NEW YORK ( TheStreet) -- CenterState Bancorp ( CSFL)'s CEO Ernie Pinner -- one of TheStreet's 10 Best Industry-Loved Bank CEOs of 2010 -- says 2011 is going to be a challenging year for the banking industry, especially for community banks. Regulations, the lagging real estate industry and capital requirements will force many smaller banks to merge.

In this Q&A Pinner discusses his predictions for the banking industry and goals for his bank in 2011 with TheStreet's Maria Woehr.

TheStreet: What were your biggest challenges this year?

Ernie Pinnner: Being in Florida, just dealing with the aftermath of the real estate bubble.

It creates a lot of turmoil when Florida's basic business is shoveling real estate. More important is the impact on our marketplace with the customers and all of the people that are affiliated with the real estate business here. It brought about the recession, which has strongly influenced the bank in terms of earnings and credit quality.

TheStreet: I noticed shares weren't as high as they were at the beginning of the year. What is your take on that?

Pinner: Well, there is no question that we got hurt by a loss that came about in the third quarter. That came about from a sale of loans that we made. We took a pretty good hit on those loans. I'm confident that we could have disclosed that quicker and a more informative manner than we did. So that drove the price down pretty dramatically. It was trading in the $8.50 range and it got down to around $6.

TheStreet: Looking ahead, what are your goals for 2011?

Pinner: I would like to think we will have been able to make two or three more Federal Deposit Insurance Corp.-assisted bank deals, which hopefully would produce another $500 million to $600 million minimal in footings. With the transactions we made in 2010 we should begin to feel the impacts of those in our 2011 profits. Hopefully we can grow the balance sheet by 20 percent to 25 percent and get profits back to a respectful amount.

TheStreet: Where do you see loans headed next year?

Pinner: Loans are going to be very difficult in my opinion in Florida. As a general rule, I think loans are shrinking. We have been fortunate that a lot of the markets impacted some of the larger regional banks so our cue on loans is not as bad as I have expected or not as large as I have seen. It takes a lot more scrutiny, as you would imagine, in a recessionary market. If I could keep loans at three to four percent growth on the legacy side of the bank I would feel real good. We were short growth in loans because of the acquisitions that we make through the FDIC side.

TheStreet: Will you raise the dividend in 2011?

Pinner: I probably don't see that happening. I would love to see it, but right now capital is such a precious commodity in a company as small as we are. I think the majority of the shareholders would say they would rather see us put it to work right now in this FDIC acquisition, but the secret to the FDIC is to make sure you have strong capital. That is something the FDIC and regulators are very sensitive to. So I think that capital would be better used and leveraged for the shareholder if we keep it in tact and try to use it for acquisitions.

I am sensitive to dividends. Historically, the policy has been to try to move the dividend each year. Of course, we stopped that when all of this started, but there will come a time when we go back to going to a respectable dividend and moving it up once a year.

TheStreet: What is your forecast for the industry in 2011?

Pinner: I think 2011 will probably be better than 2010, but I don't think in Florida that we are out of the woods completely. I do believe when you look at it from a very macro viewpoint, nationwide we are seeing improvement, but in Florida we are close to ground zero and that is going to take a little while.

For Florida to turn, we need to move the inventory and put people back to work. It is going to be a tough year.

TheStreet: The community bank sector is supposed to change dramatically this year. How do you expect the industry will change?

Pinner: There will be more bank failures. I hope there will be less this year than we saw last year. Although there is the undertone that says if you can't get your bank to a $500 million size it could be very difficult to survive in any profit mode that shareholders would be willing to stick with you.

--Written by Maria Woehr in New York.

To contact the writer of this article, click here: Maria Woehr.

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