Florida's southwestern coast continues to generate outsize deposit growth for an Orlando-based community bank.
The $1.54 billion-asset Cogent Bancorp said this week that its branches in Fort Myers and Naples had surpassed $400 million of combined deposits in just under three years of operations. Cogent opened its branch in Fort Myers in August 2020. The branch in Naples opened in September 2021.
Cogent reached the $400 million-deposit milestone one year after reporting that its deposits in Fort Myers and Naples had crossed the $200 million threshold. Cogent operates eight branches in total, all in Florida.
To be sure, Florida's booming economy has worked in Cogent's favor.
"The amount of growth happening in Florida is incredible," Brandon Box, the bank's Southwest Florida market president, said Thursday. "We see all the time people relocating" from across the United States. "They're coming here, bringing their families, and in many cases moving a business here."
The picture isn't as bright outside Florida. Industrywide, banks lost nearly $500 billion of deposits in the first quarter, according to S&P Global Market Intelligence. While much of that loss occurred in the regional bank space, community banks were affected, as well.
Cogent's roots stretch back to 1999, when it was founded as Pinnacle Bank. The company rebranded in 2018 after a group led by current CEO Lee Hanna recapitalized the bank. Under the leadership of Hanna, a veteran Florida banker who started his career at the legendary Barnett Bank, Cogent has reported an increased annual profit for four consecutive years, with net income topping $15.9 million in 2022.
Cogent reported a $5.5 million profit for the quarter ending March. 31. Deposits grew by more than $276.3 million to $1.4 billion during the 12 months ending March 31 — with Box's Southwest Florida market contributing the lion's share of that growth.
Florida's total bank deposits grew by $80 billion, or 9% during the year ending June 30, 2022, according to Federal Deposit Insurance Corp. statistics. That increase has benefited banks around the state. In Miami, for instance, the $5.9 billion-asset Ocean Bank reported earlier this month that its deposits rose by $231 million during the first three months of 2023.
Box, for one, said he's convinced the growth trend has continued into 2023.
"It seems to be folks that want to invest more," Box said of the new arrivals to the state. "They want to move here, start a business or grow one. The multiplier effect of that economically is incredible."
Still, the biggest driver behind Cogent's deposit surge may be the region's scarcity of community banks. One de novo institution, Gulf Coast Business Bank, opened in Fort Myers in 2021. That addition, after years of consolidation, didn't begin to satisfy the demand for what Box described as "a modern small bank."
According to the FDIC, a total of 10 Florida-based banks operated in Collier and Lee counties, home to Naples and Fort Myers, as of June 30, 2022. A decade earlier, there were 24. The decline has boosted awareness of Cogent among the small businesses in its target market, according to Box.
"There just aren't a lot of options any more for small businesses that really value having a community bank partner, someone they can call and who can get things done quickly," Box said.
Cogent's deposit growth "definitely exceeded our expectations," Box added. "I think we all thought the market needed another community bank. I don't think we realized how desperate it was. … We've really just tried to fill that void."
The $60 million-asset Gulf Coast saw its deposits grow by more than $13 million from March 2022 to March 2023.
Cogent's success in Southwest Florida hasn't prompted the bank to alter its business plan. There are no new branches on the drawing board, with the company preferring to hew to a branch-lite model which envisions just one branch in any given city.
Box said he has added two people to his team's support staff. He said he will continue to hire as the number of accounts in the market, which now tops 2,800, continues to climb.
Cogent will also consider more lenders as opportunities arise. "We're always open to bringing on great bankers," Box said.
