Jeff Ostrowski
Alexandra Clough
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Tuesday, January 20, 2009
Wonderful Life? Billionaire sees too many small banks
When I talked to Palm Beach billionaire Wilbur Ross last week about his deal to buy most of First Bank & Trust Co. of Indiantown, I neglected to ask his opinion of It’s a Wonderful Life.
The classic flick offers a romantic version of small banks as cornerstones of the American dream. Ross isn’t quite so dewy-eyed, though, about small institutions such as First Bank.
“There’s nothing wrong with them, it’s just that I don’t think they’re the wave of the future,” Ross said.
He noted that there are more than 8,000 FDIC-insured institutions in the U.S., which he called “a ridiculously large number.” Ross said he envisions using First Bank (assets: $85 million) as a platform to buy up other small banks.
Not surprisingly, small bankers don’t agree with Ross’ conclusions about the banking industry.
“There certainly is a reason why he would target small banks,” says Pat Cooper, president of First Bank of the Palm Beaches, which has assets of $74 million. “They’re profitable, and they’re in tune with their clients.”
Unlike big banks, small banks haven’t been hit especially hard by the financial meltdown, Cooper says. Indeed, he argues, the successors of Bailey Brothers Building & Loan are proving to be “good stewards of FDIC-insured money.”
Then there’s the matter of customer service.
“People like the personal touch,” Cooper says. “When you start buying them up and putting them all together and amassing them, what you end up with is a larger bank that loses that touch.”
If the FDIC approves the deal, Ross will pay a premium for First Bank and Trust Co. of Indiantown. The price of $7.3 million for 68 percent represents a premium, based on the bank’s equity capital of $7.8 million.
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Office, warehouse vacancies rise, rental rates fall in Palm Beach County
The one-two punch of the recession and the housing meltdown continued to batter Palm Beach County commercial real estate during the fourth quarter, CB Richard Ellis says.
The county’s office vacancy rose to 22.8 percent, up from 19.6 percent in the third quarter and 15.3 percent in the fourth quarter of 2007. In 2005, the office vacancy rate was a mere 8 percent. (Chart above shows office trends.)
The county saw a number of large blocks of empty office space come on the market, either through new construction or departures. In Boca Raton alone, 303,770 square feet became vacant. In Lake Worth, a former Washington Mutual building added 83,750 square feet of empty space.
Average office lease rates fell slightly to $19.55 a square foot.
In the industrial market, vacancy rose to 8.6 percent in the fourth quarter. In 2005, the county’s industrial vacancy rate was a microscopic 3 percent. The average industrial rent fell to $7.91 a square foot, down from 9 percent from a year ago, CB Richard Ellis said.
Chart showing industrial trends is below.
See CB Richard Ellis’ office report here, and the industrial survey here.
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