Avoiding Burns in a Hot Market: Community Bankers Who Thrive in Commercial Real Estate Lending Say the Secret Is Emphasizing Relationships over the Temptation to Do Every Deal
2006; American Bankers Association; Volume: 98; Issue: 1 Linguagem: Inglês
ISSN
0194-5947
Autores Tópico(s)Housing Market and Economics
ResumoMidnight in the Garden of Good and Evil, the 1997 murder mystery movie, and the 1994 book of the same name by John Berendt, helped put the city of Savannah, Ga., on the modern map. bizarre true story has widely been credited for reinvigorating Savannah tourism. It has also helped make Savannah a relocation city of choice, and that has meant big things to bankers. I'll bet there's nobody else whose market has grown dramatically because of a soap opera, said Walter Bowden, president and CEO of Darby Bank and Trust Co., Vidalia, Ga., which itself is a transplant that took root in the market. You would be amazed at the number of people that came to Savannah once that book and movie were out, who saw the city, liked it, and bought real estate, said Bowden. Bowden was speaking during a roundtable discussion about commercial real estate trends with six other members of ABA's Community Bankers Council in late October of last (All seven banks were state-chartered institutions with FDIC serving as their chief federal regulator.) Indeed, Bowden's bank began getting involved in commercial real estate lending for the first time about a decade ago, and like all the other banks taking part in the roundtable, Darby Bank, $555 million-assets, is now a heavy commercial real estate lender. Boom times in CRE Savannah's prosperity isn't an isolated phenomenon. In many markets around the country, economic improvements the last decade have made commercial real estate lending quite attractive to community banks that have all too often seen themselves squeezed out of other forms of lending. Several members of the roundtable group serve as prime examples. For instance, there's Kent Needham's First State Bank in Tonganoxie, Kan. A NASCAR racetrack--the Kansas City Speedway--opened in mid-2001 near the bank's market. The track has created a lot of job opportunities in development, and housing, says Needham, president and CEO of the $294 million-assets bank. Other economic factors have also helped, so over the last ten years, we've seen a general increase in our commercial and residential construction activities, said Needham. bank tries to keep its commercial real estate activity diversified, so it finances a mix, including office, retail, hotel/motel, and residential construction. Ed Gutzmann, vice-chairman at $332.5 million-assets Mainstreet Bank, in South Saint Paul, Minn., says that his bank, a heavy construction lender, has benefited from a strong Twin Cities economy. As a result, its commercial real estate portfolio has grown by about 20% for three years in a row. Tom Boyle of State Bank of Countryside, Ill., in the Chicagoland area, says his $977 million-assets bank tends to specialize in commercial real estate lending for residential projects, but, in serving the greater Chicago market, we have a lot of diversification within that segment. Some banks have carved out specialized niches. do a lot of tax-credit construction, says Bob Braswell, president and CEO of Carolina Bank. is construction lending for low- and moderate-income apartments. We do 12-15 transactions a year. These projects give the $329 million-assets bank, in Greensboro, N.C., a good leg up on Community Reinvestment Act compliance. They also bring in healthy fee income, and sometimes lead to additional lending opportunities. In Ann Arbor, Mich., Robert Chapman says that his United Bank and Trust-Washtenaw, a four-year-old startup affiliated with an older bank elsewhere in the state, specializes in financing student housing. Not large, dormitory-style buildings, but smaller structures, typically rehabs of existing facilities that investors acquire to rent to students attending the University of Michigan. This has been a helpful offset to falling economic activity resulting from auto industry problems. …
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