Boutique Business Banking for Small and Medium-Sized Enterprises is Trending in the Gables, Where Local Decision Making is the Power That Counts
By J.P. Faber
If it’s a weekend morning, the most likely place you will find banker Abel Iglesias is on his bike. For three or four hours each day, he and his biking comrades will pedal for scores of miles through the back roads of Miami-Dade.
“What I find is that it builds perseverance,” says the President and CEO of Professional Bank. “I kind of extrapolate that over to banking. It makes you mentally tough.” It’s also reflective of how Professional and other local banks succeed in the world of business banking in the Gables: by being on the ground here, and keeping it local.
Professional is one of a handful of locally based banks that succeed in business lending because they are local – or take a very local approach. Larger banks, while able to lend larger amounts, frequently concentrate the decision making elsewhere.
“The founders of the bank based it on filling the void left by [large] banks when it came to catering to the professional community – attorneys, physicians, dentists, accountants. We initially targeted them and provided their business banking needs,” says Iglesias. Launched in 2008, Coral Gables-based Professional Bank has grown organically – and locally – to $760 million, and in the process has expanded its client base. “We’ve grown into the business of pure commercial banking for small-to-medium-sized businesses.”
We take care of the needs of businesses that are run by individuals, and they live here…Abel Iglesias
The target of small-to-medium-sized busineses, aka SMEs, is one that has attracted the commercial lending teams of numerous smaller banks, ones that are either true community institutions or ones that act like locals.
First American Bank, for example, is a $4.9 billion privately held bank based in Chicago. It entered the local market by purchasing the Bank of Coral Gables, along with its local roots. With offices now on Galiano Street, they came to the Gables because they were a bank focusing on the needs of middle market manufacturers and exporters.
“We first came here to service exporters, and in South Florida and Coral Gables there are many exporters who need a lot of services,” says Brian Hagan, the Florida Market President for First American who handles commercial lending. “We deal with the smaller end of the middle market, companies with sales of a couple of million up to $50 million or $60 million, who need loans of between $1 million and $25 million.”
Hagan says his firm has lent to local firms that include a graphics company, an international distributor of wire and cable, an international distributor of paper products, and a plastics manufacturer. “The Gables has a strong business community and that strength is diversity. There are lots of international businesses, a tremendous entrepreneurial spirit in the smaller businesses, and a lot of brokers selling and buying goods… and that’s why we are here.”
While Coral Gables has the cachet of being the home to nearly 150 international headquarters for multi-national corporations, these are typically served by massive global banks with ties to the parent companies. What local financial institutions target are smaller firms, which can fall below the radar of bigger banks like Chase or Bank of America.
That is precisely the reason that Center State Bank landed in South Florida, and established a branch on Alhambra Circle. An Atlanta-based bank, its initial mission was to set up banks in rural communities that were traditionally underserved. Having grown to $17 billion in assets – including acquiring the two largest community banks in rural Homestead – “we have run out of rural communities to serve,” says David Pruna, area president for the bank. “We are now growing into the urban areas.”
Pruna, a Miami native, says that Coral Gables was chosen as the entry point into urban South Florida because of its array of small businesses that were potentially underserved. “That’s why we chose it first, as our beach head into the northern part of the county… Many people see Brickell as the financial district, but I think that Coral Gables is the epicenter of South Florida,” he says. “It has a tremendous amount of professionals and small businesses and industries, that lend themselves to growth. To partner with [them] is a great opportunity… With our suite of solutions we can grow with them.”
The idea of working with small businesses to help them grow, and then retain them as clients, is a central part of the philosophy of Grove Bank and Trust, formerly Coconut Grove Bank, which has always seen Coral Gables as part of its local territory. Among their claims to local cred is saving the University of Miami in 1931; the bank bought the then-insolvent university’s assets and structured a loan that allowed it to buy its assets back. Otherwise, UM would have been absorbed by the University of Florida and now be called Pan American University.
Many people see Brickell as the financial district, but I think that Coral Gables is the epicenter of South FloridaDavid Pruna
“Some of the companies we work with end up growing their businesses to $30 or $40 million, after a loan of a few hundred thousand dollars,” says Jose Vazquez, president and chief lending officer for Grove Bank and Trust, who describes his firm as “a small, boutique community bank” with $275 million in assets. But precisely because it is a small, local institution, Grove Bank strives to develop personal relationships with its clients, which have ranged from a clothing retailer on Miracle Mile to a restaurateur on Giralda.
“We look at any business that could be a viable lending candidate,” says Vazquez. “Entrepreneurial startups are more difficult to back in general, though we do have SBA products we can offer.” The key, he says, is working with the individuals and understanding their track records. “We like to get to know our customers, and not just because the government asks you to know who they are… We’ve got some clients that could be a small one man, one women law operation, and others that do eight figures in revenue, 50, 60, or 70 million in revenue,” he says. “There are plenty of those in the Gables, neatly housed in the offices of the city beautiful.”
Indeed, regardless of size, Coral Gables is viewed as a lucrative market
for business banking. “Coral Gables has always been a great market for doing business at all levels, from business banking to commercial real estate to retail banking. It’s one of the epicenters for business in the area,” says Nick Bustle, the Miami market president for Valley Bank in charge of commercial lending.
While Valley’s parent company Valley National Bancorp is one of the nation’s top 50 banks, with $30 billion in assets, it is “set up to deal with the smaller businesses,” and can lend amounts as little as $100,000. They are keen to work with both entrepreneurs and large businesses, especially when they can “increase our share of wallet” by serving the individual who runs the business. “Crossover is a big focal point for our bank,” says Bustle. “A lot of companies are located in Coral Gables, and the individual and professionals associated with those companies are located here.”
Despite Valley’s size, says Bustle, “we have a lot of folks on the ground, and a lot of local decision making… for someone looking for a real relationship with their banker.” The idea of a strong personal relationship is, of course, the mantra of any community bank. “Banking has changed and evolved over the years, but we have maintained our niche by catering to the special nancial needs of the community,” says Iglesias of Professional. Like their name implies, they have continued to focus on the needs of local professionals. “Someone that wants to buy into a law firm, or a law firm that wants to acquire another law firm, or a doctor or dentist that wants to expand or buyout a partner – those are the sorts of needs we can accommodate, in a niche of being able to understand these businesses and underwrite them with an appropriate financial package.”
The key is working with the individuals and understanding their track recordsJose Vazquez
It’s not that Iglesias avoids playing on a larger stage as well. He was recently appointed to the board of the Miami branch of the Federal Reserve, for example, and the loans that his bank makes to companies such as flower importers, housewares distributors, or equipment vendors to petroleum and mining companies range from $3 million to $15 million. But, he says, “We take care of the needs of businesses that are run by individuals, and they live here.”