Writer: Esteban Pages
3 min read September 2023 — 2023 got off to a rocky start for the banking and finance industry with the failures of Silicon Valley Bank, Signature Bank, First Republic Bank and Heartland Tri-State Bank. On top of that, higher interest rates and prevalent inflation added to the uncertainty of financial institutions nationwide, responding with increasingly stringent lending standards and credit terms. Yet, Broward County’s financial landscape shows encouraging signs.
Regulators recently approving Dade County Federal Credit Union’s charter expansion into Broward — effectively surpassing the 2.5 million population cap established by the National Credit Union Administration — and Amerant Bank’s new Broward regional headquarters are a testament to the region’s financial strength.
Invest: sat down with local leaders from different banking and finance backgrounds to discuss their outlook and emerging industry trends.
What is your assessment of the banking sector in South Florida right now?
Richard Becker, Managing Director, Cross Keys Capital: It’s so different when you compare South Florida to other parts of the country. With all the people who are moving here and the amount of innovation and business startup happening in South Florida, it’s been very exciting. We’ve had more opportunities over the past two years with all these relocations since the pandemic than ever before. When it comes to the private equity community, they have moved down here in droves and that has really brought the investment community together. To date, there haven’t been many new investment banks formed, so we at Cross Keys have been lucky as it has created ample opportunity.
We’re a national firm, but this year 65% of our business sales have been done in Florida, inclusive of South Florida, Jacksonville and Tampa. As a firm, we are super excited about what the Brightline will bring to the region. The younger folks in the firm don’t mind having deals done across the country, but the older leadership team is thrilled if we can be in our own bed at night. So the increase in sell-side opportunities in South Florida and Florida in general has been very welcomed.
Keith Costello, Co-founder & CEO, Locality Bank: The rapid growth of interest rates had a huge effect on the overall portfolio of those banks. With rising interest rates, bond portfolio prices decrease. If your bond portfolio goes down, and many of them were reduced by much more than 10%, you have a shrinkage on your asset side and you have liabilities that are not decreasing, so your equity goes down. It is a lot about managing risk and your balance sheet.
Another interesting lesson that we hope regulators understand is that this is a crisis that did not happen among the community banks or the small banks sector. Silicon Valley Bank and First Republic were not Chase or Bank of America but they also were not small banks at all. We hope that the new regulations coming out of this are not going to affect banks our size.
The clients that we’re working with are family-owned businesses. They’re smaller, local companies. Most of those companies are not going to receive high-level service and attention at a larger financial institution. Our opportunity is between $1 million and $5 or $10 million. We’re seeing that a lot of companies are not getting the attention they need and most importantly, they’re not getting any money when they need capital to run their businesses. That is an opportunity for us.
Deana Hennessey, President & CEO, PriorityONE Credit Union of Florida: It’s crazy out there right now with the bank failures that are happening. We have to reassure members that based on the cooperative structure of credit unions, we operate under a different model than banks. We’re very member-focused, and we have great stability and more conservative lending practices. We also have different regulatory oversights than banks on things like deposit insurance.
We are almost over-regulated but we always make sure to be in compliance. The organization is ultimately responsible. How else can we help and educate our members on their finances if we can’t do that ourselves? We’ve had to really keep an eye on our ratios to make sure we are where we need to be for our institution to remain viable for the long term.
What is your outlook for Broward’s financial landscape?
Becker: The pandemic has accelerated the idea that South Florida is, and should be,a gigantic banking community. And no longer just a jumping off point for Latin American business. Whether you’re in private equity in West Palm Beach or asset management or banking in Fort Lauderdale or in hedge funds or crypto in Miami, the foundation for financial service growth here is as good as anywhere in all of North America right now. Fort Lauderdale has tremendous upside over the next two decades. We view ourselves as lucky and fortunate that we established our professional services firm here in Broward in 2002. In hindsight, it was just an exceptional decision.
Hennessey: We have to continue finding new ways to improve our digital services. PriorityONE is rolling out a new lending product that relies on artificial intelligence (AI). While we don’t have the capacity to develop this on our own, we have some great partners to help develop and implement this. It will give our members a faster and more personal experience that will be transformative. As credit unions, it’s our nature to cooperate, so we always share best practices and how we can drive change and operational efficiency. As a member of the Credit Union Women’s Leadership Alliance, which is all about sharing ideas, that collaborative nature will be what continually helps credit unions excel into the future.
Costello: I am optimistic about this area. You wouldn’t start a business in a market unless you believed in that market, unless you were optimistic about the future of that community. We’re happy to be headquartered in Fort Lauderdale because I do believe in the future of this market.
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