STATE PROFILE
Total land area:........................... 53,997 sq. miles
Official language:........................ English, since 1990
Administrative divisions:.............. 67 counties
Legal system:...............................Based on English Common
Law; judicial review of
legislative acts
Executive branch:...................... Governor
Legislative branch:..................... Bicameral (House of
Representatives, Senate).
Judicial branch:........................... Supreme Court
ECONOMIC PROFILE
Currency: US dollar (US$)=100 cents
Real GSP growth: 3.7 % (1996)
GSP (average annual growth rate): 4.4 (1978-1996)
Real GSP per capita: US$22,613 (1996)
Consumer price index, all US South urban consumers
(average annual growth rate): 2.1% (1997).
Main commodity exports: Parts for auto data processor machines and
optical readers,
fertilizers, transmission appliances, TVs, radios, digital processing
units, motor vehicles.
Main imports: Motor vehicles, clothing, coffee, frozen shrimp and prawns,
flowers,
ammonia (anhydrous, or in aqueous solution), kerosene (including kerosene-type
jet fuel).
FOREIGN BANKS, BRANCHES AND INTERNATIONAL
STATE AGENCIES
I. Banking
Supervision
1. The primary supervisor of state licensed foreign bank offices in Florida
is the
Florida Department of Banking and Finance under the Florida State Comptroller's
Office.The Federal Reserve Bank of Atlanta also supervises foreign banking
offices.
2. The Florida Department of Banking and Finance is an independent agency.
3. The state comptroller, elected by popular vote, reports to the governor's
office.
The comptroller is a State of Florida cabinet member.
4. State law requires foreign bank offices to be examined every 18 months.
5. Examination ratings and criteria follow U.S. standards.
6. Under the Florida International Banking Supervision Section, the "C"
in ROCA
stands for compliance and not capital adequacy. Also, when discussing the
five
crucial performance dimensions in the domestic section, the "S" of CAMELS,
"Sensitivity to market risk," is included. The State uses CAMELS to evaluate
commercial banks and ROCA to evaluate foreign agencies and branches,
but does not utilize a CAMEO.
II. Consolidated
Supervision
1. Florida law requires a foreign bank applying for a license in Florida
to be subject
to comprehensive supervision on a consolidated basis. Florida law also
permits
(as of October 1, 1997) a home country supervisor to examine its Florida
offices.
However, the home country supervisor must provide notice of its intent
to
examine a banking office in Florida and may not examine customer
loan
or deposit accounts and records.
2. Permission to open or close banking establishments abroad follows U.S.
guidelines.
3. The matter of requesting consent from the host country to open or close
banking
establishments in Florida should be considered from a federal point of
view.
4. Florida may ask for information from home offices of foreign state agencies,
although information from cross-border establishments does not appear to
be
applicable to the Federal Reserve or the United States.
III. Interest Rates
1. Interest rates on loans are determined by the market.
2. Interest rates on deposits are determined by the market.
IV. Insurance on
Deposits
1. Nonresident deposits in foreign banks are not subject to FDIC insurance.
2. The are no limits on insurance deposits.
V. Trade Finance
1. Florida does not define trade finance; however, working capital, pre-export
finance and letters of credit receive the same treatment as other extensions
of
credit.
2. In the United States, banks are typically responsible for bearing the
risk of export,
import, pre-export, working capital and capital goods finance, as well
as letters of
credit, acceptances and drafts.
3. As a general rule, the Department of Banking and Finance does not perform
liquidations and, therefore, does not have specific guidelines for the
treatment
of trade finance under such circumstances.
4. Specific provisions or reserve requirements are not applicable since
liquidations
are not performed.
VI. Capital Adequacy
1. Under the Florida International Capital Adequacy Section, for a foreign
bank to establish an office in Florida, its balance sheet must reflect
at
least $25 million in capital for a branch or agency application and
$10
million for a representative office application.
2. For a foreign state agency to operate in Florida, it must follow the
guidelines
provided by the Florida International Capital Adequacy Section.
3. Capital adequacy is measured according to the home country's guidelines,
as
established by the May 1983 Basle Committee on Bank Supervision.
VII. Asset Quality
1. Loan portfolios are classified as follows:
Classifications for credit risk: substandard, doubtful, losses
Classifications for transfer risk: substandard, value impaired, losses
2. Florida does not require reserves on bank assets.
3. The legal lending limit for unsecured loans is 15% of head office capital,
aggregated for the entire U.S. The legal lending limit for secured
loans is
25% of head office capital aggregated for the U.S.
