Posted on September 23, 2009
It might be time to break up with your bank. That is one lesson developers are learning from this recession. But that does not mean deals cannot get done. Think of this crisis as an opportunity to develop a better banking relationship. Megabanks have been hit hard by the real estate meltdown. Some still have frozen assets. Others are reducing entire categories of loans—even the good ones—because they feel over exposed in that particular industry. The megabanks truly are throwing out the baby with the bath water, eliminating profitable loans as they try to recover from the shock of their toxic asset write-offs. At Gold Coast Bank, we still value relationship banking. Located in Islandia, New York, our bank welcomes loan requests from developers. We also have a solid base of small and mid-sized privately held businesses. To continue the relationship theme, it is safe to say, many of them have been “dumped” by bigger banks and have found a home at Gold Coast Bank. Banking is relationship based. Along with all of the mergers and consolidation among the megabanks comes high turn-over of personnel. The managers who wrote loans for these organizations years ago, may have disappeared. By the time a loan comes up for review, it is easy for borrowers at these big banks to be reduced to faceless account numbers. If a bank feels over-exposed, it may change the terms of the loan upon renewal, even for companies with a solid track record. A bank that is especially squeamish will just call the loan. That is where the opportunity arises. Gold Coast Bank is offering banking the way it used to be. That means personalized service – the kind where everyone from the president to the teller knows customers’ names and faces. Anyone can pick up the phone and call the bank president, a board member or even the chairman of the board to discuss a project or ask a question about his account. The team at Gold Coast Bank also brings a deep understanding of the Long Island real estate market to the table. Many of the bank’s board members are real estate investors themselves. They own and manage properties throughout Nassau and Suffolk. That means they know the market and can identify a good lending opportunity. They are also savvy about how to help customers overcome some of the challenges in the current real estate market. The bank organized in 2008. When other banks began floundering with bad debt, Gold Coast Bank was brand new, with pristine balance sheets. As a result, the bank has money to lend. It is rolling out the red carpet to reach the customers megabanks have turned away. One benefit Gold Coast is offering is “Check Capture,” an electronic check scanning system. This technology is a huge time saver for real estate companies that collect hundreds of rent checks at the beginning of each month. Instead of going to the bank to make a deposit, the checks are run through a scanner in the company’s office. Check Capture speeds up the clearing process by several days, letting organizations know within 24-hours if a check fails to clear. That is a much faster turn-around than the traditional process of making a deposit with a bank teller. If a bank is busy, if might not scan those checks until after business hours and clearing them can take days. Some real estate clients prefer a lock box. Tenants can deposit rent checks there. Then Gold Coast Bank will collect the lock box and scan the checks on behalf of the property owner. This program was created to help clients control costs. Instead of staffing up for a few crunch days every month, Gold Coast Bank can manage that process. Breaking up is hard to do. Consider the service the bank delivers. Weigh the benefits of being a big client fish in a smaller banking pond. The next time a project needs pricing take it to Gold Coast Bank for comparison. But if you have been dumped, pick up the phone today. Get back in the game and see if a new banking relationship cannot uncover opportunities impossible to find at most megabanks these days. The red carpet is out. Cris Damianos is vice chairman of the board for Gold Coast Bank, Islandia, N.Y., and a principal at Damianos Realty Group, Smithtown, N.Y. Article originally published by the New York State Real Estate Journal on September 22, 2009.