Feb. 13--Seventeen South Florida-based community banks that may not be able to survive on their own should consider selling or merging, according to an analysis by a national consulting group.
According to Kamal Mustafa, chairman of the New York-based Invictus Consulting Group -- an independent bank financial risk management and advisory firm that has been conducting stress tests on U.S. banks since the recession -- more than a quarter of community banks based in Broward, Palm Beach and Miami-Dade counties -- 17 of 64 -- don't have enough money to rebuild.
He said even though they exceed Federal Deposit Insurance Corp. requirements, they had to sell off too many assets during the Great Recession and aren't big enough to become more profitable now.
"Their earnings are down; they actually are weaker," said Mustafa, who wrote a national report on the nation's community banks and gave specific South Florida data to the Sun Sentinel. He spoke to bankers in South Florida last month.
Bank acquisitions in the state have been growing since the recession, said South Florida-based bank analyst Ken Thomas. But he doubted 17 community banks would be sold in South Florida in a year because they have other ways of raising capital aside from merging.
"The preferred approach is to raise money in the community," Thomas said.
He estimated five to 10 banks might be sold in South Florida this year. In January, for example, Weston-based Florida Community Bank finished its acquisition of the struggling Great Florida Bank that was based in Miami Lakes.
While merging banks can bring in more capital and a stronger workforce, the chairman of a Fort Lauderdale bank said he is going to be concentrating instead on finding more investors to raise money.
"Having more capital is always better," said Moshe Cubin, chairman of OptimumBank that also has branches in Plantation and Deerfield Beach.
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