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Around the west coast of Florida, loans are on the rise at several community banks.
Some institutions are seeing percentage growth in the double-digits over the previous year — up to an increase of 34.2% for Winter Haven-based CenterState Bank.
The reasons behind the increase in loans are varied. They include two big ones: the consolidation of the area's banking industry through acquisitions and a strong economy overall.
Examining loan growth from the second quarter of 2017 to the second quarter of 2018, executives at five area banks offer a peek behind the curtain. They explain why their institutions are doling out more dollars — and why it makes good business sense.
Bank of Tampa
Total assets: $1.65 billion
Loans: $1.1 billion in 2018 second quarter, up 11.0% over 2017
With assets totaling $1.65 billion, The Bank of Tampa is one of the largest independently owned community banks in the Tampa Bay area. Founded in 1984, The Bank of Tampa is privately held by its employees, directors and clients.
Built on the foundation of a commercial bank, Executive Vice President Corey Neil, who is also Hillsborough County market president, says the bank has enjoyed steady growth by sticking to its core principles. But he adds its lending growth of 11 percent in second quarter 2018 over the same quarter 2017 — with total loans of $1.1 billion — is due in part to overall economic conditions combined with an increase in investment in non-owner-occupied real estate.
“We’ve taken advantage of our interest and expertise to get some of that business,” says Neil. “We’ve also had some decent growth in our core commercial and industrial, and also owner-occupied commercial real estate. We’ve seen good growth, but we have an appetite for more in both of those core areas."
Neil says The Bank of Tampa’s lending growth is reflective of the economy of the broader Tampa Bay market. With 12 offices in Hillsborough, Pinellas, Sarasota and Manatee counties, he says the bank is positioned to take advantage of growth of its core lending business.
“The lift in the economy is creating an environment where our borrowers are seeing their businesses doing well,” says Neil. “Good credit viability among our borrowers means you don’t have banks out there being too aggressive and artificially inflating the lending market.”
The bank’s real estate loans total $715 million, $433 million of that non-farm non-residential, and $39 million in construction and land development. Commercial and industrial loans total $293 million.
“We see a lot of positive trends in this market and a rising tide raises all ships, so we are taking advantage of that,” says Neil. “Our strategy going forward is to stick to our knitting in the commercial real estate investor space. We are very comfortable in our core C&I and owner-operator space as we continue to expand on the consumer side.”
— Andrew Warfield
CenterState Bank
Total assets: $10.5 billion
Loans: $7.0 billion in 2018 second quarter, up 34% over 2017
Mark Thompson has an easy explanation for what he describes as the “outsized” growth of CenterState Bank’s lending portfolio, which at $7 billion in the second quarter of 2018 is a 34% increase over the same period in 2017.
“We doubled the company from January to where we sit today, so that has outsized production,” says Thompson, the bank’s president.
Headquartered in Winter Haven, CenterState Bank operates in 33 counties in Florida and Georgia and provides correspondent banking and capital market services for approximately 600 community banks in five states with business development offices in six states.
The bank doubled in size through acquisitions in the first half of 2018, which include Platinum Bank, Gateway Bank, Sunshine Bank and Harbor Community Bank, the latter which had acquired Jefferson Bank in 2017. Combined assets of the acquisitions is approximately $2 billion.
But purchasing banks with outstanding loans isn’t the only reason for the bank’s growth, Thompson says.
“We have been blessed to be a financial institution that is in one of the fastest-growing states in the country,” says Thompson. “The economic tide is lifting all boats, and we are participating in the value of that. Our markets are very strong. We are purposeful about where we have our banking centers, so we tend to gravitate toward areas where we see population growth, rising wages and job growth.”
CenterState Bank was founded by a group of bankers and entrepreneurs more than 25 years ago with three separate community banks in Polk, Osceola and Pasco counties. Its holding company, CenterState Bank Corp., was founded in 2000, officially combining the banks into one company.
Thompson says the bank’s approach to growth is organic, based on a 10% average growth model per year. That growth is largely based on commercial lending. Of its nearly $6 billion in real estate loans, $5.6 billion are in non-farm and non-residential properties. It has also nearly $610 million in outstanding commercial and industrial loans.
“We started the year with about 130 commercial relationship managers and we budgeted to add 20 through recruiting and outside hiring,” says Thompson. “We have been successful in bringing in a successful production team and that has helped is in that growth model.”
— Andrew Warfield
Bank: Pilot Bank
Total assets: $332.93 million
Loans: $258.70 million in Q2 2018, up 24.98% over Q2 2017
During the past year, loan growth at Pilot Bank of Tampa has increased nearly 25%.
Pilot Bank CEO Roy Hellwege says his bank is first and foremost a traditional Tampa Bay community bank, but it also has an affiliate — the National Aircraft Finance Co. — that represents about half of its portfolio and lends to pilots who own their own aircraft. “That part of the business has taken off,” Hellwege says. “It’s a very secure type of lending. It’s a very nice niche that our bank has enjoyed for quite a long time.”
