I have been a community banker involved in various levels of branch management and marketing for the last 25 years.
So, as you proceed to read this "Lessons in Lending" column, I can safely say that you will get a much broader brush on the subject than from a traditional lender.
My perspective may be likened more to that of a generalist than a specialist with respect to this subject, although I certainly have handled my share of applications and closings for both the consumer and the commercial markets. Consistently, however, I have referred the larger, more detailed commercial proposals, as well as the varied types of mortgage applications, to my commercial or mortgage colleagues. It is a system that puts the experts in front of the customer, and it is a system that works very well for that customer.
At a community bank, it is all about the customer. My focus at the branch was to know my customers and to develop relationships with those customers so that all that followed was relevant and meaningful to both parties. We call it customer value management - defined as delivering an exceptional customer experience through timely education and advice at every stage of a customer's life - and it is practiced by all, branch bankers and lenders alike.
The practice means that we strive to put the customer in products and services that address their specific financial needs at any moment in time. It is more about who we are and how we conduct ourselves in the course of our interactions with customers, than about the products themselves. We must be adept at uncovering the real concerns and demonstrate integrity in how we subsequently address those concerns with customers.
When we talk today about Wall Street and Main Street, rest assured that we - the community banks - are taking care of Main Street. That is nothing new, but community banks now are moving from what some may have considered relative obscurity. The ongoing financial issues have made smaller banks in vogue. The public is embracing and acknowledging the worth of "plain" values and solid practices. As some big banks struggle, many community banks are being praised for their lending practices.
If I were to describe our lending practice, it is almost too simple. For a generalist, however, it works: We lend to people we know, for venues that we have knowledge of, and in locations where we all live, work and play. We offer flexibility that is not bound by the policies of a corporate headquarters located somewhere out of the area. We make decisions locally, and allow personal presentations in front of the decision makers. We encourage personal visitations to the prospective collateral.
Very importantly, we remain steadfast in our commitment to solid underwriting. While I have underscored that our mission is to know our customer, please understand that I am not suggesting that because of that familiarity we do not do our due diligence with respect to verifying the details of every deal. Actually, it is quite the contrary. We hold on to this as one of our strong standards.
As many of us have surmised from the subprime mortgage mess, it was one of the areas in which a big gap was noted. An apparent lack of basic verification and assessment of proper fit contributed to some banks' of and investment companies' fate. And they suffered casualties. We are, and always have been clear: When we ask for income information, we expect to see a W2 or a tax return to back up that information When we ask for an estimate of the value of collateral, we verify with an appraisal.
It is imperative that we practice such due diligence because, in a very real sense, we are using the community's money. I have heard "recycling" of the money in a community. We turn community deposits into community loans, and have a fiduciary responsibility to act not only prudently in that endeavor, but also in acknowledgement of the needs of that community. And we do.
It is the interworking of all of these philosophies that has led us to our position of financial strength. It has allowed us to consistently lend to both businesses and consumers throughout the current financial crisis at levels that continue to be strong.
We have learned to manage regulation and concentrate on our customers. It is a proven formula that has passed the test of time.
Karen Serinis is senior vice president, retail branch network, for Canandaigua National Bank & Trust. She can be reached at (585) 394-4260, ext. 50650, or firstname.lastname@example.org.
Reprinted with permission of The Daily Record ©2009