Certain changes to Florida banking laws went into effect on July 1, 2014. Some of these changes that will most significantly affect community banks include:
- Management Interlocks – It is now illegal for a Florida financial institution executive officer or director to serve as an officer (not just an executive officer) or director of another Florida financial institution in the same Metropolitan Statistical Area, unless the Office of Financial Regulation (“OFR”) grants a waiver. A person who violates this law is subject to being barred from banking in Florida.This change completely eliminates the availability of the exemption for small market share institutions (less than 20% of a market’s deposits) contained in the Federal Depository Institution Management Interlocks Act. This is a clear example of the Florida legislature increasing regulation beyond the scope of existing Federal regulation.
- Injunctions – Unlike the Federal banking regulators, the OFR considers a Memorandum of Understanding (“MOU”) to be a formal enforcement action. The revised law eliminates the requirement that, prior to obtaining an injunction against a bank, the OFR illustrate that an actual or threatened breach of an enforcement action (including an MOU) will cause substantial injury to a bank, its depositors, creditors, or stockholders.
- Loans Not Exceeding $50,000 – The special treatment of interest and fees for loans not exceeding $50,000 has been completely eliminated.
Although Florida’s Legislature often indicates that it desires to decrease the regulatory burden on Florida businesses, certain of the revisions to the banking laws, such as the management interlocks restriction and the lending limit change, serve to increase regulation on community banks.