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Analyst says no cause for alarm in slower Florida bank lending

Margie Manning

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The downtown St. Petersburg office of The Bank of Tampa, the most profitable local bank in Q2 2019.

Florida community banks slowed their lending slightly in the second quarter of 2019.

The slowdown is in line with national trends and should not raise any economic alarm bells, said Lozan Aleksandrov, a managing director at Janney Montgomery Scott LLC, an investment banking and research firm.

There was a 5.1 percent median increase in loans portfolios for Florida’s 113 banks in the three months ended June 30, compared to a 6 percent increase in loan portfolios in the previous quarter, a new report from Janney said.

Community banks are a key source of credit for small to mid-size companies in the area. Changes in the banks’ loan portfolios can be a proxy for how eager businesses are to expand, hire and make big purchases.

The slight drop in loan growth in Q2 for Florida banks is a reflection of economic concerns nationwide, including over a trade war, Aleksandrov said.

“This is less than a 1 percent decline. If you have a couple of loans that closed on July 1 instead of June 30 it’s enough to make a difference. So I wouldn’t read too much into this level of change on a quarterly basis,” he said.

Janney’s on-the-ground observations in Florida indicate there’s no reason to worry, he said.

“In talking to banks throughout Florida, things are more or less as they were. Banks are still seeing strong demand and good opportunities to look at,” he said. “Also, in the previous credit cycle before the economy overheated, the pricing went out of whack. In this moment in time, there’s no excess like that happening. We’re seeing indications the economy is going strong but not overheating.”

There was a mixed bag of lending gains and pullbacks among the community banks in the Tampa-St. Pete area. Pilot Bank, a Tampa bank with $403 million in total assets and a recently opened branch office in St. Petersburg, had the biggest gain in total loans, up 26.9 percent. Freedom Bank, a St. Petersburg bank with $344 million in total assets, had a 19.2 percent drop in total loans during Q2.

Cathy Swanson, CEO, Freedom Bank

“The reason for the drop in loans is that we are Government Guaranteed lenders and, at the end of March, had closed a couple of large USDA loans which were subsequently sold in the secondary market, which is our strategy with these loans,” said Cathy Swanson, CEO, Freedom Bank. “We are still active in the local lending market and, as always, watch what is going on and respond accordingly.”

All of the Tampa-St. Pete banks were profitable in the second quarter of 2019. The Bank of Tampa, with $1.8 billion in total assets and 11 offices in Hillsborough and Pinellas counties, had the highest net income for Q2 2019, $6.1 million.

The median net income for Florida banks in the second quarter was $969,000, the Janney report said.

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