With 1,500 people moving there every week—and stellar job growth over the past four years—the Orlando, Fla., metro features a competitive banking environment where the opportunities are open for enterprising community banks.
By Bridget McCrea | Illustrations by James Taylor
Orlando, Fla., is well-known for its warm climate, short drive to the beach and one very famous mouse. But it’s home to more than just vacationers and theme parks. Peel back the layers of the Orlando metropolitan statistical area (MSA), and you’ll discover a dynamic business environment home to titans like Lockheed Martin, Siemens and AT&T.
No. 1 in the nation for job growth for the past four years, the Orlando MSA welcomes 1,500 new residents every week. Beyond “The City Beautiful,” the MSA, an area of more than 4,000 square miles, includes the cities of Kissimmee and Sanford. By 2030, it will be home to 5.2 million people, up from a current 4.3 million, by the Orlando Economic Partnership’s count. Over the same time span, the region’s employment will grow by 19%, a full 10 percentage points faster than the national average.
“The addition of more than 1,000 people per week since before 1950 has made the area one of the fastest-growing regions in the country for decades,” the group reports. “Looking to the future, that trend is not expected to diminish.”
It all bodes well for the metro area’s community banks.
Not a “cow town” anymore
Orlando’s expansion isn’t relegated to any one sector. Its business community is both active and diverse. The strongest growth over the past year was in the professional and business services category, which accounted for a combined 40% of growth. Construction followed close behind with 22% of the total growth, while leisure and hospitality contributed 20%. A few of the recent business announcements include a new call center for Aldi, Inc., a new fulfillment center for Amazon and the expansion of Deloitte Consulting’s U.S. Technology Center.
“There’s tremendous growth taking place here, starting with the sheer number of housing starts that we’re seeing right now,” says David Dotherow, president and CEO at $340 million-asset Winter Park National Bank in Winter Park, Fla. He points to Florida’s year-round warm climate as one of the biggest draws for new residents and employers. Add Orlando’s centralized location to the mix—plus its many theme parks and impressive tourist numbers—and you wind up with a landscape that looks a lot different than the “cow town that it was back in the 1970s,” Dotherow adds.
A relative newcomer that obtained its charter in 2017, Winter Park National Bank opened its doors following the Great Recession, when local financial institutions were bought out, merging or going out of business. This created an opportunity in the market for a community bank that could make local decisions for loan approvals and leverage referrals as a primary business-generation tool, versus having a large advertising budget.
“We felt there was a tremendous need for local community banks to service the market,” Dotherow explains. “So, we assembled an experienced management team and board of directors, raised $40 million and started our bank.”
It didn’t take long for Winter Park National Bank’s founders to see just how competitive the Orlando banking scene was. “There are a lot of banks here and a lot of competition,” says Jeffrey Jenkins, the community bank’s chief financial officer, who keeps a close eye on the local housing and construction industries. “You have to be careful about how you manage those industries because if the economy slows, there can be some tremendous swings in those sectors.”
Limited to smaller loan deals due to its size, Winter Park National Bank works to develop participation relationships that help it to close those gaps. It also has to balance out the regulatory costs of staying in business by factoring in IT, cybersecurity and other inherent costs to running a community bank.
“You really have to run efficiently on the expense side,” Dotherow says, “and make that happen with fewer people, each of whom has to wear multiple hats.”
Increasing market share
Like the city itself, Orlando’s community banking landscape has flourished and evolved over the past decade, according to Joe Losch, Orlando market president at $17.8 billion‑asset Ameris Bank in Atlanta. For example, deposits held in banks in the Orlando MSA have grown 50%, to more than $50 billion. “Despite that growth, the banking industry has consolidated, and the Orlando MSA has 20% fewer banking institutions, 30% fewer community banks and 20% fewer overall branches,” he says.
While many large banks have grown through acquisitions, Losch says most haven’t retained the resulting combined market share due to disruptions caused by their mergers and consolidations. “These mergers have left many clients and bankers disillusioned, making them open and receptive to making a move,” he says, noting that community banks are in the perfect position to pick up both clients and bankers disgruntled by these changes.
