New banks: The nine-year drought

How long has it been since a new bank on the Gulf Coast has opened?

Nine years, according to a search of state records. And no applications are pending.

The last startup bank on the Gulf Coast regulators approved was Shamrock Bank of Florida in Naples on Jan. 27, 2006, state financial records show. (Crosstown rival First Florida Integrity Bank acquired Shamrock last year.)

The drought has as much to do with the regulatory environment as it does with low valuations investors place on financial institutions today, especially community banks. Many bankers say the size of an institution now has to surpass $500 million in assets to reach profitability.

That's in part because of the additional compliance burdens the government has placed on banks since the recession. Another reason: profit margins on lending have remained skinny while the Federal Reserve keeps short-term rates low.

As a result of these factors, community banks today barely trade above book value. That's nowhere near the bonanza of four to five times book some investors earned when they sold their banks during the boom of the last decade. So the days of small groups of investors pooling a few million dollars together to form a community bank are likely gone forever.

Investors, instead, are looking at acquisitions of existing banks. Winter Haven-based CenterState Bank of Florida is one of the leaders in that area. For more on the acquisition trend, see Page 10.