The ever-changing marine lending landscape

Posted on Written by Reagan Haynes

Editor’s note: This is how things stood in early October.

 

Who’s out
1) May 2006, National City. This was a top-10 retail marine lender since about 1996 and became a national player in 2001, says Jim Coburn, vice president for lending at FlagStar, who also worked at National City for 25 years. Local National City branches still do some direct marine lending.

2) September 2007, Regions Bank. After several fast-paced mergers, power struggles erupted between lending staff, Coburn says. Regions also currently makes direct boat loans through its local branches.

3) June 2008, GE Money. The top-five player with a large dealer base was formerly owned by E-Trade and Deutsche Bank, and had also been freestanding as Ganis, says SunTrust vice president of marine lending Don Parkhurst. GE was the result of acquisitions during the last decade, Coburn says, and had initially sought an interested buyer for the retail business line. Unable to find one, GE exited. GE Distribution Finance remains the market share leader in marine floorplan financing in the United States.

4) July 2008, Wachovia. Wachovia was largely a service company and finance broker marine lender prior to the company’s acquisition of WFS, an indirect auto lender based in California, in 2006. That group managed the marine lending group and expanded it into a national indirect dealer lender. Citing a declining marine market and low margins, the bank pulled out, but still finances boats directly on a local-branch level, Coburn says.

5) August 2008, Citizens Bank of Rhode Island. The bank was recently acquired by RBS (Royal Bank of Scotland) and was a top-15 lender, with assets close to $90 billion, Parkhurst says. The bank dealt mostly in loan servicing and the finance broker business. Its market was not fully national in scope, Coburn says.

6) September 2008, KeyBank. A top-three retail bank, based on annual volume, prior to this year. Key was a 50-plus-year marine lender with beginnings in the Great Lakes basin as Society National Bank, before going national, Coburn says. The company opened Key Luxury Yacht Lending in Fort Lauderdale in August 2005 as a service company that focused primarily on larger yacht loans to generate fee income for the bank. The subsidiary also is affected by the exit decision.

* M&T Bank of Buffalo did not pull out of retail marine finance, but did scale back. Now the bank does only indirect marine finance business in states where it has a physical branch presence, Coburn says.

** Sovereign Bank also scaled back and now is only lending in its own “footprint” states, Parkhurst says. The bank still has a valid program and covers 12 states with indirect lending to dealers and service company/finance brokers, Coburn said.

Who’s in
1) Bank of America, a top-five national retail and floorplan marine lender.

2) Bank of the West (owned by Parabas, the largest bank of France) is a top-five national marine lender with a significant dealer base. The bank was trying to expand its floorplan portfolio in 2006, Coburn says.

3) US Bank, a national retail marine lender with a dealer and service company/finance broker base.

4) Textron, largely a wholesale lender, and one of the top five in that segment.

5) SunTrust, a national bank that focuses mostly on the service company/finance broker business.

6) Caterpillar, while not a bank, is probably among the top 10 or 15 lenders.

7) Provident Bank of Maryland has about a $350 million portfolio, Parkhurst says, meaning the bank is somewhat small, but still significant. They mostly make marine loans through their service company/finance broker base, Coburn says. They are not truly national; rather, they do business in select states where their management feels comfortable.

* There are also smaller banks, like Flagstar, which has been a regional (three-state) marine lender with a small portfolio for the last six years, Coburn says. Its marine lending presence grew significantly in 2007-08. The bank temporarily suspended its indirect lending and service company/finance broker production until the credit crunch eases.

Who’s new
1) January 2007, BB&T went to the street with a retail marine (dealer) finance program. Coburn, who worked on the bank’s start-up in marine, says the bank operates in a 10-state area, mostly in the Southeast, and currently has a very small floorplan portfolio.

2) CGI is still in the start-up mode. Its management tells Coburn it will be working on dealer retail and dealer floorplan programs. CGI already is making marine loans through selected service company/finance broker relationships. The company is owned by Societe Generale, which also owns Scott Financial through a recent purchase. That purchase was its entry into the U.S. marine finance market, Coburn says.

This article originally appeared in the November 2008 issue.

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