How Community Banking Has Changed

MIAMI—Marti Mang, senior vice president of corporate lending at TotalBank and CREW-Miami's president, has been a leading community banker for 44 years. She sees first hand the regulatory pressures impacting the banking sector today—and the commercial real estate trends that are emerging.

In this exclusive interview series, GlobeSt.com caught up with Mang to discuss the commercial lending trends she's seeing in South Florida. We also asked her how community banking has evolved since the Great Recession.

GlobeSt.com: What trends are you seeing in commercial lending this year in South Florida?

Mang: In commercial banking, the trends we are seeing are increased competition because of the re-entry into the market of many of the non-bank lenders, such as the CMBS and life insurance companies—and even very new players using crowdfunding. We have a situation where there is an abundance of capital chasing too few deals.

Increased competition tends to affect pricing and often results in other concessions to win the business. Also, because of the heavy regulatory burden, commercial bankers do not have a level playing field and are saddled with many requirements under the Dodd-Frank Act, which is still undergoing implementation and interpretation. 

Another trend is the return to 30-year amortizations for some property taxes, as well as lenders locking in 10-year fixed rates. This latter move could easily result in narrow margins when the interest rates finally increase. Although we have staved off rate increases for the past six years, this is the longest unprecedented period of the prime rate remaining at 3.25% and it is not hard to predict that an increase is in the horizon.

GlobeSt.com: How has community banking changed as a result of the effects of the national financial crisis?

Mang:Community banking also underwent many changes as a result of the financial crisis including significant consolidation. The number of banks was reduced from 7,284 in 2007 to 5,500 in 2015.

Because of the decline in asset values, many loans had to receive an adverse risk rating resulting in an increase in the loss reserves. This depleted the capital of the banks and caused a number of banks to close or merge with stronger financial institutions.

Be sure to come back for part two of this feature, where Mang will discuss how women in banking have advanced in the past 20 years.