4. For treatment of the investment portfolio, Florida law requires banks
to follow
Generally Accepted Accounting Principles (GAAP).
5. Investment portfolio categorization is conducted under FASB standards:
hold-to-
maturity, available-for-sale and trade portfolio.
6. The valuation of the investment trade portfolio affects the profit and
loss statement.
VIII. Liabilities
1. Florida statutes require a foreign bank either to pledge 7% of third-party
liabilities in specified assets directly to the Department of Banking and
Finance or to maintain eligible assets of 107% of third-party liabilities.
2. Foreign banks with offices in Florida can offer a full range of deposits
to
nonresidents only, including time, savings and demand.
3. Third-party deposits are subject to either 107% asset maintenance or
7%
asset pledges. Florida does not limit deposits accepted by foreign banks.
4. Florida does not place a limit on the level of concentration of any
type
of deposits.
FLORIDA STATE BANKING INSTITUTIONS ( DOMESTICBANKS )
I. Banking Supervision
1. The Department
of Banking and Finance is the primary supervisor for Florida
chartered banks.
2. The supervisory
entity is an independent agency.
3. The state comptroller,
elected by popular vote, reports to the governor's office.
The comptroller is a State of Florida cabinet member.
4. Florida law requires
that banks be examined at least once every 18 months.
In practice, if a bank has not been examined by a federal regulator
within a
12-month period, Florida will examine the bank.
5. The categories
used for banking examination range from one through five,
with one being the best rating and five the worst.
6. The state uses
CAMELS to evaluate commercial banks and ROCA to evaluate
foreign agencies and branches. The state does not utilize CAMEO at all.
The
Uniform Financial Institutions Rating System (often called the CAMELS
Rating System) employs a numerical rating. These ratings are used
to measure
six crucial performance dimensions: capital adequacy, asset quality, management,
earnings, liquidity and sensitivity to market risk.
The following gradations are used in conjunction with performance ratings:
Rating 1: Indicates strong performance, significantly higher than average.
Rating 2: Reflects satisfactory performance, average or above, including
performance that adequately provides safe and sound operation of
the bank.
Rating
3: Represents performance that is flawed to some degree and is considered
fair.
It is
neither satisfactory nor unsatisfactory, but characterized by performance
that is
below
average quality.
Rating
4: Refers to marginal performance, significantly below average. If left
unchecked,
such performance might evolve into weaknesses or conditions that could
threaten
the viability of the institution.
Rating 5: Considered
unsatisfactory; performance that is critically deficient and in need
of immediate
remedial attention. Such performance, by itself or in combination with
other weaknesses,
threatens the viability of the institution.
II. Consolidated Supervision
1. Basle Agreement
provisions are not applicable for domestic operations.
2. Consent to open
or close banking establishments abroad should follow federal
guidelines.
3. Federal requirements
are applicable for opening foreign banking establishments
in Florida.
4. Rights to information
on cross-border establishments follow federal standards.
III. Interest Rates on Assets and Liabilities
1. The market determines
interest rates on loans.
2. The market determines
interest rates on deposits.
IV. Insurance on Deposits
1. All Florida-chartered
banks have Federal Deposit Insurance Corporation
(FDIC) insurance.
2. FDIC limit per
customer, per institution is US$100,000.
V. Trade Finance
1. Florida law does
not differentiate between trade finance and other extensions
of credit;
all extensions of credit are treated equally.
2. In the United States,
banks are typically responsible for bearing the risk of
export, import, pre-export, working capital and capital goods finance,
as
well as of letters of credit, acceptances and drafts.
3. As a general rule,
the Federal Reserve does not perform liquidations and, therefore,
does not have specific guidelines for the treatment of trade finance under
such
circumstances.
4. The state banking
system does not make specific provisions or require reserves for
treatment of trade finance during the liquidation of domestic agencies.
VI. Capital Adequacy
1. Florida law does
not establish capital adequacy standards, but the regulatory agency
is permitted to close banks when they are imminently insolvent, a term
defined as
capital of less than 2% of total assets, adjusted for apparent losses.
