Market shift

Executive Summary
Industry. Banking Trend. Banks in the region are profiting from strong lending. Key. Market could see a shift in 2017.

A sampling of community banks along the Gulf Coast shows strong loan activity — and profits — as 2016 closes.

A steady flow of newcomers to the region is driving most of the loan growth, bankers say. They cite the need new arrivals have created for homebuilding and construction of restaurants, retail stores and medical buildings. The surge is good news for bankers and their clients, something of a renaissance after several years of a post-recession tight environment.

Yet some bankers believe the lending market, particularly in super-hot sectors such as multifamily, might be due for a slowdown. For example, Al Rogers, executive vice president and chief lending officer for Clearwater-based USAmeriBank, says concerns of over-building have led his bank and others to tighten up on lending for multifamily residential projects. “There appears to be a pause in that sector as a result of increased scrutiny and more aggressive underwriting,” Rogers says.

USAmeriBank, one of the largest community banks in the region, posted $33 million in third quarter profits, in addition to net interest income of $9.6 million. Several other banks in the region posted strong third quarters in loans and profits. The list includes:

n Naples-based Encore Bank made $1.2 million in the quarter and had $279 million in loans and leases. The loan volume reflects a $40 million year-over-year increase from the 2015 third quarter, according to Tom Ray, CEO Encore, which has $382 million in assets.

Ray expects to repeat the $40 million in loan growth in 2017. “I'm optimistic about the future because we have the demographics working for us,” he says. “Boomers are retiring and moving here. We lend to people who support those boomers.”

n Sarasota-based Sabal Palm Bank totaled $102 million in loans through Sept. 30, with real estate loans accounting for $98 million of the total, according to Federal Deposit Insurance Corp. data. The bank kept on rolling past the quarter, says President and CEO Neil McCurry, with $42 million in new loans through Nov. 30. It had zero loan losses for the year.

Home construction drives much of the real estate loan growth, McCurry says. “The most successful industry to be in right now is homebuilding,” he says.

Fort Myers-based FineMark National Bank & Trust ended the quarter $6.5 million in profit with loans for the year of $912 million. Real estate loans accounted for $826 million of the total, according to the FDIC. “I would say a significant component of our growth, probably 60%, is in some way tied to the real estate market,” says FineMark President and CEO Joe Catti.

Sanibel Captiva Community Bank totaled $279 million in loans in the third quarter, helping the bank post a $3.2 million profit. Assets are up to $328 million at the 13-year-old bank, an increase of 22% from $269 million in 2015.

This year's profit continued a string of profitable years going back to 2013, according to Craig Albert, president and CEO. “2016 is going to be a record profit,” he says. “We expect 2017 will be another great year.”

Trump card

Some bankers in the region, confident the economy is on solid ground going into 2017, hope to get a boost from a polarizing source: President-elect Donald Trump.

For example, a majority of bankers polled in a recent survey from the Raymond James Florida Bank Symposium say they look forward to a slowdown or halt in regulation under a Trump administration. Al Rogers, chief lending officer for Clearwater-based USAmeriBank, says he and other bankers also believe Trump will work with Congress to roll back various provisions of 2010's Dodd-Frank financial reform bill.

“There is some excitement around the new administration,” Rogers says, “but it is still too early to gauge the election's impact on the appetite for commercial credit.

“Obviously rising interest rates could dampen enthusiasm; however, other factors such as lower taxes, an improved economy and potentially more moderated regulatory initiatives might offset the headwinds of the inevitable Federal Reserve's rate moves,” Rogers says in an email.