On the community bank side, Hellwege says leadership has played a role in the bank’s loan growth. “We’ve had the privilege of attracting talent for some time,” he says. “Over the past year, we’ve invested significantly in the commercial lending team.” Now the bank has four lenders dedicated to commercial loans. A year ago, it had one.
Another influence on Pilot Bank has been the consolidation of the industry through recent bank acquisitions. “That consolidation is creating some real opportunity for our bank as well,” Hellwege says.
The bank’s loans include a focus on what he calls one-off deals, such as financing a Wawa, a Chick-fil-A, smaller office buildings and smaller multifamily properties. The bank does offer loans on projects with greater numbers of units, but the smaller, 15-to-20 unit projects represent more of a niche for Pilot because it comes with a lower risk profile. Hellwege says, “I believe we’re increasingly a go-to destination for small business owners.”
Pilot Bank has a key edge, says President Rita Lowman, in its longevity. “We’re actually 31 years new,” she says. “That’s really important that we have been in the market. The executives really know the market well.”
The future continues to look bright. “We believe that we’ll continue to at least match the rate of growth we’ve enjoyed this year and last,” Hellwege says. “We believe 2019 will continue to be a strong year locally and for the broader national economy.”
— Grier Ferguson
Bank: Sabal Palm Bank
Total assets: $194.10 million
Loans: $153.66 million in Q2 2018, up 28.49% over Q2 2017
The 28% loan growth at Sarasota-based Sabal Palm Bank is due to a combination of factors, says President and CEO Neil McCurry Jr.
Sabal Palm recently moved into its new downtown Sarasota headquarters, increasing its offices from two to three.
It also increased its staff by 40%, going from 27 to 38 full-time employees. The new hires are spread across several departments, including lending, branch staff and compliance, but McCurry says, “We certainly increased the forward-facing people in the community and the behind-the-scenes group to manage all of the growth we’ve experienced.”
McCurry, like other banking executives, mentions industry consolidation as one of the factors for growth. His bank has been fortunate, he says, to have several experienced bankers join Sabal Palm.
The types of loans it provides range from loans for people’s primary residences to business and commercial real estate loans. It works with businesses and entrepreneurs in Sarasota and Manatee counties that offer support services such as plumbing or air conditioning.
“We try to stay fairly diversified,” McCurry says. “We purposely track all of our concentrations and try to keep as diversified of a lending portfolio as possible in the local market,” he says. If Sabal Palm leadership sees that the bank has more of a concentration in one area than another, it recalibrates.
Ahead, McCurry sees further loan growth. “We haven’t seen any real signs of softening in the market,” he says, but the bank is aware of economic cycles pointing to things slowing down at some point.
Next year will be a good year, but not necessarily a better year. McCurry isn’t sure what the impact of the recent red tide outbreak will be on area's tourist heavy businesses.
“Every day, we go out and try to tell people our story — a local community bank serving the market,” he says. “Fortunately, we have a lot of people we work with who repeat that story.”
That plays into more growth. McCurry says, “Probably the best thing we’ve done is we’ve done a good job of getting word-of-mouth referrals and recommendations from our existing customers.”
— Grier Ferguson
Bank: First National Bank of Pasco
Total assets: $166.03 million
Loans: $90.43 million in Q2 2018, up 15.53% over Q2 2017
Prior to 2011, First National Bank of Pasco was primarily a consumer lending bank offering loans for mobile homes. President and CEO Steven Hickman says when he joined the bank, that changed.
“During the great recession of 2008, 2009 and 2010, we suffered greatly for that,” he says of the focus on mobile home loans.
Since then, the bank rebranded and became more commercial-focused. It didn’t end all consumer lending, but it lessened its concentration in a singular loan type, broadening its product offering and diversifying risk.
Within the past 18 months, First National Bank of Pasco has hired six experienced commercial lenders, Hickman says. From the second quarter of 2017 to the second quarter of 2018, loans have increased about 15%. That growth, he says, is spread across many loans of different sizes. Now, Hickman says, the bank’s loans are well diversified.
The bank increased the most year over year in commercial real estate loans. “That’s because we had very little commercial real estate loans on our books to begin with,” Hickman says. Starting from zero, the bank was able to increase that fairly rapidly.
On the commercial real estate side, as well as in other kinds of real estate and construction, the bank primarily lends to a tricounty area — Pinellas, Hillsborough and Pasco counties. Hickman has confidence in the economy ahead, but pays particular attention to the construction industry. “I do watch those construction numbers,” he says. “That’s where you see the beginnings of any kind of economic slowdown. Right now, they’re very strong.”
The bank’s third quarter numbers will reflect continued growth, according to Hickman. “We had record growth in August,” he says. The dollar amount of new loans increased more than ever in the 33-year history of the bank. “Our pipeline is strong,” he says. “I anticipate going into 2019, as long as there’s nothing economically that would constrain economic growth overall in Florida and this market, we’re going to continue to do very well and grow our loan portfolio.”
— Grier Ferguson
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