“Formation of new banks has been slow over the past 10 years, and combined with merger consolidations, there are now fewer community banks serving Orlando,” Losch explains. “The result is that for the remaining community banks, there is now an opportunity for us to not only grow, but also increase our market share.”
An eye toward growth
The Orlando branch of $7 billion-asset Seacoast Bank of Stuart, Fla., benefits from the metro’s regular influx of potential customers. With an active hospitality and tourism industry, the region is also home to numerous corporate headquarters that banks like Seacoast have been able to partner and grow with, according to executive vice president Julie Kleffel.
Kleffel points to recent infrastructure upgrades at the Orlando International Airport, major investments in Lake Nona Research Park—known as Medical City—and an $800 million investment in SunRail, central Florida’s commuter rail line, as a few examples of the government and business commitment to moving the area forward. “There are many diverse industries and economies here in Orlando,” Kleffel says. “Our team has been able to double and triple down on that to become one of our bank’s fastest-growing markets statewide.”
Even in this tight labor market, Seacoast Bank has been able to find and recruit quality employees to round out its team, although Kleffel says the region’s 3.2% unemployment rate does make that difficult at times.
“We continue to invest and develop the talent that we have,” she says, “while also seeking opportunities to grow that talent strategically and efficiently as our bank grows.”
Speaking of growth, $17 billion-asset CenterState Bank of Winter Haven, Fla., has been on the acquisition trail over the past few years, acquiring several Orlando-area financial institutions. CEO John Corbett says they undertook this acquisition strategy to comply with the Durbin Amendment included in the Dodd-Frank Act.
With $7 billion in assets at one point, the community bank knew that when it crossed the $10 billion threshold, it would lose the interchange income from debit cards. “That was going to cost us $12 million a year,” Corbett says. “The choice was either sell the bank when it hit $10 billion in assets or grow through it. We chose the latter.”
During the year ahead, CenterState Bank will focus on four main priorities: further development of its corporate culture—the “CenterState Way”—overall bank growth, risk management and digital transformation.
“Like all banks nationwide, we’re looking at how to use digital to empower our personnel,” Corbett says. “We’re not just trying to buy computers. We want to use the digital channel to be more personal with our clients.”
Seacoast Bank: Strengthening
Seacoast Bank, one of the largest community banks in Florida, remains under the direction of the family that founded it nearly 95 years ago. The $7 billion-asset community bank in Stuart, Fla., has 49 locations and is led by CEO Denny Hudson, whose grandfather started it during the Great Depression.
“We’ve survived lots of ups and downs from that point to today and we’re doing really well,” Hudson says. “We’re profitable, we’re posting growth, we love the Florida economy. It’s a terrific place to be.”
Asked to reveal the community bank’s secret sauce, he says it really comes down to the people running the organization and their commitment to serving customers while also achieving Seacoast Bank’s mission. That mission is to help people improve their lives while also building stronger communities.
“We were founded in a community that had been without any bank due to the severe downturn in Florida that actually preceded the Depression,” Hudson says. “It was important to get a banker that understood the economy has ups and downs, and who could run the bank in a conservative fashion. It needed to be able to protect depositors and, in so doing, protect the community.”
That mission hasn’t wavered since 1926 and has served Seacoast Bank well, according to Hudson, who sees great potential in the Orlando market—and beyond—for community bankers who take a similar, customer-centric approach. He adds: “Part of our mission is helping communities become stronger, and there’s no better role to play than that as a community bank.”
A vibrant banking market
Corbett says CenterState is ready to face competition and grab new opportunities in Orlando, which he describes as one of the “most vibrant banking markets in the country.” He points to the area’s credit unions as one source of competition, noting that they tend to be “incredibly aggressive” about purchasing community banks. “That’s a negative,” he says, adding that he sees the inverted yield curve and low interest rates as two of the outside challenges for community banks.
Kevin Sacket, president at $234 million-asset Sunrise Bank of Cocoa Beach, Fla., which has operated in Orlando for a few years, is seeing stiffer competition. “We have a few new upstart players in the market and a number of other banks all competing for the same business,” he says. He sees commercial real estate as a particularly strong aspect of the Orlando market, where the bank is still carving out its niche.
