Clark Blackwell

I've spent at least 15 of my 21 years as a community banker handling deals most bankers shy away from: Owner-occupied residential construction-perms. These transactions demand significant "teaching time" on the part of the banker for even the most sophisticated borrowers. Some of the topics I'm able and willing to cover in great detail with your client are:

• Hiring a reputable general contractor,
• The necessity of having adequate cash reserves to fund inevitable cost overruns,
• County and municipal permitting,
• Explaining how the progress draw process works,
• Locating suitable, buildable land,
• Pros & cons of onsite sanitary sewerage (septic systems),
• Ins & outs of municipal building code & fire inspection,
• Pros & cons of set-price turnkey or cost-plus construction arrangements,
• The necessity of Builder's Risk insurance & subcontractor Lien Waivers,
• De-bunking the myth that Title Insurance isn't needed for new construction,
• Making an apples-to-apples comparison of why a "one time closing" helps no one but the bank,
• Ensuring modification from construction loan to permanent mortgage is as seamless as possible.

Crescent Bank remains willing and able to handle residential C-P loans in the Metro Atlanta communities of Johns Creek, Alpharetta, Canton, Ball Ground, Holly Springs, Cumming, Cartersville, Woodstock, Jasper, Big Canoe, Lake Arrowhead, Waleska, Marble Hill, Tate, Marietta, Acworth, and Roswell.

East Tennessee Realtors: Does the name "Butcher" ring a bell with anyone? For everyone outside the Knoxville / Maynardville area of TN who are interested in reading about bankers gone wrong, look for a "Whirlwind: The Butcher Banking Scandal", written by former Knoxville Sentinel reporter Sandra Lea.

The Butcher tale parallels the connivings of Sir Stanford & Bernie Madoff. For folks in East Tennessee who were old enough to have a bank account during the Jimmy Carter presidency, there are only two emotions associated with the Butcher name: loathing or adoration.

In the late 1960's & early 70's brothers C.H. and Jake Butcher built a legitimate banking empire based in Maynardville, TN and were ultimately credited with putting Knoxville on the U.S. financial map by bringing the 1979 World's Fair to East Tennessee. Along the way, the Butchers established a sister company called Southern Industrial Banking Corporation (SIBC) which was a state-chartered Savings & Loan. SIBC paid interest rates on deposits which were substantially above market and deposits were supposedly fully insured. You can see where this is going . . .

FDIC examiners accomplished the shutdown of the Butcher shell game by an intricatedly-planned, chillingly-executed examination of several Butcher banks, with teams of differernt examiners showing up at the various banks simultaneously. In 1982 Ms. Lea published a multi-page "playbook" in the Knoxville Sentinel naming those associated with the scandal.

There are honest, hardworking people all over East Tennessee who heard the Madoff & Stanford stories and had already "been there, done that, lost the T-shirt". If you're interested in learning more of the saga, but reading about banking isn't your cup of tea, just respond to this post & I'll add a little more info in future posts.

This past Friday I celebrated that preliminary victory we all know well: the first call from someone you met through a specific networking strategy. Though that first call is usually nothing more than "tire kicking" on the part of the prospect, one of my mentors taught me to consider each step in the sales process to be an installment to success.

Friday's call was a result of attending a Chamber of Commerce groundbreaking ceremony about a month ago. I wasn't one of the people in an ill-fitting hardhat holding a spray-painted golden shovel for the cameras. I was happily and discreetly networking behind the scenes. The person who called was the General Contractor whose client had been the star of the show at the groundbreaking.

As of right now I don't have enough information on hand to know whether Crescent Bank will be willing to fund the transaction we discussed, but having a customer share confidential information requires a certain level of trust. When I have the financial information on hand, that's the second installment toward success.

. . . which brings me to the subject: How do you stay sane while eating an elephant? Take it one bite at a time. Yum. . .

A few minutes ago I met with a customer and a representative from a Certified Development Company (CDC). My customer is planning to expand his business in 2009 by moving from a leased space to a new building he plans to build on land he has owned since 2006. For various reasons the transaction needs to be funded through the SBA 504 program. My purpose in arranging the meeting was to make sure all three parties are starting off (and remain) on the same page.

CDC's are nonprofit organizations which exist for the purpose of funding and servicing SBA loans. Though it isn't quite fair to call CDC a "middleman", the analogy works. My customer was pleased to learn the following benefits to his particular plan which are understood to be part of President Obama's financial stimulus package:

1. Borrowers are able to roll SOME refinancing of existing non-real estate business debt into a 504 loan. In the past, SBA 504 was only set up to fund real estate cost.
2. The borrower is able to avoid paying the 1.50% CDC processing fee (now funded directly by SBA). This represents a savings of several thousand dollars on most transactions.
3. Because the bank is also able to avoid paying the lender's portion of the CDC processing fee, the borrower avoids that cost as well, which is typically passed along in the form of closing costs.

Specific details on how these expected benefits are to be doled-out are expected to be available this coming Tuesday, March 10th.

A key element of SBA 504 loans has always been the requirement of quantifiable JOB CREATION. Given the rising unemployment figures across the USA, it would be hypocritical for me as a banker (and as a US citizen) not to applaud this particular portion of the stimulus package. Please help me get the word out.

In the last 12 months I've accepted invitations to two different "live" networking groups which I chose not to attend a 2nd time because the person who led the meeting came across as selling the equivalent of snake oil. One meeting is particularly memorable because the "president" touted his investment company which "guarantees double-digit returns".

Was I networking with Bernie Madoff or with "Sir" Stanford, the subsequent "Ponzi-du-jour"? No, but the same principle applies. Legitimate financial advisers neither make nor attempt to make those types of claims. Had I consented to filling the "banker seat" in that group, I would've become nothing better than a snake-oil salesman through guilt by association. "Birds of a feather!" is the way Grandma would've put it.

What the Ponzis of the world stand to gain by associating with those of us who have worked hard to build favorable reputations in a community pales in comparison to what we stand to lose by associating ourselves with them.

Good reputations take years to build but can be ruined in the blink of an eye. I stayed away. I recommend that you do the same.