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Out-of-State Lenders Gain Ground in CT Commercial Lending

KeyBank, NBT Bank Land Spots Among Fastest-Growers

By Sam Minton
Commercial Record Staff

Commercial real estate lending has proven to be a source of rapid growth for two large out-of-state banks determined to make inroads in Connecticut.

Data from The Warren Group, publisher of The Commercial Record, shows that Cleveland-based KeyBank and Norwich, New York-based NBT Bank landed on the list of fastest-growing commercial real estate lenders operating in Connecticut.

KeyBank nearly doubled its CRE volume from the beginning of 2023 (95 percent growth) to a commercial loan volume of $84,712,092 in the first two quarters of 2024 as compared to the same period in 2023.

After the larger banking industry’s struggles last spring, Key Bank was planning for growth in 2024.

“Obviously, first and second quarter of 23 were difficult with different issues, some of the bank failures so I would say we clearly planned on active growth and we executed on that as the market evolves,” said John Manginelli, Northeast regional executive at KeyBank Real Estate Capita.

KeyBank wasn’t the only outside firm to find success in Connecticut this year.

NBT Bank grew its commercial real estate loan volume increase from $14,689,750 in the beginning of 2023 to $55,822,534 in the first two quarters of 2024. NBT Connecticut regional president Andreas Kapetanopoulos credited larger banks pulling back on lending for the bank’s 280 percent growth in CRE volume.

Advantages of Scale

With Key Bank being one of the largest banks in the United States, Manginelli said, the bank can utilize national strategies in each community where it operates.

“Besides being an active balance sheet lender, we’re also a large capital market lender – Fannie, Mae, Freddie Mac, CMBS, insurance company placement,” he said. “So, we will actively look to help our owners in Connecticut to say, ‘Can we help you grow from the capital market side? Do your deals need refinancings? We can place those for you.’”

Key Bank also utilizes a large public-sector group to help borrowers maximize any potential tax benefits. The bank recently closed on a deal that helped monetize tax benefits in Bridgeport and Manginelli said they are looking to do similar deals across the United States.

While not always being the direct lender on these deals, Key helps provide joint venture or equity capital through its public-sector finance group.

“The beauty of Key is we’re really a great mortgage investment bank with a balance sheet, so we look at trying to help those developers anyway,” Manginelli said. “We continue to have our affordable bankers looking to help in the markets we’re active in. Bridgeport, Hartford, New Haven, West Hartford – with developers in those locations, we’re going to continue on that growth strategy.”

On the Outside Looking In

Manginelli credits KeyBank’s success in Connecticut to being intentional about having a presence in the region. The bank has sponsorships at the Hartford Yard Goats stadium as well as with the University of Connecticut and operates branches, offices and ATMs in 42 communities in the state.

“While we have great business bankers, middle-market bankers, private bankers, a couple of real estate portfolio managers, what we try to do is get involved in the community,” he said. “I always say it’s best to replicate the things that have been successful and then bring some nuances in like the public sector deals that we did in Bridgeport to show owners of real estate capital, ‘Hey, we’re doing these for other clients.’”

Manginelli also added that Matthew Hummel, Key Bank’s market president and commercial banking executive for Connecticut helps to ensure that the bank is involved in events in the state.

Andreas Kapetanopoulos, NBT regional president, Connecticut, also believes that marketing plays a crucial role in the bank’s success in the Nutmeg State. But he also noted that NBT has taken a grassroots approach to finding business in Connecticut.

“We have the contacts, we know the folks that we need to speak with, so those contacts are already in place,” he said. “It’s really just introducing the NBT name to people.”

Rate Cut Expected to Drive More Growth

NBT has also increased its footprint in the region with its merger with Salisbury Bank, located in northwestern Connecticut. Kapetanopoulous added that NBT is always evaluating possible expansion opportunities in the region.

Key Bank also will look to further its imprint on the Nutmeg State.

“Going forward, we have more plans for growth,” Manginelli said. “We have a good mix of people that live and work in the communities of Connecticut. So, we’re going to keep trying to be meaningful to folks there.”

As both banks look to grow, both Kapetanopoulous said NBT will be aided by this week’s Federal Reserve interest rate cuts, which might help make more commercial real estate deals and planned developments pencil.

“Inflation has come down, supply chain issues have been addressed for the most part, maybe on the logic, electrical components there’s still some delays, but as you get more stabilization in that area, people can really work out their budgets,” he said. “I think the next item is just to kind of see interest rates come down to help make the projects viable and profitable.”

While seeing gains in CRE, NBT focused on balanced growth, Kapetanopoulous said, looking to build out its C&I portfolio, as well.

Manginelli said KeyBank also expects to see more growth in Connecticut, especially as interest rates come down.

“I definitely think it’s picking up [the transaction flow] and part of that is I think we anticipate short term rates to drop,” Manginelli said. “That will definitely help some of those value-add deals, the construction deals, deals where you’re getting traditional bank financing or debt fund financing. So those rates as well will come down, because we will place loans for clients at debt funds. We try to help our clients any way we can.”

The Fast 50 ranks the 50 fastest-growing loan providers in Connecticut, including mortgage and financial companies, banks, credit unions and other financial institutions. Sourced from real estate data analytics firm The Warren Group’s mortgage market share module, these rankings compare the number of loans through June 2023 to the number of loans made through June 2024, and the volume of loans through June 2023 to the volume of loans through June 2024. Rankings include purchase and non-purchase loans. Commercial rankings had a minimum of three loans in each year. Residential rankings had a minimum of five loans and a minimum of $1 million in volume in each year. Residential includes one- to four-families and condominiums. All rankings are statewide. All data is sourced by The Warren Group from public records, which may contain errors. For more information please contact Data Solutions at 617-896-5365.