Florida Bank Loan Defaults Arise Amid Tariff Anxieties
Hopes for a banking sector rebound after the election have been swiftly undercut by growing concerns over global trade and a fresh wave of uncertainty surrounding loan defaults—an issue already surfacing in Florida.
According to Federal Deposit Insurance Corp. data, the percentage of overdue and nonaccrual loans in Florida climbed from 0.52% at the end of 2024 to 0.70% in the first quarter of 2025. Over the course of 2023, troubled loans increased from 0.46% to 0.70%.
To manage the rising threat of loan losses, banks have allocated hundreds of millions of dollars to reserves over the past two quarters. Much of this caution centers around over-leveraged commercial real estate, particularly in Tampa Bay, where property values have dropped significantly since their post-pandemic highs. Some multifamily properties have already sold at steep losses—such as an apartment complex south of Gandy that changed ownership last month.
The broader impact of tariffs is expected to hit a wide range of commercial borrowers, especially businesses with heavy reliance on international supply chains.
“The range of uncertainty is far wider than it was just a month ago—there are many variables at play,” said Raj Singh, CEO of Miami Lakes-based BankUnited, during a recent earnings call. “The final outcome on tariffs is still unknown, and it will definitely have repercussions.”
BankUnited increased its loan loss reserves by $15 million last quarter, which Singh said should be adequate even if credit performance weakens beyond current forecasts. He mentioned that their risk models reflected slightly worsening conditions based on April data compared to March.
“With the current level of unpredictability, it makes sense to maintain some extra capital,” Singh added.
While the exact effects of tariffs on specific sectors remain unclear, one area expected to feel the impact early is industrial warehouse real estate, a category that has outperformed others in recent years.
John Corbett, CEO of SouthState Bank, said during the bank’s latest earnings call that their credit team identified about $200 million in industrial warehouse loans located near port cities—a relatively modest exposure for the $65 billion institution.
“Our credit team is taking a comprehensive look at the loan book—both top-down and bottom-up—meeting with clients and listening to their concerns,” Corbett said. “There’s no panic, but many clients are sensibly postponing capital investments.”
Source: SFBJ
