Several Gulf Coast banks have hightailed it out of the mortgage and residential lending business, scared off by onerous Dodd-Frank regulations.
But Sarasota-based Sabal Palm Bank, a $107 million asset lender, plans to use the changes for an opportunity to expand in that area — not retrench. Sabal Palm CEO Neil McCurry says getting the bank ready to comply with the rules was an “immense undertaking” that involved dozens of meetings, seminars and courses. The bank even hired an outside compliance expert to assess its progress. McCurry believes the expense, and risk, will be worth it.
Area banks that have exited residential mortgage lending include Tampa-based Bay Cities Bank. Bay Cities President and CEO Greg Bryant says the work was mostly a sideline business, and it made more sense to focus elsewhere, especially on commercial lending. The bank got into residential lending in 2007 and got out of it in January.
Says Bryant: “It was all about the continuous regulatory burdens coming down the pike.”
McCurry understands that perspective. Yet he and Sabal Palm will forge ahead in home lending, along with a few other community banks, including Sarasota-based Insignia Bank.
“We took the exact opposite approach,” says McCurry. “The rules changed and got tougher, but as a community bank we feel like we need to be in residential lending. We think housing is a big part of the region's recovery.”
Sarasota-area banker Brian Hall, now with Gateway Bank of Southwest Florida, co-founded Sabal Palm in 2006. McCurry, who founded People's Community Bank in Sarasota in 1999, joined Sabal Palm in late 2012 on a mission to help it raise at least $4 million. The mission over-subscribed and brought in $5.6 million.
After the capital raise McCurry set three immediate-if-not-sooner goals for Sabal Palm: Bring in more customers for assets and deposits; address legacy issues on nonperforming loans; and become profitable. Says McCurry: “We put some high expectations on ourselves.”
The bank, with 19 employees and two branches, met many of its goals. Assets, for example, are up 20%, from $89.2 million at the end of the 2013 first quarter through the end of the 2014 first quarter.
Total deposits over that timeframe rose 26.2%, from $73.7 million to $93 million. Nonperforming assets and nonperforming loans have decreased, thanks to a concentrated effort to unload two real estate properties.
“We're pleased that we met our goals,” says McCurry. “It took a lot of hard work. But by no means am I saying we've won the race.”
McCurry now seeks to continue to grow the bank and get more customers. He and some loan officers have implemented a marketing blitz in recent months; they've hosted meet and greets and gone to breakfast with business owners, accountants and lawyers. They have also been cold-calling for new clients.
“We realize there are still a lot of people who don't know much about Sabal Palm Bank,” says McCurry. “I think this is a huge success story.”
Follow Mark Gordon on Twitter @markigordon