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To get a sense of what's holding back the Gulf Coast's economy, Gary Tice points to the recent sale of a shopping center just north of his Naples office.
The center sold for about $12 million, but the mortgage on it was nearly $31 million. “That gives you an indication of what's happening in the market for distressed properties,” says Tice. “This property was only three or four years old.”
If you want to get a read on the economy in the southern region of Florida's Gulf Coast, you would do well to speak with Tice. The Naples banker recently was appointed to the Federal Reserve Bank of Atlanta's Miami branch, joining fellow new appointee Mike Jackson, chairman and CEO of AutoNation, on the seven-member branch board.
Tice currently is chairman and CEO of Naples-based First National Bank of the Gulf Coast, a community bank that opened in 2009. He and business partner state Sen. Garrett Richter built and sold First National Bankshares of Florida, selling it to Fifth Third Bank for $1.6 billion at the peak of the market in 2005. When they sold FNB for 6.5 times tangible book value, it had $5.3 billion in assets, $3.9 billion in deposits and 77 branches stretching from the Tampa Bay area and Orlando to Sarasota, Fort Myers and Naples.
“I think the economy is improving, but at a very slow pace,” says Tice, forecasting growth that will mirror modest increases of the late 1990s and early 2000s. “We do see some signs of recovery, but it's spotty.”
Tice is concerned about the depressed values for commercial real estate, as evidenced by the shopping center sale at a 60% discount off the note. These kinds of values will harm community banks that made commercial real estate loans through the boom.
Commercial real estate write-downs will continue to deplete the capital of weak community banks, spurring more closures and consolidations this year, Tice forecasts. Increased regulatory burdens will add to banks' cost of doing business, he adds.
On the flip side, lower values may attract investors. “If we see some of these REITs and more competition for acquisitions, that will drive up values a little bit,” Tice says. And if community banks consolidate and boost capital, more of them will be making loans to entrepreneurs.
Regionally, Tice believes Collier is better off than Lee or Charlotte counties. “Collier is very robust,” he says. “Lee and Charlotte have a ways to go. They were extremely overbuilt.”
Tice suspects the unemployment rate is seven to eight percentage points higher than reported because many people have given up looking for work. Officially, the state says the unemployment rate in the Naples-Marco Island area was 11.5% in December. In the Cape Coral-Fort Myers area it was 12.5% and in Punta Gorda it was 12%.
Companies aren't yet willing to risk hiring a lot more people now, preferring to pay existing employees overtime if they need to, Tice says.
However, the political climate has improved since the election of Gov. Rick Scott. “I applaud the governor for doing what I think he needs to do,” says Tice. “We do have to change the business environment for the state of Florida.”
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