Stirrings of growth in marine finance

There is a glimmer of growth and hope emerging in the marine finance market. The workers who lost positions when the credit bubble burst are finding their way back into the business they know and wish to serve. They are members of an industry talent and knowledge pool with experience to get things done – finding and carefully executing boat loan deals for the benefit of buyers, sellers, builders and related businesses – and to help financial institutions do so profitably. This industry human resource is uncovering funding, convincing finance newcomers and bolstering those “keeping the marine faith” that setting the groundwork now will pay off in future dividends as the economy recovers.

First Trade Union Bank based in Boston announced in early February that it entered the yacht financing industry guided by Jim Velez, who will be vice president/yacht program manager. Velez, most recently vice president of yacht lending at KeyBank, with more than 29 years experience in the marine lending industry, will be responsible for identifying and cultivating new customer relationships.

Maritime Capital Group, a Fort Lauderdale-based provider of boat and yacht financing, named Peggy Bodenreider vice president about the same time. She has 26 years of experience in marine finance, most recently as national sales manager for the marine lending division of GE Money. Bodenreider will be identifying growth opportunities for marine lending and expanding service offerings for her new firm.

These are two strong examples of how seasoned lending pros are bringing experience and involvement to new assignments that will have a positive, reviving effect for boating. They are the latest of a continuing transfer of talent that has been occurring for about two years. And for the banks and finance firms that have not exited marine during the economic and boating downturns, familiar faces with an urge to serve remain.
What is the impetus for these firms to either get involved or ramp up their activities in an industry facing an unknown uphill climb?

“There are opportunities in economic downturns for new business as well as to prepare for when the market turns around,” says Bodenreider. “Maritime Capital views this as the time to build and strengthen relationships with our broker and dealer clients, as well as our banks. As lenders leave the market, it’s important the industry knows financing is still available and we are here to help.”

“We see both long- and short-term opportunities in marine lending,” suggests Velez. “There’s no question that we’re in a down cycle, but there’s still business out there. With significant lenders exiting the market, the demand for new lending sources is greater than ever. We are looking to establish a niche in the upper end of the market ($750,000+), which we feel is somewhat underserved at this time.”

These recent examples of interest in marine lending come from sources of both new and old money. First Trade, a well-capitalized community bank, saw its net income rise 17.2 percent in 2008, and has assets of
$590 million.

“We have the means and desire to lend and seek to diversify our portfolio,” says Velez. “We know based on past personal experience and historical data that marine loans are high-quality, high-performing assets, and we feel they will be a great addition.” During its rollout phase, First Trade will utilize the service company network (marine loan brokers) for loan originations.
Maritime Capital seeks to grow retail financing for boaters nationwide by leveraging its service now provided to customers of its sister company, National Liquidators, the vessel recovery company and boat auction.

“It’s a great time to get into or expand within the marine lending business and time to re-establish the bar,” explains Bodenreider. “Through prudent lending practices, banks can build a solid portfolio, and with rates remaining steady, they can expect profitability to increase. Staying close to the market and knowing where there’s business is key to success. We are fielding calls from dealers and boaters who want to work with us.”

While these are encouraging developments, marine lending is not out of woods. Both executives have concerns about spiking delinquency and repossession rates. But they also know how to mitigate trouble going forward. Looking toward resolution of economic and industry trials, Velez reflects confidence, saying, “I truly believe that First Trade is entering the yacht financing market at a great time.”