As wholesale lending sees financial support wane amid withering industry conditions, community banks — oft forgotten during the recent run-up in housing — are seeing a resurgence in interest from borrowers who want access to a more traditional mortgage. The latest community bank to jump in the fray is Florida Bank Group, Inc., a small bank holding company with $810 million in total assets. FBG said Monday that it had formed Florida Bank Mortgage, as part of an effort to offer mortgage services statewide. Randy Freese, tapped by FBG to lead its nascent mortgage ops, said that community banks are poised to take advantage of the mortgage industry downturn by building stronger relationships with customers. “In response to the recent developments in the mortgage origination market,” Freese said, “we believe that community banks are well positioned to expand into this market by virtue of the relationship of trust we enjoy with our customers.” I’m not quite sure how the personalized service usually associated with a community bank scales up to a statewide operation, personally. Most community banks are an independent lot that make decisions at the local level; which means I’m not exactly sure if FBG’s approach here is what you’d expect with a community bank. Regardless, it will be interesting to see as 2008 progresses if more community banks look to grow their mortgage lending operations — and if so, whether that growth is sustainable over the long term.

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