Economic forecast: Bank seeks to capitalize on hot real estate market

Company: The past 12 months has been “transformational,” for the bank, says CEO John Corbett, and the massive shift began several weeks prior to the pandemic. A key date was Jan. 27, when the bank Corbett had been running, Winter Haven-based CenterState, announced plans to merge with Columbia, S.C.-based South State. The $6 billion deal built a Southeast banking power, now with $38 billion in assets and some 300 branches in six states. The company kept the South State name, mostly for branding and marketing purposes as a regional bank, Corbett says, and kept the headquarters in Polk County. The merger closed June 7.

Opportunities: The bank attacked the biggest pandemic opportunity — federal PPP loans — with vigor, handling more than 20,000 loans worth $2.4 billion. Corbett and many on the South State team, like dozens of fellow bankers across the region, worked nights and weekends to stay ahead of the deluge. “I remember taking a conference call on Easter Sunday at midnight,” Corbett recalls.

The bank’s biggest potential area for growth in 2021, Corbett says, is in residential loans. The bank did about 5,000 residential loans in the third quarter, and with the hot housing market, Corbett expects that trend to continue well into 2021. One factor that helps the bank there, and in other areas, he says, is geography and pandemic politics: Most of South State’s markets are in states, such as Florida, Georgia and South Carolina, that didn’t shut down economies and businesses at the rate some other states did. “Markets in states that stayed open will have an easier time with the economy then states that closed,” Corbett says.

Threats: The state of the economy, even while better in most Southeast states, is something Corbett keeps a close watch on. An important metric he looks at to gauge that is the bank’s loan pipeline, of work and deals in progress. It was down 30% through August, he says, but as of mid-December, “we are almost back to where we were before the crisis.” If that pipeline drops in 2021, that could be a bad sign for the bank. Also, while not a particular threat to South State, the merger/consolidation trend among banks will likely keep a steady pace in 2021. That’s a byproduct of low interest rates, he says, which clamp down on bank revenues. “There were several big bang mergers in 2020,” Corbett says, including CenterState-South State. “You will probably see more banks merge (in 2021.)”