Independent Banker - April 2024 - 16

PORTFOLIO
" We're still a little more cautious than usual, but
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there's no better time than when others are on the
sidelines to make the best loans you'll ever put
in your portfolio. "
-JAMES NORTON, SEACOAST BANK
that has doubled to 50%.
" We feel like in a couple of
years, those assets that have that
much equity are really going to be
well-performing assets on the books,
and so we're trying to take advantage
of that, " explains Lisa Shelnutt,
commercial real estate division
manager at the Greenville, S.C.,
community bank.
Community banks that have the
capital to lend see a good runway
ahead to expand existing relationships
with their best customers and get a
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foot in the door with new ones.
" We feel really good about where
we're positioned with the level of
service we provide to our customers, "
says Shelnutt. " We're big enough to be
able to do most transactions for our
customers but small enough where I
can text our CEO with the fi rst name
of a top customer and he'll know
exactly who I'm talking about. "
United Community serves clients
across the Carolinas, Florida, Georgia,
Tennessee and Alabama. " We're more
comfortable in our market where
we sit in terms of taking real estate
risks. But we will go out of our market
for the right project and the right
sponsor, " adds Shelnutt.
For example, the community bank
recently originated a $22 million loan
for a South Carolina-based developer
that is building a new industrial
property in California. " We're a very
relationship-driven bank. So, number
one, we look at our relationship with
a sponsor, and number two is the
project, " she says.
Due to constraints on debt service
coverage, many banks are lending
at loan-to-value or loan-to-cost
ratios of 50% to 65%. Originating
conservatively underwritten loans is
the " easy " part, adds Norton. " The
hard part is what's the long-term view
of this relationship because we're
protective of our fi nite resources, i.e.,
our balance sheet and our capital,
and we're going to use it for the
best-in-class sponsors who are willing
to fully bank with us, " he says.
Increased appetite for term loans
Some bankers are fi nding new lending
opportunities within CRE market
challenges. For example, high interest
rates have contributed to a disconnect
between buyers and sellers that is
delaying a sponsor's exit strategy.
" We're seeing some of our
developers get their deals leased up
and are not really happy with the
price that they get for their properties
in the market, " says Pirok.
Veritex sees a signifi cant
opportunity to extend those loans
for two or three years and keep those
loans on its books a little longer,
particularly for good multifamily
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Independent Banker - April 2024

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