Veteran banker Tramm Hudson tells a banking joke that doubles as awkward.
“The phrase used to be, 'Lend on dirt, can't get hurt,'” he says. “Now it's, 'Lend on dirt, lose your shirt.'”
As is often the case with jokes, Hudson's rhyme is funny because there is an element of truth in it.
It's also indicative of a paradigm shift in lending practice. Banks across the nation are being forced to respond to a radically different business environment.
Whitney Bank, a regional bank headquartered in New Orleans, has decided to prominently feature the Gulf Coast in its response. The company will soon open a regional headquarters in Tampa's Westshore business district, and hopes to become more actively involved in the area economy.
The draw: a “huge distribution network,” says Hudson, a long-time Gulf Coast banking executive who is now a senior vice president at Whitney.
That network is propelled by a business activity center that is often overlooked when considering the region: The two and only major ports on Florida's Gulf Coast. “The Port of Tampa and Port of Manatee have great long term potential,” says Eric Obeck, Whitney's regional president for the Tampa Bay market.
Major factors contributing to that potential include the widening of the Panama Canal the likely economic boom that will accrue to the Gulf Coast ports, as well as speculation about a possible defrosting of trade relations with Cuba, according to Obeck.
In that respect, expansion into the Tampa market is a logical next step for Whitney Bank, after having successfully done business in other major port cities like Houston and New Orleans. The company prides itself on having survived the effects of Hurricane Katrina as an example of its familiarity with the market.
Whitney has already built a substantial branch network in the area, with 18 offices from Pasco County in the north to Venice in the south. That network has helped build the bank's deposit base, a key component of successful banking in a down economy.
Another significant effect of developing the branch network has been a sizeable involvement in the trust asset market. Obeck says Whitney manages more than $200 million in trust assets, which do not appear on the company's balance sheet.
But Whitney is a commercial bank first. Obeck points to a “primary focus on small-to-medium sized businesses” as the company's driver for area business. The bank will use its nearly $1 billion in assets in the Tampa Bay area to support that mission.
The sizeable asset base helps enable Whitney attract a region's biggest business clients. For those businesses with greater needs, Obeck says, “We can lend them $100 million if we want.”
In recent attempts to develop those small business relationships, Hudson admits that the bank has been “certainly more cautious, and more careful” about lending money. It's an example of a larger trend in the current economy: credit markets that remain stubbornly sludgy.
At the same time, Obeck says the company will continue to be guided by its existing strategies. “Every bank has a lending policy,” he says. “We're sticking to our lending requirements.”
As a former entrepreneur himself, Obeck cites another issue that could be contributing to reduced lending: changes in small business owners' willingness to take on debt. With cash flows down for so many businesses, the focus has shifted to cost control, rather than expansion, Obeck says.
Despite current conditions, Obeck and Hudson both expect Tampa's economy to eventually show a strong recovery. “Florida is really the sleeping giant,” Hudson says, “and we're focused on Hillsborough County in particular.”
Like so many others, Whitney Bank is doing everything it can to be in the best possible position when that recovery happens.
— Alex Walsh