Signs of the Times

Following the bank failures of the Great Recession, Southwest Florida is seeing an influx of new financial institutions and mergers.

The names on the monument signs popping up on local roadways are telling. Bank OZK, Lake Michigan Credit Union, Synovus.

It appears that Southwest Florida is drawing renewed interest from Northern-based financial institutions following the wealth of clients attracted to seasonal homes or who are permanently relocating. The business expansion also signals the growing stability in the decade since bank failures hit their peak after the Great Recession’s housing market crash.

In other words, the local banking and finance industry is thriving.

Thomas Smythe

“Historically, Midwestern banks have a strong presence in Southwest Florida,” says Thomas Smythe, a professor of finance at Florida Gulf Coast University. “It’s got be related to snowbirds, moving with their clientele who come down here from January to May, so they feel a need to have a presence. It’s likely going to be their wealthiest clients, as well, so they want to service them.”

Southwest Florida communities, of course, consistently rank high on lists for the best places in the nation to live and retire. Companies engaged in deposits, loans and investments have found the region is a lucrative place to do business, too.

“I think it has a direct correlation with the clientele that is being served,” says Thomas Smythe, a professor of finance at Florida Gulf Coast University. “I was stunned at the bank presence down here. Fort Myers is a big city but it’s not New York or Chicago. The community bank presence here is like a major banking market.”

Customers want the convenience here of the financial institutions they have been accustomed to banking with for years before traveling south. Whether they live here full-time, seasonally or are just visiting, it’s a comfort factor to have a brick-and-mortar branch of their financial institution nearby.

Here is a look at Southwest Florida’s financial industry’s recent activity, and how it reflects on the region’s economic and population growth.

 

BLENDING BANKS

A few recent bank mergers are changing the local landscape.

At the beginning of the year, Georgia-based Synovus Financial Corp. completed its acquisition of FCB Financial Holdings, owner of Florida Community Bank, National Association.

With the merger of FCB, Synovus became a top-five regional bank by deposits in the Southeast, with 300 branches in five states, including 51 former FCB offices in Florida markets. Synovus now has six locations in Lee, four in Collier and three in Charlotte.

Bank of the Ozarks, based in Little Rock, Arkansas, came to the Gulf Coast in 2010 when it bought the failed Horizon Bank of Bradenton. The recently rebranded Bank OZK has six offices in Lee County, three in Charlotte County but no offices yet in Collier County.

“Bank OZK, through our 43 Florida offices, serve customers in Florida’s most populous and high-growth areas, which is very attractive to us,” says Susan Blair, executive vice-president of corporate communication. “We have added to our network of banking offices in Florida in recent years and we plan further expansion in Florida.”

Truist, a seldom-used term for selflessness, is the proposed name for a new bank that would result from the pending merger of BB&T and SunTrust banks in the southeastern United States. If the $66 million mega-deal is approved by the federal government this quarter, Truist Bank will be the largest bank merger since the 2008 financial crisis. The proposal to create the nation’s sixth-largest bank is notable because of its size and post-recession timing.

“We’re confident the BB&T/SunTrust combination will be positive for consumers and communities, creating more value for all of our stakeholders,” says Thomas A. Crosson, a corporate spokesman for SunTrust Bank.

SunTrust and BB&T, an acronym for Branch Banking and Trust Co., simply decided to insert an “i” into the middle of trust—a word both bank names have in common—to form Truist. BB&T, based in Winston-Salem, North Carolina, has more than 1,800 financial branches in 15 states. Headquartered in Atlanta, SunTrust Banks Inc. operates more than 1,200 offices in the Southeast and Mid-Atlantic states. Their combined geographical footprint would cover 17 states, including Florida.

“That was a strategic merger in terms of market overlap or lack of market overlap, otherwise the two of them are very, very similar,” Smythe says. “It’s what we typically look at as a merger of equals because they are about the same size.” SunTrust has 16 locations in Lee, eight in Collier and five in Charlotte. BB&T has 12 locations in Lee, six in Collier and three in Charlotte.

The creation of Truist Bank, however, may mean fewer bank locations instead of more in Southwest Florida. The reach of BB&T and SunTrust overlap in many neighborhoods, so redundant branches are bound to be consolidated.

 

CREATING CREDIT UNIONS

Florida credit unions exceeded the national growth rate last year, increasing assets by 8.5 percent, according to the League of Southeastern Credit Unions & Affiliates. The operations are growing at a fairly good clip because the federal government radically loosened their standards, FGCU’s Smythe says.

“We’ve got a much wider variety of credit unions,” he says. “Credit unions have grown largely because Congress has loosened the definition of what the capture audience needs to be.”

For instance, Tampa-based Suncoast, Florida’s largest credit union, formed 85 years ago originally to serve teachers in Hillsborough County. Later expanded to serve all school employees along the coast, Suncoast became state-charted six years ago and was opened to anyone who lives, works, attends school or worships in Charlotte, Lee, Collier and 14 other counties served by the credit union. The credit union’s members no longer have to qualify to join by being part of a specific industry, company or organization.

Another credit union originally founded for school employees about the same time as Suncoast, Lake Michigan Credit Union entered the Southwest Florida market in 2015 and opened branches in Bonita Springs, Fort Myers and Naples. The largest credit union in Michigan, LCMU today offers membership to anyone who lives in Michigan’s lower peninsula or the 14-county Southwest Florida region, immediate family members of LMCU members, or anyone who contributes $5 to the nonprofit ALS Foundation regardless of which state they reside in.

Following retired baby boomers south, Lake Michigan Credit Union moved into some vacated First Third branches. LMCU also acquired Naples-based Encore Bank in April 2018, extending its reach up the Gulf Coast and into Charlotte County and bringing its Florida branch count to 10.

