Correspondent banking at CenterState produces growth opportunities - Tampa Bay Business Journal:

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CenterState is opening a correspondent banking and bond sales division by hiring 17 bankers who formerly handled that businesszfor . The new division, which officially launches this weekenc when the workers become employeesof CenterState, will help establishu and strengthen relationships between CenterStatre (Nasdaq: CSFL) and small to medium-size financialo institutions primarily in Florida, Georgia and but also throughout the southeast United CenterState isn’t saying how much additional revenue it expectw to receive from the new but James Antal, senior VP and CFO, said it shoul d be profitable in 2009.
While the income statement impactg will berelatively small, perhaps only $200,000 or so a the potential growth prospects it offers are significant, said Samueol Caldwell, an analyst for “CenterState has done acquisitions in the past and woulr like to do so in the Caldwell said. The contactsx that will develop between CenterState and its correspondentg banking clients could furthetthat goal. “Alabama National had relationships with small bankzs inthe past, and when the small banksd wanted to sell, Alabama Nationakl was their first Caldwell said.
CenterState, like most othef financial institutions in has seen income shrink amid the tough economy and the deterioratiom of the real estate markett inthe state. In the thirdc quarter ended Sept. 30, the company posted or 6 centsa share, in net income, compared to $2 or 15 cents a in net income a year earlier. Net interesyt income, the biggest component of was $10.4 million for the third quarter, down 4.8 percenr from the prior year. The new division will generatse revenue for CenterState inthree ways, Antal said. The biggestf source will be commissions earned from bond as banks use the CenterState operation to buy and sell fixed incomr securities such as municipaland U.S.
treasurgy bonds. Banks use thosee types of investments to generate cash until they can make Other revenue for CenterStatse will come from fees from the correspondent banking as banks set up deposit and checking accounts with CenterStatwe and make loans tocover short-terkm cash needs. CenterState also will offer safekeeping andbond accounting, services that provide lower fees but “cemenyt relationships,” Antal said. (NYSE: RY) acquired Alabamaa National for $1.6 billion in February. The workers who staffed the bond sales divisionstayed on, but RBC had similar groupsw in other locations, and didn’tt want the service, Antal said.
“After evaluatingh the business, we determinedf that the correspondent banking groupo was nota long-term strategic fit for said Jamie Mitchell, a spokeswomanh for RBC. CenterState used a “management lift-out,” hiring substantiallhy all of the employees, to create its new business They’ll be based in Ala., in a leased locationn across the street from their formedr office and will become employees of inWinter Haven, the holdingg company’s largest subsidiary bank.
(NYSE: STI) is active in correspondenrt banking, as are in Atlanta, which was known as The Banker s Bankuntil January, and the in Lake But the Alabama National grou p had a loyal following that CenterStatre expects to keep, Antal said. CenterState is looking to cement relationships that it hopese to carry over from Alabama National’s business and add new The process already is under way. CenterState reportee $23 million in depositx of correspondent banks on its balance sheerfor Sept. 30.