Independent Banker - May 2017 - 68

Lender Life
commerce. Specifi cally, that means it
lends to a wide variety of businesses,
including organic food companies,
environmentally responsible real
estate development and clean
energy projects.
Other banks have been pulled into
green lending by their customers
or by a desire to tap into the growing
green lending market. Centinel
Bank of Taos, a $220 million-asset
community bank in Taos, N.M., has
been fi nancing alternative energy
for more than 30 years. At less than
5 percent, however, it still represents
a fraction of the bank's overall lending
volume. " For the most part, we
have entertained those loans under
our traditional offerings, whether it is
a consumer or a commercial product
line, " says Angel Reyes, president of
Centinel Bank.
But Centinel Bank sees growth
opportunities ahead after it heard
its local electric cooperative plans to
signifi cantly increase its solar energy
capacity. That expansion will likely
result in $6 million to $10 million in
new investments over the next three
years on megawatt arrays sprinkled
throughout the county. Reyes
sees that as a chance for Centinel
Bank to provide debt fi nancing for
" Where we are at today
is trying to fi gure out
how we incent builders,
developers and owners
with fi nancing to take
that step with LEED or
green technologies. "
-ANGEL REYES,
CENTINEL BANK OF TAOS
contractors doing the excavation
and installation work, as well as to
fi nance parts of these arrays over a
longer period.
Starting from scratch
The way most community banks
dip their toes in the widening pool
of green commercial lending is by
fi nancing alternative energy projects,
such as solar and wind, as well as
energy-effi cient commercial real
estate projects. On both fronts, banks
are developing expertise and, in some
cases, commercial loan products or
incentives to grow that business line.
First Green Bank, a $570 millionasset
community bank, based in
Orlando, Fla., was founded in late
2008 with a mission of social responsibility
and promoting environmental
sustainability. " It has truly been
a journey from the fi rst day that I
hatched the idea of being environmentally
focused, " says Kenneth
LaRoe, founder, board chairman and
CEO of the holding company First
Green Bancorp. Nearly a decade ago,
there weren't many formal green loan
products, so the bank sat down and
created its own.
First Green Bank provides an interest
rate discount of 25 basis points
on commercial real estate and construction
loans for projects that are
environmentally sustainable, as measured
by Leadership in Energy and
Environmental Design (LEED) certifi
cation. It also developed solar loans
for both residential and commercial
customers, with the commercial loans
providing a 10-year fi xed-rate loan
with a 20-year amortization.
The borrower can get a loan for
Taking the LEED
Annual trends in commercial LEED certifications
6,000
5,000
4,000
3,000
2,000
1,000
Number of Projects
4,920
337
2006
2016
Source: U.S. Green Building Council
100 percent of the cost of having
solar panels installed, with no money
out of pocket. LaRoe notes that for
some borrowers, depending on the
effi ciency of their new solar power
systems, the energy savings offset
the loan payment. He also says First
Green Bank has completed hundreds
of solar loans, with a current portfolio
of $6.6 million outstanding, and has
never had a default.
Centinel Bank is also seeing an
uptick in LEED and energy-effi cient
building projects in its commercial
and multifamily real estate lending.
" There is an expectation to utilize
these new technologies and obtain
these certifi cations for a whole host
of reasons, " says Reyes. " Where we
are at today is trying to fi gure out
how we incent builders, developers
and owners with fi nancing to
take that step with LEED or green
68 ICBA IndependentBanker May 2017
Independent Banker - May 2017

Table of Contents for the Digital Edition of Independent Banker - May 2017
