Did boat show visitors take home that yacht? See how the deals are unfolding in Miami
A week after the 2024 Discover Boating Miami International Boat Show ended, David Druey’s work is just starting.
The Florida regional president of Centennial Bank has applications to wade through, credit histories to check, and character references to carry out.
During the boat show, the Fort Lauderdale-based executive told the Miami Herald he looked at about 15 financing deals and said yes to four of them. But about six months from now, he will have agreed to seven or eight deals.
“A lot of these deals don’t close at the boat show,” but afterward, said Druey. And “some people will commit to a boat that’s not finished being built yet.”
Amid the migration to South Florida of dozens of financiers from New York and Chicago in recent years, the regional Centennial Bank may seem an unusual player. Its holding company, Home BancShares Inc., is headquartered in Conway, Arkansas. Centennial, a wholly owned subsidiary, offers commercial and retail banking in Arkansas, Florida, and South Alabama.
During the Great Recession, it started buying several failed banks in Florida and in the region over three years. In 2018, it acquired Shore Premier Finance from Union Bank & Trust, based in Richmond, Virginia, which offered marine banking. Today, that serves as Centennial’s arm for boat financing.
It is a space in which Centennial seeks to grow, currently accounting for $1 billion of its $45 billion in assets under management.
“We wanted an opportunity to be in that sector,” said Druey, who moved from Arkansas to South Florida nearly a decade ago. “In Fort Lauderdale, you’re in the marina and yacht capital of the world. So, we needed to be in that sector of business, and we weren’t.”
They are increasingly becoming relevant. With about eight deals from the February boat show, Centennial will lend between $6.5 million and $9 million. The total value of the boats purchased: $12 million to $18 million.
It also handled another individual deal just before the boat show: Centennial loaned a buyer $12 million for a vessel valued at $20 million.
“I’m pleased with the boat show,” Druey said. “Overall traffic was not what it was in the past, but the serious folks were there,” he noted.
The show drew nearly 100,000 visitors.
The following is an interview with Druey about what’s involved in buying a yacht and getting financing:
Do you provide financing to individuals or companies?
Very few companies. Normally, single asset entities like an LLC.
A lot of the vessels we finance go for $400,000 to $1 million. And it is an individual or husband and wife who buy those type of boats and finance them over 20 years. Most of our deals are not business-related.
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What are the steps in buying a yacht?
The process of buying a vessel is the same process of buying a car or buying a home. The more money you’re talking about, the more hoops you have to jump through.
You’ve got to have good credit score. You’ve got to have good character. You’ve got to have the ability to repay. You have to have good debt to income. The same things that apply on a mortgage loan.
What’s your debt-to-income criteria?
The maximum is usually about 40%.
What’s the typical financial profile of someone you lend to?
I don’t think there’s a typical profile. But I’d say it’s a professional that has disposable income
Salaried typically or business owner — probably could have written a check for it if they really wanted to but they chose to finance it.
Credit score is pretty important because we run everything through an underwriting system. They need to have a credit score of over 700.
We finance boats that start at $400,000 in overall value and go up to $20 million. We normally require at least 20% of equity on smaller vessels and 30% to 35% for larger vessels.
What’s the lowest end of salary scale one can be at to even be in the ballgame?
I don’t see many people that make less than $100,000 that buy a boat that we would even consider financing, just because of the amount of the payment. People should have enough disposable income so that they can spend $1,000 to $1,500 per month forever.
Does your typical buyer own homes and other property?
Yes. This is a toy. We’re talking about people buying toys. They’re expensive toys but they’re toys. They could buy a boat, or they could buy a plane. It’s just a toy.
What are other signs you look at?
Credit balances — what historically has their credit balance been and where are they now? Are they living on credit cards? The time on job is very important. Historical credit balances and job tenure are two really important things that tip the scale.
If I was at one tech company as VP and got promoted to president at another tech company, then that’s a good move. If I was at one business and all of a sudden went to something completely different, then that’s a warning sign for us. That’s always going to be a concern.
What is the most surprising client you’ve had?
Nothing surprises me. We got a guy who sells sewer pumps to cities. They don’t care what the economy is doing. That guy is pretty consistent. If you’re in sales, it depends on what you’re selling, and where are you in the cycle of sales.
What do you tell browsers who don’t have means to buy a yacht?
I would tell them to go join a boat club. There are all kinds of boat clubs around South Florida.
A boat club basically allows you to pay a monthly fee and then use a boat in a rental fleet at your discretion. You sign up for it. That will allow you to get into boating without the capital expenditure of financing.
You do it for a year at a time, to see if you like boating. And if you like boating, then you can see if you’d like to buy a boat. If you don’t like boating, all you’ve lost is one year.
Is this good advice even for people who have the money?
Yes. You need to see if you like boating or not. Unfortunately, there are a lot of people that buy boats that don’t use the boat like they thought they would use them and then they sell them.
