MIAMI FLORIDA
Flagler Condominium
Project
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The Foam Depot has been contracted to
reproduce the exterior trim and millwork on the old First National Bank of
Miami. This bank is one of the oldest in Miami and also considered to be
the biggest bank in Florida. This bank was one of two banks that survived
the great depression. This project
will be finished within the next year.
Check
the progress of the project
Circa-1920
Brief History
about the Building
The First National Bank of
Miami
was founded on December 1, 1902, and was the largest bank in
Florida
in 1946. It was one of only two banks in
Florida
to survive the Great Depression of the 1930s.4 The bank
changed its name to Southeast Bank in 1969,under the leadership of Charles
Zwick, former
U.S.
budget director during the Lyndon B. Johnson administration.
In the 1960s and 1970s, Southeast Miami was the
biggest bank in
Florida
. It had a good reputation and was occasionally referred to as “the Morgan
of the South.”5 Although some regional economic problems
started weakening
Southeast Miami
in the early 1980s, it was still highly regarded in the
Florida
banking industry. In 1982, a hostile
shareholder attempt to take control of the bank
was rebuffed at a cost of $148 million. Southeast Miami watched Barnett
Banks, Inc. (Barnett),
Jacksonville
,
Florida
, pass it by as the largest bank in
Florida
in 1983. In 1987,
Southeast Miami
lost $87 million on loans to lesser developed countries, and in 1988
Southeast Miami
bought First Federal
Savings and Loan,
Jacksonville
,
Florida
, an acquisition that turned out to be unprofitable.
Also during 1988,
Southeast Miami
began losing its deposit base to competitors. By June 30, 1990, it had fewer
offices in
Florida
(246) than either First Union (390) or SunTrust Bank, (SunTrust)
Atlanta
,
Georgia
(369), and far fewer than Barnett (548). Although
Florida
was a banking market driven by consumer accounts and its economy was powered
by small businesses,
Southeast Miami
was viewed as a bank that wanted to do business only with large companies.6
Southeast Miami
had developed a large Latin American private banking business, and the number
of its uninsured deposits was high
for a bank of its size. Uninsured deposits made up
about 13 percent of all deposits at the end of 1990, and about $760 million,
or 10 percent of all deposits, at the time of failure.
Between July 1990 and January 1991,
Southeast Miami
replaced its president and entered into a formal agreement with the Office of
the Comptroller of the Currency (OCC), in which it agreed, among other things,
to improve its real estate lending and credit administration procedures. The
bank failed to comply with parts of the enforcement action, however, and
continued to experience substantial losses. For 1990, Southeast
Miami
reported losses of $172 million.7
Southeast Miami
had also experienced significant problems as a result of concentrated lending
in commercial real estate and weak underwriting and credit administration
practices. As of August 31, 1991, real estate loans at
Southeast Miami
totaled $3.5 billion, or 45 percent of the bank’s total loan and lease
portfolio, and nonperforming assets equaled 10 percent of loans.8
Southeast Miami
reported a loss of $116.6 million for the first quarter of 1991 and $139
million for the second quarter of 1991.
The announcement of the huge 1991 losses caused
more depositors to withdraw their funds, and the bank’s liquidity problems
grew worse. Total deposits declined from $11.2 billion at year-end 1990 to $8
billion at the end of August 1991; deposits fell more than $1 billion in July
and August alone. In September 1991,
Southeast Miami
started offering
above-market-rate certificates of deposit in an
effort to generate liquidity.9 The Federal Reserve had
agreed with Congress only a few months earlier that it would limit its lending
to undercapitalized banks to a period of 60 days out of any 120-day period,
and the bank was unable to obtain private funding to meet its daily cash
needs.10
From June through early September 1991,
Southeast Miami
struggled to put together a proposal for open bank assistance (OBA) from the
FDIC.
Southeast Miami officials worked closely with the FDIC in arranging for due
diligence teams from Barnett; First Union; NCNB Corporation (NCNB),
Charlotte
,
North Carolina
; SunTrust; and a private investor group.
Southeast Miami
’s President Douglas Ebert reported, however, that hopes “really dimmed”
when a
New York
investment firm that could have provided additional capital broke off
negotiations on September 13, 1991.11
4. Robert Trigaux, David Dahl, John
Craddock, and Helen Huntley, “Southeast Bank Sold to First Union,”
St. Petersburg Times (September
20, 1991), 1A.
5. Gregg Fields, “Government Takeover
of Miami’s Southeast Bank May Not Have Been Necessary,” The
Miami
Herald (October
6, 1997).
6. Gregg Fields, “Government Takeover
of Miami’s Southeast Bank May Not Have Been Necessary.”
7. “OCC [Office of the Comptroller of
the Currency] Declares Southeast Bank Insolvent,” PR
Newswire
(September 19, 1991), Financial News
section.
8. “OCC Declares Southeast Bank
Insolvent,” Financial News section.
9. Robert Trigaux and Helen Huntley, “Banking’s
Changing of the Guard,” St. Petersburg Times (September 21,
1991), 1B.
10. Barbara A. Rehm and Kenneth Cline,
“First Union Bid Wins Ailing Bank in Miami,” American
Banker,
(September 20, 1991), 1.
11. Kenneth Cline, “First Union Deal
Breaks New Ground; Stock Market Signals That It Likes Pact,” American
Banker (September
23, 1991), Special Report section, “ The Rescue in Miami,” 1.
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