By Greg Paeth
As banker Mer Grayson Jr. recalls, when Drees Homes needed a loan of about $1 million for its corporate headquarters on Grandview Drive in Fort Mitchell, three Northern Kentucky banks decided to team up to share the risk on a construction loan that was considered to be pretty hefty around 1980.
How things have changed.
No one suggests million-dollar transactions are now equivalent to lunch money in Northern Kentucky. But a fortunate combination of factors – the region’s location, its growth, new technology, and critical changes in state and federal banking regulations – mean it is far easier for businesses today to get several proposals when they’re searching for capital to build, operate and grow.
A factor distinguishing Northern Kentucky from other corners of the state is its status as a key element of the Cincinnati metropolitan area, 28th largest in the country with a population of more than 2.1 million, according to U.S. Census data. By comparison, Louisville Metro ranks 43rd with 1.3 million people and Lexington 107th at just over a half million.
In downtown Covington on Madison Avenue, Republic Bank & Trust, headed by Market President Thomas R. Saelinger, has established three offices in Northern Kentucky – Covington, Florence and Independence – and one in Cincinnati since it entered the Greater Cincinnati market 10 years ago. And Louisville-based Republic, which now has 44 offices in five states, isn’t done.
“We’re looking at additional offices in Northern Kentucky in northern Campbell County and in central Kenton County in the next 12 to 24 months,” said Saelinger, who grew up as the youngest of 10 children on a farm in Campbell County. “We’re also looking at two more locations in Cincinnati.”
A key factor in attracting top-flight people to Republic is its proximity to a big city that offers professional sports, the arts and other amenities that many young people find appealing, said Saelinger, who worked for Cincinnati-based Fifth Third Bank for 15 years before moving to Republic seven years ago.
“We see a clear need in our market for a strong community bank with access to resources and skilled bankers,” said Jason Payne, Republic Bank’s managing director of the Northern Kentucky Market. “Business clients and consumer clients not only want state-of-the-art technology from their bank, they also want nimble and responsive service.”
At this point, the Northern Kentucky/Greater Cincinnati market has proven to be receptive to what Saelinger describes as a “larger community bank” that has assets of about $4.8 billion.
“It’s been a strong year and 2015 was good. We had greater than 20 percent growth in lending and greater than 15 percent growth in deposits,” said Saelinger, adding that Republic’s loan portfolio has grown from about $35 million to $230 million in recent years.
The six Northern Kentucky counties highlighted in this article – Boone, Campbell, Gateway, Gallatin, Grant, Kenton and Pendleton – have bank deposits of $6.9 billion, which is about 9 percent of the $76.5 billion on deposit in 190 banks in the state, according to Federal Deposit Insurance Corp. statistics as of June 30.
As impressive as that statewide total is, the Cincinnati metro area alone tops it by 30 percent, according to FDIC data, which show some $107 billion on deposit in lending institutions inside an area that includes Northern Kentucky and a sliver of southeast Indiana. By comparison, metropolitan Louisville has $25.2 billion on deposit and metro Lexington banks reported $9.4 billion.
Although it’s a widely used metric in assessing and comparing the availability and the scale of financial services, bank deposit totals don’t tell the whole story, Grayson said.
“When you’re looking at Lexington and Louisville, you have to keep in mind that all of the (financial) firepower in Cincinnati is also in Northern Kentucky,” said Grayson, a second-generation bank executive whose career goes back 50-plus years to his first job with the First National Bank of Cincinnati in 1964.
“If someone needs $25 million today, there will be two or three banks that want to talk to them and they will be in a position where they can negotiate about the terms,” said Grayson, who came out of a brief retirement 11 years ago to help establish operations for Lexington’s Central Bank in Northern Kentucky. He retired a second time last year as Central’s regional CEO and still chairs its advisory board.
Central Bank is one of 27 banking companies that do business at 175 offices in Northern Kentucky, where competition seems to be increasing on a yearly basis.
BB&T, ranked the 11th largest commercial bank in the country with consolidated assets of $217 billion, made a splashy debut in Northern Kentucky and Cincinnati in mid-2015 with its acquisition of the Bank of Kentucky, which had grown into the region’s largest community bank with $1.9 billion in assets and 32 branch offices.
Huntington, headquartered in Columbus, Ohio, and ranked 31st in the country with assets of $74 billion, is expanding its presence in downtown Covington, the region’s largest city, by moving about 100 jobs from the suburbs to a building in the heart of the city’s beginning-to-revive business district. A multimillion-dollar renovation of the historic five-story building is underway.
“One thing we have seen since the Great Recession started is that people are saving money in banks, and the deposit levels in banks have grown and grown and grown,” said H. Lytle Thomas, president/CEO of Heritage Bank, a large locally owned Northern Kentucky community bank. “Most banks have plenty of cash to lend out, so the access to (money) has not been an issue because they have plenty of money to lend. …(But) the criteria for making a loan has changed; regulations have slowed and sometimes restricted the ability of banks to lend money. Bankers have become more cautious.”
Thomas has personal experience at both ends of the bank size spectrum.
He took over at Heritage, headquartered in Burlington, about 10 years ago after leaving Cincinnati-based Fifth Third Bank, 16th largest in the U.S. with consolidated assets of more than $141 billion.
