The increasing migration of Northern high-income executives is accelerating the real estate markets and the overall economy in South Florida, while banks are reporting substantial profit gains and are eager to welcome their businesses.
The nation’s biggest banks reported record profits for 2021 thanks to higher investment banking fees and lower loan losses during by the pandemic, according to the Financial Times. JP Morgan increase its profits from right under $30 billion in 2020 to almost $50 billion; Goldman Sachs Group went from around $10 billion to over $20 billion; and Morgan Stanley increase its profits from $10 billion to around $15 billion, according to data from S&P Capital IQ, reported by Bloomberg.
Bank of America, in its third quarter report of profits, showed a revenue of $22.87 billion, a 12% increase since last year. CitiBank, in the release of its 2021 fourth quarter net income, reported $17 billion, compared to $16.8 billion a year ago.
David Glickman, Wealth Market leader for TD Bank in Florida, said that the Covid-19 pandemic has changed the way a lot of companies do business.
“Executives can now work remotely,” he said. “We have a lot of people who are migrating down to Florida for the nice weather, but also because we have no state income tax.”
As professionals are settling in South Florida, they are establishing bank accounts. “That’s a big benefit to local banks,” Mr. Glickman said. “These people are selling their homes and moving down to South Florida, so a lot of banks are going to benefit because people are looking for lending to buy or construct new homes, which in turn impacts the economy, the construction companies… it’s a domino effect.”
According to the Florida’s State Office of Economic and Demographic research, from April 2020 to April 2021, avout 330,000 people moved to Florida. “And all the people coming down are executives, entrepreneurs; they’re going to create opportunities that help expand the economy,” Mr. Glickman said. “There will be a continuous growth, and it’s going to expand beyond South Florida, as Sarasota is expanding rapidly, and Tampa [too]. This is good for the state of Florida, but certainly Miami will be a benefactor with all the money pouring in.”
With the almost 900 people moving to Florida every day, according to Jimmy Patronis, Florida’s chief financial officer, the state’s population has grown by 2.7 million in the last ten years, Harvard Politics reported.
For the banks, this translates into increased deposits, wealth management advisory demand, lending and new relationships with local institutions.
The influx of high-earning professionals relocating to South Florida is bringing economic advantages to the area as they start setting roots, said J.C. de Ona, Centennial Bank’s Southeast Division president.
“Overall, a lot of them are buying homes, leasing office space or buying office or industrial space,” Mr. de Ona said. “So it’s bringing opportunities for banks to do mortgages and to finance them. And with the executives come other employees within their business structure.”
This migration is helping the mortgage industry and the local developers of multi-family projects, Mr. de Ona said. “It helps the economy in so many different ways – from home buying, to offering jobs and getting office space, to their kids going to our schools, and them buying automobiles, or going to restaurants. A lot of them come down here to invest in business creation or get real estate.”
The New York State 2022 budget legislation is increasing the corporate franchise tax from 6.5% in 2021 to 7.25% in 2022 for companies earning more than $5 million. Personal income tax is also increasing for top-earning New York residents. Taxpayers earning up to $5 million would have a 9.65% income tax rate; taxpayers earning up to $25 million, a 10.3% personal income tax rate; and for people earning more than $25 million, a 10.9% personal income tax rate.
Mr. de Ona said that the trend of New Yorkers migrating to South Florida will continue well into 2022. “With the tax changes we’re seeing in New York,” he said, “every indication is that they’re going to continue to migrate down here, as South Florida is becoming more and more attractive.”