Relationship Banking

DECEMBER 12, 2011

Relationship Banking

Originally posted by Eric C on February 10, 2001 at 15:53:23:

To those who asked for more information about business plans, here's more "why", than "how to".

First, my apologies to the seasoned veterans out there, this is more for the newbie's. All comments are welcome.

The question, "Can you perform?” strikes at the the very heart of a banker's (or any other lender's) concern.

Can you perform?

How do I know that you can?

What will happen to the bank (and to me) if you can't?

Simple questions. Not so simple answers.

A thread about business plans should strike a chord with many readers here. But perhaps, more important than the the plan itself, is the knowledge and understanding you gain as you begin to develop a real working relationship with your lending sources.

Your business plan can serve as an introduction of sorts; it can also serve as a foundation upon which you can begin to build that critical relationship.

Psychology has pretty much proved (to my satisfaction anyway) that most of us need to be persuaded on an emotional, as well as a logical level. And that's the goal of my business plan - to influence and to persuade.

I think of the business plan as the logical argument - full of reason, facts and figures - and the relationship as the emotional argument - I'm a nice guy, I pay my bills, and I do what I say. Without both arguments, I probably won't get the loan, the deal, or the ….

Remember those questions earlier? Again, what I'm really trying to do is to reassure the bank (and banker) that they won't be criticized for making this loan AND that they won't get hurt. Period.

As the cycle swings from credit "tightening" to credit "easing" and back again, banks will usually change the emphasis they place on these arguments (emotional and logical), but both will still be needed.

Ok, what about that "relationship" part of the equation? In an earlier post on hie site, Ray talked about the importance of visiting in person. I agree. Although the world may be spinning faster these days, nothing can take the place of "face time". No level of technology will soon remove (if it ever does) the desire to connect the numbers with a name, a face, and a handshake.

Take the time to get to know the people you're asking to invest with you. Good deals come and go, but great relationships last. And the secret of making those relationships last? In the words of Aretha Franklin, one simple little thing: R-E-S-P-E-C-T. Feel free to dance around the room a bit, if you like – nobody's watching. Really.

The only problem? You have to show them a little respect before you can begin to earn theirs. Some of the things I do to "develop" and later to "nurture" those relationships are:

1. Bring some business to the bank; not just my own. I'm in the business of building, developing, etc. I meet people all the  time who need a good bank and a good banker. You probably do too. So, take them to the bank and introduce them.

2. Learn about their business. You don't have to be an expert, but you should learn some terminology, the current trends in the industry, and some of the local players.

3. Socialize with them. I can't tell you how many times I've been unable to get fifteen minutes with a new banker, but later (same day) been successful at getting four hours from them on the golf course.

4. I write letters to help their kids get into college, or to get jobs. Doesn't everyone do this? Nope. Not hardly. They most certainly do not. They should, but most don't seem to connect the dots.  What does it hurt?

5. I always bring my materials (financial statements, etc) with me. I don't want them to EVER have to ask for another financial statement,rent roll,property tax bill, etc. Why make their job harder? Be professional and step up your game. I guarantee you they will appreciate it.

6. I try to catch them doing something right. And when I do, I let everyone know about it. This may be the most crucial point - everyone likes to be recognized and feel important.

As an example, here's a letter I wrote to the President of a local bank when his long time VP retired. The names have been changed to protect the innocent as well as the guilty.

Mr. Gary Cortez

President Texas Bank

123 Main Street Way

San Antonio, Texas 00000

Dear Mr. Cortez:

My family has been banking at Texas Bank since 1973. We've seen San Antonio go through boom times and terrible times. And just like the city, our family has experienced our own emotional and financial roller coaster rides over the years.

Throughout those years, Texas Bank has been a constant; many of the people at the bank have been so helpful over the years. Arch B, Larry T, Bridget P, Sherry B, Kathy H, and David P are just a few examples of the great people at Texas Bank.

Even so, there is one person who, over the course of almost thirty years, stands above the rest - Bud Williams.

When I heard that Bud decided to leave San Antonio, I was shocked and saddened. Through the years, Bud Williams was our loan officer, confidant, and advisor. He could be compassionate, gracious and diplomatic. He could also be stem, blunt and demanding. In short, he was the perfect banker. And both Texas Bank and our family are better today because of Bud Williams.

Texas Bank made us student loans, car loans, home loans, real estate loans, business loans, signature loans, and extended lines of credit. Much of that is because of Bud Williams.

Dedication, honesty and thoughtfulness are traits that you don't find much anymore. They can only flourish where they are welcomed and encouraged. Texas Bank has done a fine job of that and Bud Williams is a shining example.

I like to think that Bud made me a better businessman; I know he made me a better person.

He will be missed.



And this to Bud himself:

Dear Bud:

I have to say that your decision to move away from San Antonio leaves us with mixed feelings. On the one hand, we're sure that you and your wife are excited about the move; that part of the country is so beautiful and green, it must seem like a paradise compared to South Texas. The move also puts you much closer to family and I know how much you've missed your kids these past years. No one deserves happiness more than you.

On the other hand, you will be missed here too. We'll miss your firm handshake and easy laughter, but most of all we will miss the honesty and straight-forwardness you brought to all your dealings at Texas Bank. Those abilities are very rare, just like the man who possesses them.

We just wanted to let you know how much you'll be missed by our family. You may be gone, but you'll not be forgotten. Let us know where you land and how you are doing. Keep in touch - remember, you have friends here.

Best wishes,

Eric and family

I'm not a professional letter writer (as you can easily tell by these examples) but I feel strongly that when you DO develop these "relationships" you should do your utmost to nurture them. And that takes work. And time.

But when it's all said and done, I think that you'll find it well worth the effort.