Orlando-area community banks remain optimistic that careful business practices and strong community ties will be enough to steer them through the financial chaos nearly two years after the national bail outs.
Central Florida is faring slightly better than Tampa, Miami and Jacksonville included in the top five U.S. markets in free fall whose economic indicators 'have gone from bad to worse with no signs of recovery,' according to Forbes.com.
Citizens Bank of Florida
Customers now look for different qualities in a bank, according to Rick Lee, President and CEO. "Before the recession people were chasing the best interest rates, now they look for customer service, strength and stability."
To assess the strength of a bank Lee suggests consumers review Web sites like bankrate.com, FDIC.gov and bauerfinancial.com. Citizens Bank of Florida and Commerce National Bank & Trust of Florida are two of a handful of banks in the Orlando area with a four-star designation by Bauer Financial.
"We have always been careful with arranging loans. I'd like to see an end to the too-big-to-fail policies which got us into this mess," said Lee, who anticipates some impact from additional regulations when the upcoming Financial Regulation Bill is passed by Congress.
Lee bears in mind that behind the statistics are stories of citizens trying to deal with economic hardships. "We have to be focused and have a heart for our customers who are struggling."
Commerce National Bank & Trust of Florida
President Ray Colado said customers like that they operate and solve problems at the local level. "When customers find their way to a community bank they don't go back. Our customers' problems are solved right here in Winter Park Florida, and there is value to that," he said.
Colado believes problem loans without short term solutions will influence more bank failures in the state and the country.
Colado's bank is still lending but keeping an eye on the percent of problem loans to capital. Banks are regulated by that percent and may come under federal scrutiny if the percent is too high. Colado said, "When that percent rises, it is much harder on the next person who comes in my office with a problem loan and on us to not raise the percent."
Federal Trust Bank
After several months of negotiation, Federal Trust Bank was able to secure The Hartford as its sole shareholder which was great news for President and CEO Dennis Ward. "This has helped us address issues and think positively about the future," Ward said.
Headquartered in Sanford with 11 locations across five Central Florida counties, FTB knows its community customers from Winter Park to Palm Coast and Eustis to Port Orange. "We've learned that if we know the people we're dealing with, it makes the interaction much more productive. It's incredibly helpful for a bank to know its customers which larger institutions can't do."
The 35-year banking veteran hopes to see more regulation for other players in the banking services industry like rating agencies and mortgage brokers. He hopes that the legislators will be thoughtful about the impact and benefit of future regulations on the consumer.
"There can be unintended consequences on borrowers," Ward said. The former CEO of Regions Bank has seen a change in what customers look for in a bank. "No one paid much attention to their bank before, it was a commodity, now they are more discerning."
First Colony Bank
CEO Bruce May experienced the customer shift to community banks since First Colony's recent opening in 2008.
"Because of failing and closing banks due to fraud and loan problems there has been a huge shift toward community banks. When you know the Board of Directors personally and what they stand for, it makes a difference," said May.
Technology has also leveled the playing field for community banks as customers depend less on multiple brick and mortar locations and more on debit cards, scanning, remote deposit capture and online banking.
May remains optimistic about Maitland's economy and growth.
"We want to continue to be good stewards to our shareholders and do loans that make sense. There is always an opportunity for good buys especially in real estate for those who have resources." May predicts 2010 will be more challenging because many businesses used up their rainy day funds in 2009.
"I do expect to see more bank consolidations."
May would like to see existing regulations applied more consistently and for the free market to work.
Economist point of view
Sean Snaith, director of the University of Central Florida's Institute for Economic Competitiveness believes that "although many community banks are on solid ground there will be more failures before the banking crisis is over."
The commercial real estate fallout will be the aftershock from the residential real estate crisis and has not fully manifested itself, Snaith said. Developers are beginning to run out of money as businesses find rent difficult to pay resulting in empty retail space. Snaith views it as a wave poised to crash as the number of real estate foreclosures accelerate this year and into 2011.