, chairman and chief executive of $335 million-asset Republic Security Bank, West Palm Beach, Fla. …

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