Last October, Achieva Credit Union acquired Preferred Community Bank and its branches in Cape Coral, Fort Myers and Lehigh Acres. In 2015, Achieva made national news for being the first credit union in the United States to acquire a bank in whole with the purchase of Calusa Bank, based in Punta Gorda.

Since then, a national rise in credit unions buying banks has occurred, mostly because credit unions as nonprofits do not have the same pressure a bank faces in ensuring shareholder returns. Another credit union’s acquisition of a bank is pending in Southwest Florida.

MidFlorida Credit Union recently announced its proposed acquisition of Iowa-based First American Bank, which has area branches in Naples and Cape Coral. Striving to be known as “the non-bank bank,” MidFlorida also began as a teachers’ union in Polk County. When the deal closes later this year, the credit union will add Collier and Lee counties to its service area that now includes 60 branches stretching from Orlando to Arcadia. Credit unions are governed under different rules than banks, but they perform many of the services that only banks once did without paying taxes.

 

Charles K. Idleson (left) is Florida regional president at Busey Wealth Management.

FUSING OTHER FINANCIAL INSTITUTIONS

In late August, Charles K. Idelson, then president and CEO of Investors’ Security Trust, was sipping champagne in Champaign, Illinois, to celebrate his Fort Myers-based trust company’s new partnership with First Busey Corp., headquartered near the University of Illinois campus.

The newly minted Busey Wealth Management merged Busey’s banking options with the wealth management services of the independently state-chartered Investors’ Security Trust. Through additional tools and resources and the backing of a $9.25 billion organization, Idelson says the combined company is better positioned to serve existing and new clients. “It’s going to be something new for Busey.

“It’s going to be something new for us and hopefully it’s going to be something new for the community,” says Idelson, who now is the Florida regional president of Busey Wealth Management.

Busey desired to increase its presence in wealth management by merging with a strong, profitable company with deep expertise and strong ties to Southwest Florida. Interestingly, Investors’ Security Trust sought out a merger that would enable the company’s continued growth and longevity here.

“We just didn’t have the resources to get us to the next level, with all honesty,” Idelson says.

The local firm started with 30 suitors before narrowing them down to 10, then three, then finally to Busey, a company Idelson says had every component they were looking for, especially shared common values and a commitment to benefit clients, associates, shareholders and the community through relationship management and pricing.

Not only will no employees be lost in the combined organization’s six locations in the Fort Myers area, but more staff members will be hired as the venture grows, Idelson says. In fact, the pending merger of BB&T and SunTrust may provide a hiring opportunity for Busey, says Idelson, who served as a president and CEO for SunTrust’s operations in Lee and Collier counties for more than two decades until a reorganization eliminated his job.

“For them to make it work, they are going to be closing more offices than you think. They are going to be losing a lot of employees, too,” he says. “It’s going to be an opportunity for us to capture some good employees and clients that they abandoned years ago.”

Large banks centralizing operations within the last 10 years have reduced staff, reduced services and probably even are based in another state, Idelson says.

“We are focusing on Southwest Florida and it’s a chance to build that up,” he says. “We feel we are going to have a strong impact in the market as other financial institutions are decreasing their staff, closing their offices and providing less services. It’s going to be a benefit to our clients and future clients.”

 

Garrett Richter is president of First Florida Integrity Bank.

THE INDEPENDENT LENS

The president of First Florida Integrity Bank since 2007 and a Florida legislator for 10 years, Garrett Richter is intimately familiar with bank mergers and acquisitions. He was a founding director of the First National Bank of Naples, which was acquired by the FNB Corp. 1997. He also was a founding executive at the First National Bank of Florida prior to its acquisition by Fifth Third Bank in 2005.

“Southwest Florida is an attractive location for banks because of all the wealth,” Richter says, noting that the region is a good, solid market with a significant amount of deposits. “Locally headquartered community banks tend to be a benefactor from mergers because customers are reluctant to change.”

Richter predicts the BB&T-SunTrust merger will be approved because the two cultures are similar, what he describes as good, solid financial institutions. Nevertheless, all customers may not necessarily favor the union.

“There may be some fallout of customers who don’t like the situation and look for alternatives,” he says. “We are certainly an alternative.”

One of the secret ingredients of First Florida Integrity, the only community bank headquartered in Collier County, is a team of seasoned, experienced employees at its seven offices, Richter says.

The average number of years banking experience is greater than 25 years, so we have experienced bankers in all of our locations,” he says. “I think it gives us the ability to provide a very quality level of service.”

Likewise, when Edison National Bank was organized in 1997, Robbie and Geoff Roepstorff and the three other directors charted the destiny of the Fort Myers bank, making a conscious decision and a concerted effort to remain sustainable and independently operated. They had just experienced a merger firsthand the previous year as employees of Heritage National Bank in Fort Myers when it was consolidated with SouthTrust Bank of Florida. From the beginning, the Edison bankers planned to be around two decades rather than creating a quick investment by selling out to the highest bidder.

“We just wanted to ensure we are going to be here for the long term. Every decision we made was for the long term,” Robbie Roepstorff says. “We put together a board and a group of shareholders who wanted to be here for the long haul. Every community needs a community bank that will walk the talk.”

Edison’s leaders obviously have seen a lot of mergers and acquisitions over the years and a lot of local banks fail during the recession, but they have managed to hold their own for more than 20 years ago despite having plenty of knocks on the door to sell.

“We were here at the height of good times and weathered the storm and we’re still here,” Roepstorff says. “Safety and soundness have been our directive from day one and we’ve stuck to that. Our numbers are sustainable.”

The number of their four strategically located offices remains sustainable, too.

“We said from day one that we are not going to put a bank on every corner,” says Roepstorff, noting that Edison uses courier services to bridge the gaps between branches.