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

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CenterState is opening a correspondent bankinyg and bond sales division by hirinv 17 bankers who formerlyu handled that businessfor . The new division, whichn officially launches this weekend when the workers become employeesof CenterState, will help establisn and strengthen relationships between CenterState (Nasdaq: CSFL) and small to medium-sizee financial institutions primarily in Florida, Georgia and but also throughout the southeasy United States. CenterState isn’t saying how much additiona revenue it expects to receive from the new butJames Antal, senior VP and CFO, said it should be profitabld in 2009.
While the income statemenr impact will berelatively small, perhaps only $200,009 or so a the potential growth prospects it offers are significant, said Samuel Caldwell, an analyst for “CenterState has done acquisitions in the past and woulde like to do so in the Caldwell said. The contacts that will develop betweeb CenterState and its correspondent bankintg clients could furtherthat goal. “Alabam a National had relationships with smalk banks inthe past, and when the smallp banks wanted to sell, Alabama Nationalp was their first choice,” Caldwell said.
CenterState, like most other financial institutionzsin Florida, has seen income shrink amid the toughb economy and the deterioration of the real estate marketr in the state. In the third quarter ended Sept. 30, the company postefd $761,000, or 6 cents a share, in net income, compared to $2 or 15 cents a share, in net incomre a year earlier. Net interest the biggest componentof revenue, was $10.4 million for the third quarter, down 4.8 perceny from the prior The new division will generate revenure for CenterState in three ways, Antal said.
The biggest sourced will be commissions earned frombond transactions, as banks use the CenterStatw operation to buy and sell fixed income securitiee such as municipal and U.S. treasury Banks use those types of investmentw to generate cash until they canmake loans. Othere revenue for CenterState will come from fees from the correspondentybanking business, as banks set up deposigt and checking accounts with CenterState and make loanws to cover short-term cash CenterState also will offer safekeeping and bond services that provide lower fees but “cement Antal said. (NYSE: RY) acquired Alabamza National for $1.6 billion in February.
The workers who staffe d the bond sales divisionstayed on, but RBC had simila r groups in other locations, and didn’t want the Antal said. “After evaluating the business, we determine that the correspondent banking group was nota long-terkm strategic fit for us,” said Jamir Mitchell, a spokeswoman for RBC. CenterStatwe used a “management lift-out,” hiring substantially all of the to create its newbusiness line. They’lol be based in Birmingham, Ala., in a leasesd location across the street from theie former office and will become employees of inWinte Haven, the holding company’s largest subsidiary bank.
STI) is active in correspondent banking, as are in which was known as The Bankers Bank until January, and the in Lake Mary. But the Alabams National group had a loyal followingt that CenterState expectsto keep, Antal said. CenterStats is looking to cement relationships that it hopes to carry over fromAlabamaa National’s business and add new relationships. The processd already is under way. CenterState reported $23 million in depositss of correspondent banks on its balance sheettfor Sept. 30.