Large Miami-Dade banks got larger in 2009, trend expected to continue next year
By Zachary S. Fagenson
Consumer deposits in Miami-Dade grew faster at large banks like Citibank and Wachovia between 1999 and 2009 than at community and statewide institutions like BankUnited, Ocean Bank and City National Bank of Florida.
Experts say that trend will continue as the banking industry tries to regroup after its 2008 collapse.
A Miami Today analysis of Federal Deposit Insurance Corp. data found that deposits at Bank of America, Washington Mutual, Citibank, SunTrust Bank and Wachovia grew from about $7.6 billion in 1999 to more than $35 billion in 2009, more than 460%.
During the same 10-year period, deposits at BankUnited, Ocean Bank, City National Bank of Florida, TotalBank and BankAtlantic grew from about $4.5 billion to $10.1 billion, about 224%.
But both groups grew faster than the county average of the period. In that time, the county's cumulative deposits less than doubled, rising from $39.6 billion to $77.2 billion, or 195%.
Countywide, deposit growth, due to the recession, was mostly flat from June 30, 2008, to the same date this year. But from 1999 to 2007, deposits at national banks grew an average of 24.3% annually while deposits at the sample of state and community banks grew 11.99% annually.
Spikes at national institutions came after NationsBank's 1998 acquisition of BankAmerica, forming Bank of America, and Wachovia's 2002 entry in the market.
And some say the nationwide banks with a presence in Miami are poised to continue growing due to the number of troubled South Florida institutions that may slip in federal receivership. Meanwhile, others said the smaller banks' local focus is what will help foster their growth.
Either way, the battle to hold Miamians' money will rage on.
"We've got somewhere around $400 billion of deposits in [the state's] 67 counties," said Ken Thomas, a Miami-based banking analyst and economist. "Out of all those counties, our three counties [Miami-Dade, Broward and Palm Beach] have about $150 billion, which is incredible."
But despite being a deposit-rich market, no one institution has a firm grip on it.
As of June 30, Wachovia, now a wholly-owned subsidiary of Wells Fargo, had 13.05% of deposits, Bank of America 12.42% and locally controlled Ocean Bank came in fifth in market share with 4.92%
"The top three banks, usually a good measure of concentration, fell from about 43% to 33% [market share], meaning a more competitive marketplace with the three biggest players not controlling as much," Mr. Thomas said. "Competition is good and means, over time, lower prices and better and more banking services.
"There are some markets where the top two or three have more 50%" of deposits, he added.
Yet with all the troubled banks in Florida, large institutions may have the opportunity to boost their market share through FDIC-assisted acquisitions.
"If that's true," said Michael Oster, South Florida president for North Carolina-based BB&T Corp., which on Aug. 14 took over $20 billion in deposits and $25 billion in assets from Alabama-based Colonial Bank, "then you would think that the stronger, larger banks would be involved in the FDIC-assisted" acquisitions.
At the end of third quarter, the FDIC's list of problems banks sat at 552, up from 416 on June 30. And even though the agency doesn't release names or locations of troubled banks, it recently approved a 55% increase in its operating budget for 2010. The agency is to increase staff from 7,010 this year to 8,653 and bumped its budget for receiverships from $1.3 billion up to $2.5 billion.
So far this year, the FDIC has helped close about 130 banks, 13 of them in Florida.
But a recent report from Coral Gables-based BauerFinancial, which uses regulatory data to rate banks on a zero-to-five-star scale, gave two South Florida banks, Bank of Florida and Union Credit Bank, their first zero-star rating, while Turnberry Bank, Ocean Bank, Premier American Bank and Bank of Miami kept their zero rating from the previous quarter.
A number of Miami banks also dropped in ranking, including Miami-based TotalBank, Hallandale Beach-based TransCapital Bank and Bank of Coral Gables, which fell from three to two stars.
The only South Florida banks to earn five-star ratings were Miami-based City National Bank of Florida, which last year was purchased by Spanish banking giant Caja Madrid, West Miami-based Intercontinental Bank and Bank of Belle Glade.
If local institutions continue to founder in 2010, there could significant shakeups in the marketplace, with more FDIC-assisted acquisitions.
But local banks still play an important role, according the Bank of Florida Miami President Roberto Pelaez.
"Bank of Florida had $75 million [in deposits] in Miami alone as of 2008. As of Friday we're at $152 million," he said. "We have been growing. We're taking large accounts from major banks, quite frankly, because we're local, we make local decisions and we're very entrenched in the community."
And Mr. Thomas agreed, arguing that banks of all size looking to secure a long-term presence in a region generally tend to act with their communities in mind.
He singled out Bank of America, which despite being one of nation's largest banks has become one of the most prominent banks in Miami-Dade County and what he called "a good corporate citizen" due to its level of community engagement.
However, once a community or state bank is purchased by a larger bank or a private-equity firm, such as the consortium of firms led by John Kanas that bought ailing BankUnited in late May, its priorities may change as well.
"When somebody's based in another state their concerns are often different. With private equity it's even more so," Mr. Thomas said.
But "with the private-equity money they're not in for the long haul," he added. "They're going to be here for a certain period of time, take a bank public, flip it out and try to make a profit."