“When I left Fifth Third, the last loan I did was larger than the entire asset size of Heritage Bank,” said Thomas, recalling a transaction of more than $250 million. Heritage has grown to $675 million since Thomas took the helm, however.
“With the technology that’s available, now very small banks can offer internet banking, which has leveled the playing field and helped smaller banks compete,” Thomas said.
He cites Fifth Third’s leadership roles in the chambers of commerce on both sides of the Ohio as well its $1 million investment in the Catalytic Fund, which works with developers, as just two examples of the bank’s deep commitment to the region.
J.C. “Duke” Thompson, who chairs the Department of Economics and Finance in the Haile/US Bank College of Business at Northern Kentucky University, looks at the financial services industry both as a detached academic and as a member of the board of the Bank of the Bluegrass & Trust Co. in Lexington.
From Thompson’s vantage point, no other part of the state offers a more extensive menu of banks – both large and small – than Northern Kentucky, where healthy community banks like locally-based Heritage, Lexington–based Forcht and Louisville-based Republic and Stock Yards compete against a long list of heavy hitters that play at the national level.
The size and competitiveness of financial services in Northern Kentucky can’t be traced to any single factor, but it definitely benefits from the “spillover effect” of the major players in Cincinnati, Thompson said. In addition to business loans, many institutions offer other services such as cash management, insurance, trust/investment management and foreign exchange management.
Growth of the logistics industry in Northern Kentucky, some of which is linked to the DHL “super hub” at the Cincinnati airport, has helped fuel the need for a robust banking industry.
“It is (the region) becoming the supply chain capital of the world,” Thompson said.
Allied Financial Solutions
Florence – allied-financial-solutions.com
Fort Mitchell – alphamarkadvisors.com
Altus Wealth Management
Fort Mitchell – altuswm.com
Florence – apprisen.com
Bad Girl Ventures Inc.
Covington – badgirlventures.com
Bannockburn Global Forex, LLC
Cincinnati, OH – annockburnsecurities.com
Bartlett & Co.
Cincinnati, OH – bartlett1898.com
Crestview Hills – bbt.com
Bottom Line Services
Fort Mitchell – bottomlineservices.com
The Catalytic Fund
Covington – thecatalyticfund.org
Florence – centralbank.com
Cincinnati, OH – chase.com
Florence – citigroup.com
Citizens Bank Of Northern Kentucky
Newport – cbnkcc.com
Citizens Deposit Bank
Fort Wright – cdbt.com
Citizens Federal Savings & Loan Association
Covington – citizens-federal.com
Commonwealth Bank & Trust Co.
Florence – cbandt.com
Coppage Wealth Management
COVE Federal Credit Union
Edgewood – covefcu.org
Eagle Financial Services, Inc.
Florence – eagle.com
Edgewood, Erlanger – edwardjones.com
Envoy Mortgage, Ltd.
Crestview Hills – envoymortgage.com
Covington – fidelity.com
Fifth Third Bank
Florence – 53.com
Focus On Success
Fort Mitchell – focusonsuccess.com
Burlington – forchtbank.com
Fourth Street Performance Partners, Inc.
Covington, – fourthst.com
FTJ Fund Choice, LLC
Hebron – ftjfundchoice.com
Guardian Savings Bank
Multiple braches – guardiansavingsbank.com
Burlington – heritagebank-ky.com
Fort Mitchell – hilliard.com
Florence – huntington.com
Kemba Credit Union
Florence – kemba.org
Kentucky Federal Savings & Loan Association
Covington – kentuckyfederal.com
Kentucky Land Title Agency, Inc.
Fort Mitchell – kentuckylandtitle.com
L & N Federal Credit Union
Erlanger – lnfcu.com
Legacy Financial Advisors
Covington – legacyfinancialadvisors.com
Covington – mcfadvisors.com
Fort Mitchell – ml.com
Morris & Bressler
Florence – morrisbressler.com
Odyssey Financial Advisors
Edgewood – ameripriseadvisors.com
OMEGA Processing Solutions, LLC
Fort Thomas – omegap.com
Option Financial, LLC
Fort Mitchell – optionfinancial.com
Cincinnati, OH – pnc.com
Polaris Home Funding
Cold Spring – homeloansuccess.com
Primerica Financial Services
Fort Wright – primerica.com
Principled Wealth Advisors, LLC
Covington – rincipledwealth.net
Prosperity Financial Group
Fort Mitchell – prosperityconnect.com
Renaissance Investment Management
Covington – reninv.com
Covington – republicbank.com
Stock Yards Bank & Trust Company
Cincinnati, OH – syb.com
Stockton Mortgage Corp.
Florence – smcapproved.com
Covington – usbank.com
Union Home Mortgage Corp.
Fort Mitchell – unionhomemortgage.com
United Community Bank
Lawrenceburg, IN – bankucb.com
Victory Bancorp, Inc.
Fort Mitchell – victorycommunitybank.com
Wells Fargo Advisors, LLC
Fort Mitchell – wellsfargoadvisors.com
Wells Fargo Bank
Louisville – wellsfargo.com
Wurz Financial Services
Information provided by Northern Kentucky Chamber of Commerce