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Business Observer Thursday, Apr. 9, 2009 10 years ago

Home Grown

Careful lending has helped shelter Sunshine State Federal Savings & Loan Association in Plant City from the current challenges of the banking industry.

Careful lending has helped shelter Sunshine State Federal Savings & Loan Association in Plant City from the current challenges of the banking industry.

By several measures, Sunshine State Federal Savings & Loan Association in Plant City is one of the best-performing banks on the Gulf Coast.

Conservative lending has helped Sunshine State remain strong since its founding in 1954. It has two branches in Plant City and others in Riverview, Brandon and Zephyrhills.

“We stayed out of land development lending,” says bank President J. Floyd Hall, who has held the position 23 years and been at the bank 28 years.

Sunshine State has also carved its niche with personal service, pricing and community service. There's no pre-recorded voice when you call the bank, which has been in the same headquarters building for more than 40 years. Staff, some of whom have been with the bank for 40 years or more, build relationships with business and residential customers.

“People have to be cautious and get a good faith estimate,” Hall says. “With personal service, you get a real person.”

But the soured economy has Hall concerned about the health of the bank's clients, some of whom have loans with Sunshine State. Hall is also concerned about federal bank and finance policies.

“I have a lot of concerns,” he says. “This year may be challenging from earnings to loan-loss reserves and FDIC insurance.”

The Federal Deposit Insurance Corp., a U.S. government corporation that insures bank deposits, is talking about a 20-basis point special assessment for banks. For Sunshine State, that would amount to around $300,000.

“This calendar year, that is a concern,” Hall, 61, says. “But we still project that we will be in the black.”

Hall is concerned because the FDIC is taking TARP (Troubled Asset Relief Program) money with one hand and taking payments from banks in another.

“I wonder about the wisdom of that,” he says. “Time will tell.”

Sunshine State's background and history, as Hall says, is in home loans. But at a time when mortgage loans have become a commodity, Sunshine State typically hangs on to them. That has ended up helping the bank.

“If you are making loans to hold them, you look closer on the ability to repay,” Hall says. “Banks don't take the same attention if they are going to sell them.”

Despite the real estate slowdown, Hall is optimistic about the Florida home market because people will always want to live in Florida. The industry needs to reduce its home inventory first, he says.

In the banking industry, Hall sees more consolidation.

“I think we'll see more failures in the short run,” he says.

Sunshine State has thought about expanding, adding more branches, but technology has made expansion easier than new construction.

“There are so many delivery systems, such as Internet banking,” Hall says. “But I'm not going to say we wouldn't ever expand.”

Sunshine State is only one of three mutual savings and loans left in Florida, meaning, among other things, it has no stockholders and is set up similar to a credit union. But unlike a credit union, it pays federal and local income taxes.

The bank was founded by attorney and state legislator James Moody and a group of Plant City businessmen in 1954 to provide home loans to residents having trouble buying their first homes. In 1960, the savings and loan opened a second office in Brandon.

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