In another example of a community bank finding a nationwide niche to grow its balance sheet, Cogent Bank in Orlando, Florida, has launched a business to finance single-tenant net lease properties from coast to coast.
Businesses that lease single-tenant properties are typically investment-grade operators, such as banks, restaurants or retailers, so the credit performance is seen as strong. In most single-tenant net lease arrangements, the business pays not only the rent, but also the operating expenses associated with the property, including taxes, insurance and maintenance costs.
"Lenders like them, they're easy to underwrite," John Feeny, a senior vice president at Boulder Group, a Wilmette, Illinois-based real estate service firm specializing in single-tenant net lease properties, told American Banker.
Cogent is one of a growing number of small banks that have sought to
Cogent, which operates 10 branches in Florida, reported net income totaling $9.3 million for the quarter ending June 30, up 26% from the same period in 2024.
Other community banks that have launched nationwide niche businesses include the $3.4 billion-asset Capital Bancorp in Rockville, Maryland, which entered
Cogent's entry into the single-tenant net lease market will be led by Rich Dowdy, who worked at Little Rock, Arkansas-based Bank OZK and Synovus Financial Corp. in Columbus, Georgia, before joining the $2.3 billion-asset Cogent.
Dowdy told American Banker that he has worked "almost exclusively" in single-tenant net lease lending for more than a decade with "no loss exposure to speak of."
Dowdy said that once he was exposed to this type of loan, "I fell in love with them."
Cogent did make some single-tenant loans prior to launching its National Net Lease Finance team, but it confined its lending largely to within its Florida footprint. To operate at scale, a broader, coast-to-coast approach is more effective, given the nationwide scope of most tenant businesses, Dowdy said.
"If you're going to launch it, the only way it's going to work is if you do it nationally," Dowdy said. "If you do it statewide or regionally, you're almost taking yourself out of the game."
Despite the business line's solid fundamentals, relatively few community banks have opted to scale their single-tenant net lease lending operations into significant lines of business. Among the small number of banks that are active: the $1 billion-asset HCN Bank in Riverside, California, and the $2.9 billion-asset North American Savings Bank in Grandview, Missouri.
One reason that some banks may be reticent is that the loans are classed as commercial real estate, an asset class that has been under the microscope in recent years. What's more, single-tenant loans typically carry lower yields than commercial-and-industrial credits and even other CRE categories.
Dowdy linked the lower yields to the fact that credit performance in the business is strong. "You're dealing with high-quality national tenants," he said, arguing that the business makes sense on a risk-adjusted basis. "You're being fairly compensated for the risk you take."
First Savings Financial Group in Jeffersonville, Indiana, is another small bank that operates in the single-tenant net lease business.
In an April 2025 interview with American Banker, First Savings CEO Larry Myers likened the single-tenant net lease loans that his company books to bonds, due to their solid credit profile. Indeed, none of the single-tenant net lease loans in the $757 million portfolio that the $2.4 billion-asset First Federal reported on June 30 were designated as past due or even criticized.
