The Small Bank Mess

I've looked at banking from both sides now. How I survived the banking bust.

I am a young and relatively successful builder/developer in a local market. I graduated Emory University in two and a half years and wanted to go to Wharton Business School. My dad told me to get a real job and I went to work for Heritage Bank crunching numbers. We were gobbled up by Bank South and I attended their credit school program which was excellent. Upon completion, I became a Commercial lender in the booming Gwinnett County (GA) market and looked forward to a lot of happy customers.

That was a great thought for six weeks, until the crash of 87 hit, followed by the recession of 88 – 89. At 24 years of age, I was making decisions about which customers will and will not survive, and why. Because the merger had just occurred and none of the acquired loans had had time to season, my portion of the portfolio (junior man gets the junk loans) was like a battlefield triage scene from WWII. Grown men, crying because they were not certain how to tell their families how/why/when they would be losing their homes. Businesses were being closed because their business model was broken, or even worse, non-existent. Business men, who by no fault of heir own, had suddenly lost most if not everything because they did not fit their new bank’s lending standards or model. Few printable words can describe that situation. Meanwhile, during the evenings, I was attending law school at Georgia State University concentrating in real estate and finance and graduated in 1990. After several years of practicing law, I left to follow my dad’s path in real estate and developing. We/I limit our work to “family projects” and I have enjoyed the challenges presented for the last 18 years… except for the last two. My re-education started in February 08.

Two and one half years ago, my world was up-ended. It was suddenly knocked off of a pedestal, put in a coffin and left for dead as the banking industry began its witch hunt, literally. I got mad, cried, grieved and did the whole nine yards. But the next day, I got up and started …swimming. After two years of living through the chaos and trying to learn the new game, I became a “new” player. I painted stripes over my old spots, I put on a new uniform and even changed brands of deodorant. The bankers, who are now coming out of the bomb blast area themselves, have declared me “cured” (if there is such a thing) and even think my re-invented business model might be a good example to follow. The statistics are horrible. Of the 500+ businesses in my group at my local bank, only 4 of us survived. I know them all. All are fighters, none of them quit, and they all believe in themselves. Most, if not all, situations are curable. The biggest problem is the taste of the medicine. Always believe in your self and you can’t go wrong. Also, if your business plan does not make sense on paper, it will not work in real life. Thanks for reading.


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