Florida Bank Failures Decrease

By Scott Blake
Bank failures in Florida have continued to slow as the fallout clears from the housing market crash and the financial crisis, experts say.

Only two Florida-based banks appeared on the Federal Deposit Insurance Corp.’s list of failed banks this year through March 9. That compares to 12 failures in all of 2011 and 29 in all of 2010 among Florida-based banks, according to FDIC records.

One reason for the drop has been that banks have brought their problem loans and other "non-performing assets to a more manageable level," said Karen Dorway, president and research director at BauerFinancial Inc., a banking analysis firm in Coral Gables.

However, "South Florida still has a glut of repossessed real estate," Ms. Dorway added, "and that’s a drain on the banking industry."

Bauer ratings released this month show that the strength of Florida banks has improved. The firm rated 76.2% of Florida banks as "recommended" and only 2.4% of Florida banks as "troubled and problematic," based on financial data from the end of 2011.

That compares to 69.9% of Florida banks receiving "recommended" status and 8.5% receiving the "troubled and problematic" label as of the end of 2010, Bauer data shows.

The numbers also have improved nationwide, with 64.5% of banks earning Bauer’s "recommended" rating — a percentage not seen since the first quarter of 2008. At the same time, more than 11% of banks nationwide received the "troubled and problematic" rating.

"The latest ratings," Bauer reported, "show that the majority of both banks and credit unions were able to weather the financial storm of the past several years and bounce back on top."

Meanwhile, the number of consumer complaints against banks in Florida dropped to 1,231 in 2011 from 1,379 in 2010. Complaints peaked in 2009 at 1,840, nearly doubling from 992 in 2008, according to Ken Thomas, a Miami-based economist and independent banking consultant.

Mr. Thomas, who cited statistics from the state Office of Financial Regulation, noted the number of complaints is influenced by macro factors, such as the economy and the financial and housing crises, and my micro factors specific to individual banks.

Some of the "macro" problems continue today, Mr. Thomas wrote in a recent analysis of bank complaints.

"The Great Recession, which began in December 2007, ended in June 2009," he wrote. "The financial crisis, which began in August 2007, peaked on September 15, 2008, when Lehman declared bankruptcy; the financial crisis continues today not just abroad with the problems in Greece but also here as witnessed by our "Friday night’ bank closing."

He added: "The housing crisis, which began in early 2007, continues today."To read the entire issue of Miami Today online, subscribe to e -Miami Today, an exact digital replica of the printed edition.