For many community banks, commercial real estate provides a significant source for income, especially as residential loan demand has softened.

Community banks have emerged as big winners from the 125 percent year-over-year growth in commercial mortgage volumes statewide this year.

Community banks accounted for about half the lenders featured in The Commercial Record’s Fast 50 commercial lenders, based on both number of loans and mortgage volumes.

For many community banks, commercial real estate provides a significant source for income, especially as residential loan demand has softened. For some of the banks on this year’s list, market expansions and have helped drive growth, while the ongoing disruptions from mergers and acquisitions have continued to bring lending opportunities.

“We’re seeing a good benefit from a lot of the mergers and acquisitions in our industry,” said Brian McNamara, chief lending officer at Norwich-based Dime Bank. “People want to have a local bank where the local decisions are made, so it’s been pretty good for us over the past few years.”

RI Lender Finds CT Wins

The Fast 50, compiled from data collected by The Warren Group, publisher of The Commercial Record, reveals the 50 fastest-growing lenders in Connecticut for the first six months of the year, compared to the same period a year ago.

Connecticut had 2,250 commercial mortgages from January through June of 2022 worth $13 billion, compared to 1,890 loans worth $5.7 billion in the first six months 2021.

For Rhode Island-based Washington Trust, staying active in Connecticut’s commercial real estate market is part of the bank’s long-term strategy, said James Hagerty, executive vice president and chief lending officer at Washington Trust.

Who are Connecticut’s fastest-growing lenders of 2022? Click here to read our rankings.

The $5.98 billion-asset stock bank, which was founded in 1800, saw its commercial mortgage volume and number of loans nearly triple year-over-year, according to The Warren Group. The bank has long had two commercial loan officers in Connecticut, McNamara said, and earlier this year it added another lender to focus on the state.

Some of the property types where the bank experienced year-over-year growth included multi-family, industrial and self-storage.

The bank, which has a branch in Mystic and a residential mortgage office in Glastonbury, focuses its commercial lending activity along the coast from the southeastern part of the state to Fairfield County. While Hagerty said the 2022 lending growth has happened across its market area, the bank found more opportunities in the New Haven and Fairfield County markets.

Also driving CRE loan growth in the first half of 2022 was the bank merger activity causing disruption in the market, Hagerty said, adding that the bank continues to see opportunities to increase its market share in the state.

Hagerty noted that the Washington Trust has long-time relationships with CRE brokers and others in the industry.

“We’ve received a very positive reception from centers of influence within the market given the recent merger activity,” Hagerty said. “We’ve been encouraged by those centers of influence that there’s an opportunity for our bank, given our knowledge of the market and long experience, to be successful there.”

Washington Trust has recently taken more steps to expand its Connecticut lending. The bank in July opened a commercial loan production office in New Haven and hired another loan officer, giving the bank four commercial lenders for the state.

Even with rising interest rates and economic uncertainties facing commercial lending, Hagerty said the bank is committed to Connecticut.

“We have a long view on things,” Hagerty said. “We’re there to stay and be impactful in the market.”

Opportunities in New Market

Dime Bank has also seen loan growth amid the market disruption caused by mergers, said McNamara, adding that opportunities have come not just from the recent activity. Bank consolidation over the past decade has affected what business owners expect from lenders.

“Local business owners get frustrated when they’ve been with a bank that gets taken over once or twice or even more, and they’re dealing with several different loan officers,” McNamara said. “They want to talk to the person that’s going to stay there for a while and be committed to the project.”

Dime Bank saw year-over-year commercial mortgage volume more than double in the first half of 2022, according to The Warren Group. The bank has had opportunities in multi-family, self-storage, residential subdivisions, retail shopping centers, office space and owner-occupied office buildings.

Part of Dime Bank’s recent CRE loan growth has also been driven by the bank’s expansion beyond New London County, McNamara said. The $1 billion-asset mutual bank, which was founded in 1869, opened new locations in Manchester and Glastonbury in late 2020. McNamara said the bank hired two commercial lenders for that area – one last year and another in 2022 – Dime Bank is planning to open another branch in Vernon.

Despite concerns about rising rates, the bank continues to see lending opportunities, McNamara said, including for multi-family projects. He added that some borrowers sought to lock in interest rates out of concerns rates would rise even higher.

While he expects the economic conditions to have some impact on lending, McNamara said the bank is used to managing the ebbs and flows of the economy.

“You’ll see a real good season, and then you’ll see a not-so-good season,” McNamara said. “The only thing that’s constant is change in the commercial lending business – we just adapt.”