Newspaper article Sarasota Herald Tribune

Bank Mergers, but Few Failures, Are Expected in '15

Newspaper article Sarasota Herald Tribune

Bank Mergers, but Few Failures, Are Expected in '15

Article excerpt

ONE YEAR AGO KEN THOMAS predicted Florida would see fewer than five bank failures in 2014.

He was right, though a little on the high side, as regulators closed just one state-headquartered lender last year.

This year, Thomas, a well-known banking industry expert and economist in Miami, believes no more than three Florida banks will go under.

"Those that would have failed are being sold to other banks here and elsewhere," he said. "They would have failed in some other state, like Illinois, but not here, since there is such a strong demand for Florida banks, and a limited supply with no new banks being allowed."

Even so, Florida got off to a quick start in 2015. On Jan. 16, regulators shut down First National Bank of Crestview, a small, $79.7 million-asset bank whose three offices and accounts were taken over by First NBC Bank of New Orleans.

It was the first Florida bank failure since June 20, when Valley Bank of Fort Lauderdale went down.

Thomas called for 15 to 25 bank failures nationwide in 2014, and regulators ended up closing 18.

"As the economy improves, the number of problem and failed banks decline," he said. "This year, I predict just 10 to 15, or about one per month, on average."

The recovery of the Florida banking sector -- after 71 failures during the downturn, including nine in Southwest Florida -- has tracked the rebound of the real estate industry, where sales and property values have gained for several years.

While some worry about another real estate bubble, Thomas isn't buying into the theory.

"I think both 2015 and 2016 will be very strong years for both Florida and the U.S., even with the expected interest rate increases, which will be further out and smaller than most people think," he said.

Analysts expect Florida banks will attract more merger-and- acquisition offers this year as the strengthening economy and growing population entice buyer banks to the state.

"Florida is one of the hottest M&A states, and it may even overtake Texas, which was very hot until oil prices plummeted," Thomas said. "As the third-largest state and still growing, everyone wants to be here, so there is very strong demand for Florida bank franchises and a very limited supply, with no new banks being formed. …

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