In the accounting world for banks, loans are classified as assets.
So it's good news when banks on the Gulf Coast grow assets: It means the institutions are lending money to businesses and individuals.
Consider FineMark National Bank & Trust. The Fort Myers-based bank recently reported it had crossed the $1 billion asset threshold, joining six other banks headquartered on the Gulf Coast with that distinction.
FineMark's residential lending growth has been particularly strong over the past year, according to the latest quarterly report from the Federal Deposit Insurance Corp.
But it's not necessarily by design. “It's not like we target certain loan types,” says Joseph Catti, FineMark's president and CEO. “We really target individuals and families that have a higher degree of wealth. Whatever it is they need, that's the service we provide.”
FineMark keeps many of the residential loans it makes for its own account. Many lenders sell loans after they make them, generating fees. “From the bank's inception, a major portion has been somehow tied to the residential lending market,” Catti says.
But Catti says other loan types such as commercial real estate have picked up, too, as the economic recovery continues. “We're starting to see development increase pretty substantially,” he notes.
What it doesn't lend, FineMark invests in bonds for its own account. Lately, the growth in the bank's bond portfolio has been top-rated, short-duration commercial mortgage-backed securities, which generate higher yields than U.S. Treasuries.
Still, the $1 billion mark isn't all gravy. “Once a bank hits $1 billion in assets, the following year there are additional compliance requirements relating to Dodd Frank,” says Catti, referring to federal government regulations mandated by the Dodd Frank Act. “It's significantly more expensive from an audit standpoint.”