Federal legislation
does not specify minimum capital requirements, but delegates the setting
of such
requirements to the various federal banking agencies. Any discussion of
capital
adequacy in federal agency regulations is somewhat hypothetical because
the
minimums have had to meet the needs of very large banking institutions
as well
as FIRREA requirements that banks and savings and loan institutions have
the
same capital requirements. Further, evolution of the regulations has involved
adding new requirements rather than amending existing regulations. Consequently,
several answers to the question of capital adequacy can be offered without
being
inaccurate.
2. In theory, a bank
can operate with as little as 3% capital ratio, but in reality the tests
are so stringent that no bank could actually meet all the requirements
to operate with
that little capital.
3. As a practical
matter, banks need at least a 5% Tier 1¹ capital ratio (see below).
Measurement of Capital Adequacy
Tier 1
Total
Tangible
Leverage Risk-based
Risk-based Equity
Capital Ratio Capital Ratio Capital Ratio
Capital Ratio
Well-capitalized
>=5%
>=6%
>=10%
-
Not subject to any order, directive
or written agreement to meet and maintain a specific capital level.
Adequately capitalized >=4%
>=4%
>=8%
-
Meets all minimum capital requirements,
but is not "well-capitalized."
Under capitalized Fails one or more
of ³adequately capitalized² ratios.
Significantly undercapitalized
<3%
<3%
<6%
-
Critically undercapitalized -
-
-
<=2%
Tangible equity capital ratio is newly
established for purposes of this law. It refers to
core capital plus cumulative perpetual
preferred stock, including any related surplus,
minus all intangible assets except purchased
mortgage servicing rights divided by
average assets from the last call report
and adjusted for intangibles. The calculation
is not used elsewhere.
VII. Asset Quality
1. Loan portfolio classifications are based on an interagency statement
last
revised in 1979, which established classification categories as substandard,
doubtful and loss.Another category, special mention, is also used, but
is not
considered a classification.
Classification Definitions
a) Substandard: Substandard loans are inadequately protected by the
current sound worth and paying capacity of the obligor of the collateral
pledged, if any. Loans so classified must have a well-defined weakness,
or weaknesses, that jeopardize liquidation of the debt. They are
characterized by the distinct possibility that the bank will sustain
some loss
if the deficiencies are not corrected.
b) Doubtful: Loans classified as doubtful have all the weaknesses inherent
in those classified as substandard, with the added characteristic that
the
weaknesses make collection or liquidation in full (on the basis of currently
known facts, conditions and values) highly questionable and improbable.
c) Loss: Loans classified as loss are considered uncollectible and of such
little
value that their continuance as bankable assets is not warranted.
This
classification does not mean that the loan has absolutely no recovery
or
salvage value, it is simply not practical or desirable to defer writing
off
this basically worthless asset even though partial recovery may be
affected in the future.
d) Special mention asset: A special mention asset has potential weaknesses
that deserve management¹s close attention. If left uncorrected, these
weaknesses may result in deterioration of the repayment prospects
for the
asset or the institution's credit position at some future date. Special
mention
assets are not adversely classified and do not expose an institution to
sufficient risk to warrant adverse classification.
2. Florida law bases reserve requirements on deposits, not assets.
Instead of treating reserves on assets in its regulations, the State
of Florida establishes liquidity requirements.
The mathematical formula for calculating the daily liquidity combines deposits
(transaction and nontransaction accounts) to calculate the total required
daily liquidity.This result is compared with total eligible liquid assets,
and
the comparison results in an excess or deficient daily liquidity.
3. The legal lending limit for unsecured loans is 15% of capital accounts.
Fully and amply secured loans are limited to 25% of capital accounts.
4. Investment portfolios are categorized according to hold-to-maturity,
available-for-sale and trade portfolio.
5. Investment portfolio categories come from GAAP, not from Florida law.
Florida law, however, requires banks to follow GAAP. The investment
portfolio is measured monthly against the market value.
6. The profit and loss statement is affected by the change in value of
the
trade portfolio.
VIII. Liabilities
1. Minimum reserve requirements are 15% for transaction accounts and 8%
for
nontransaction accounts.
2. Florida law does not distinguish deposits by type of currency. All types
of
deposits are allowed: demand deposit accounts, term accounts, savings
accounts and others.Distinctions arise from the difference between
transaction accounts (non-interest bearing which allow transactions to
third parties by checks), and nontransaction accounts (interest bearing
with restricted transaction capabilities to third parties).
3. Florida law does not set a limit on the amount of deposits a bank can
accept.
4. Florida law does not limit deposit concentrations.