How the South Florida market is impacting banks of all sizes
Tony Coley President – South Florida Region BB&T
In 2015, Florida banks grew loans at more than twice the average percentage growth of other U.S. financial institutions. What are the main differences in such growth for the different type of institutions?
South Florida is such a dynamic market. There are always opportunities here because of the international influence and our tremendous diversity. For example, we may have a deceleration in a certain sector in the U.S., but internationally that sector may be growing. In that scenario, South Florida may still benefit because of the impact that international demand has on our market. These opportunities impact banks of every size. Therefore, it doesn’t really matter if you are a large bank, a community bank or a regional bank, there are always going to be new opportunities because of South Florida’s dynamic and fast-growing nature. However, there are some specific challenges depending on size. A good example of this is the competition community banks face from regional banks and big banks who have enough scale to provide a larger array of products to their clients and have a proportionally lighter burden when it comes to regulatory compliance. That being said, it is important to underline that all banks are doing better.
How could higher interest rates affect the mergers and acquisitions market?
One of the main impacts of an increase in interest rates is a higher profit margin for the financial sector. As a consequence, on the one hand, financial institutions will have more cash to spend on acquisitions, but on the other hand, the companies that would be willing to sell would get a better price. Therefore, the most likely scenario is an increase in mergers and acquisitions activity.
What are the main opportunities for community banks to grow in the corporate banking market?
The positive overall business environment in the region will naturally bring important growth opportunities for community banks. Another interesting aspect that will potentially benefit community banks; and all banks for that matter, will be the new regulatory environment that could arise from the changing political landscape. The hopes are that there will be fewer regulations and lower taxes, which should lead to higher overall growth. Of course, this is going to be phased in. Nothing happens overnight. But as companies get more confident with the direction of the economy, business activity and investment will rise and, therefore, the banking industry will benefit. In 2017, we will see a much better performance of the banking sector as a whole than 2016. We see plenty of business opportunities.