homepage logo

Local bankers finding ‘note of optimism’ in the troubled economy

By Staff | Mar 10, 2009

On a day when the Dow Jones Industrial Average saw an increase of 379 points — an extreme rarity during the current recession — local bankers gathered at Florida Gulf Coast University expressed cautious optimism about the future.
David Jones, chairman of Investors’ Security Trust Co. and a business professor at FGCU, called Tuesday’s Dow gains a “note of optimism in a gloomy world.”
“What I was looking for was just a hint that some of the bigger banks would have a better quarter than people expected. Both Wells Fargo and Citigroup announced they were doing better this quarter,” he said.
But whether Tuesday’s rally is an oasis or merely a mirage in the financial desert remains to be seen. Despite their assurance that the economy will eventually turn around, the experts did not dodge the seriousness of the crisis.
“It’s the worst credit crisis we’ve seen at least since World War II and probably since the Great Depression,” Jones said.
Crucial to how and when the economy turns around, he said, is the federal government’s response to the crisis.
Of great interest to banks is the government’s $700 billion Troubled Asset Relief Program, or TARP, designed to buy up toxic, nonliquid assets held by banks to enable them to resume lending.
The executives of two local banks — TIB Financial Corp., which took federal TARP money, and Florida Gulf Bank, which opted not to take TARP money — were on hand to explain how they are handling the credit crunch.
Bill Valenti, president and chief executive officer of Florida Gulf Bank, said his bank considered taking TARP funds, but decided against it because there were too many strings attached.
“We were approved, but we ultimately decided not to take TARP, but that is not an indictment of the program,” he said.
Thomas Longe, chairman and chief executive officer of TIB Financial Corp., said the acceptance of TARP funds allowed TIB to takeover Riverside Bank of the Gulf Coast, formerly based in Cape Coral, when it failed in February.
“In our case it wasn’t a bailout, it was an investment. We have to pay the money back. It strengthened our capital base in a very difficult time,” he said.
While some bankers are absorbing criticism for taking TARP funds but not lending, the FGCU panel said that is simply not the case, although lending rules have tightened as a result of the bursting of the credit bubble.
“We are lending, but there’s not many qualified borrowers walking through the door,” Harlan Parrish, chief executive officer of Colonial Bank’s Southwest Florida region, said.
As the bankers pondered the difficulties in the frozen credit and financial markets and the various government programs aimed at thawing them out, they pointed to 2010 as a point when the economy might rebound, but offered little advice in the meantime other than to wait and hope.
“It’s a matter of patience. It’s still the greatest economy in the world. Florida’s future is bright, the country’s future is bright,” Valenti said.
On the other side of the troubled economy awaits a wholly different banking industry than the one that entered the recession, said Colleen Kvetko, president of Florida Shores Financial Corp.
“Banking will change mostly from a regulatory (perspective),” she said.
That increased regulation, Kvetko added, is a result of the failure of the financial sector to police itself.
“We got fat and happy and we all had to look ourselves in the mirror because we caused this,” she said.