“We’re still a fairly new player in Orlando, so we’re really just focused on continuing to penetrate that market,” Sacket says. “Our goal is not to be a giant bank. I’m just hoping we can have our capital leveraged by the end of next year, and then we can start to focus more on refining our business in that market versus just growing it.”
Greg Nelson, president and CEO of $534 million-asset United Southern Bank in Umatilla, Fla., likes to joke that the community bank is located in the “countryside” of Orlando. Situated about 45 miles from downtown Orlando, the 82-year-old community bank hasn’t wavered from its original mission of providing localized banking to area residents and businesses. Nelson says that commitment has served United Southern Bank well. “We’re a boring bank, but boring is good,” he adds.
Like Corbett, Nelson has noted more competition from area credit unions recently, both in terms of their branch presence and their commercial lending activity. “I think all of the independent community bankers will understand this challenge,” says Nelson, whose community bank has 12 Orlando-area locations. “We’re in a very competitive market, and it’s been this way for quite some time.”
Asked about the market’s strong points, Nelson points to residential lending as one of his bank’s biggest areas. “We also do a lot of commercial lending, but residential has really continued to bounce back in our area,” he says. “That’s been encouraging, and it hasn’t gotten out of control, although we are watching home prices as they continue to climb.”
Dotherow says he’s bullish on Winter Park National Bank’s growth prospects this year, but he notes that he’s watching outside developments like the upcoming presidential election and interest rates. “At this point, the key challenge is interest rate compression. With interest rates getting compressed closer and closer to zero, the margins and spreads get tighter and tighter. It’s harder to make money,” he adds.
Despite the challenge, Dotherow expects 2020 to be good for his community bank. “I believe 2020 will be a good growth year for the central Florida market and for Florida’s banking environment as a whole,” he says, “and we expect to have a good year.”
Where to go and what to do in Orlando
Community bankers share their top tips for the ICBA members converging on the city for ICBA LIVE 2020.
For theme park fanatics
Julie Kleffel, executive vice president at Seacoast Bank, is an annual Disney passholder. She tells anyone who will be visiting the parks to download the Disney app and take advantage of the FastPass process, which helps you avoid long lines for the more popular attractions. “The app lets you navigate Disney virtually,” she adds. “It’s the best way to view the park.” Orlando’s other theme parks offer similar services, so be sure to do your homework before you go.
Sifting through the many dining options in a city the size of Orlando can be somewhat of a crapshoot, but Kleffel says two of her favorites are the Crooked Can Brewing Co. and Plant Street Market in Winter Garden, Fla., and any of the five-star restaurants located in the recently renovated Disney Springs area in Lake Buena Vista, Fla.
John Corbett, CEO of CenterState Bank, suggests either Charley’s Steak House or the Oceanaire Orlando, both of which are located on International Drive. Those looking to enjoy some nightlife can try the M Lounge, a rooftop bar on Orange Avenue or Hanson’s Shoe Repair, a password-protected speakeasy housed in one of Orlando’s oldest buildings.
For out-of-town explorers
Outside of the city itself, the Orlando area is home to many smaller, quaint towns, each of which features its own lineup of things to do and see.
In Winter Garden, you’ll find a “Mayberry-meets-Main Street” feel, complete with a Tiffany glass museum, the Garden Theatre and Rollins College. If a seaplane ride over some of Florida’s inland bodies of water, kayaking at Juniper Springs or viewing the manatees at Blue Springs is more your style, then start your trek in Lake County, about 40 miles from downtown Orlando. Also known as America’s Seaplane City, Tavares is the place to go for the seaplane rides.
Other places to check out on Orlando’s outskirts include the Lakeridge Winery & Vineyards in Clermont (about 25 miles from Orlando) and Renninger’s Antique Market in Mount Dora (roughly 30 miles away). If a visit to the beach is on your itinerary, check out world-famous Cocoa Beach, which is home to the world’s largest surf shop (Ron Jon) and a dinosaur museum (Dinosaur Store).
Bridget McCrea is a writer in Florida.