1 / 17

Relationship Banking- Bank loans and Line of Credit

Relationship Banking- Bank loans and Line of Credit. Mike Rizzo Senior Vice President Five Star Bank 3100 Zinfandel Dr., Suite 100 Rancho Cordova, CA 95760 (916) 851-5443 mrizzo@fivestarbank.com. Five Star Bank. Who are we? Established in 1999 in Rocklin

micah
Download Presentation

Relationship Banking- Bank loans and Line of Credit

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Relationship Banking-Bank loans and Line of Credit Mike RizzoSenior Vice PresidentFive Star Bank3100 Zinfandel Dr., Suite 100Rancho Cordova, CA 95760(916) 851-5443mrizzo@fivestarbank.com Progressive Professional Personal

  2. Five Star Bank • Who are we? • Established in 1999 in Rocklin • Serve the regional CRE and business markets • Sub-S bank • 465M in assets • Offices in Rocklin, Natomas, Rancho Cordova, Elk Grove, Redding and Chico (LPO) Progressive Professional Personal

  3. Banking During the Great Recession • Residential Mortgage meltdown with national banks and investment banks • Downward spiral of national, global, state and local economy • Consumers stop spending • Businesses downsize and/or go out of business • Unemployment increases which perpetuates decreased consumer spending • Commercial real estate falters because tenants become scarce as businesses go BK • Regional and community banks take losses as businesses and CRE developers and business owners can’t pay back their loans. Progressive Professional Personal

  4. Lessons Learned • Too much leverage is a bad thing (just ask a real estate developer) • Must be able to Scale Up (AND SCALE DOWN!) • Large fixed cost could be detrimental • Liquidity, aka cash, is king especially when your fixed assets are underwater Progressive Professional Personal

  5. Banking and Business Today • Businesses are healthier • Quality loan activity is up • Banks are optimally cautious • Yet, two out of every five California Bank’s under regulatory order Progressive Professional Personal

  6. What’s the Right Bank for You? • Strength (liquidity, capital levels, earnings power, loan loss reserves, portfolio quality) • FFIEC - https://cdr.ffiec.gov/public/ManageFacsimiles.aspx • Is your banker a “trusted resource” or an “order taker”? • Relationship Banking • Where are the lending decisions made? • Do you personally like your banker? • Do they personally like you? • Shop Local- Bank Local Progressive Professional Personal

  7. What kind of lending do they do/can they do/want to do? • Industry types • Loan Types – CRE, C&I, Consumer • Loan size • Company revenue Progressive Professional Personal

  8. Approaching the bank • Referral to the bank from an advisor, industry expert, CPA, attorney, etc. • When is the best time to come to the bank and what should I expect? Progressive Professional Personal

  9. Deposit Services • Are you just looking for money? • What kind of Deposit Services do you need? • Remote Deposit Capture • Courier • Night Drop • ATM • Cash Management • Online Banking • ACH • Wire Transfer • Positive Pay Progressive Professional Personal

  10. Loan Types • LOC- 30 day resting • A/R formula LOC – monthly formula • Perm working capital (SBA) • USDA • Equipment Loans 2-5 year term installment debt • Tenant Improvement – unsecured • Letter’s of Credit (LC) • Real Estate – Conventional and SBA Progressive Professional Personal

  11. Balance Sheet vs. P&L • Are you solely focused on the P&L? • Learn to read your Balance Sheet • Your bank looks at the balance sheet first Progressive Professional Personal

  12. Sample Industry and Loan Type • Smart Grid – SBA and LOC • Bio Engineering –Venture Debt – term and A/R LOC • Energy Efficiency (Manufacturing/Distribution) – Term, LOC, tenant improvement • Electrical Contractor - LOC • Network engineering/network security - LOC • Solar – Project Finance • Geothermal – LOC/Equipment • Software – SBA and conventional • Telecom – LOC • Window Coverings – Manufacturing/retailing • Attorney Firms – LOC • CPA - LOC • Non-Profits – LOC/ CRE • Hardware component – Venture debt • Restaurants – Tenant Improvements/equipment • General Contractors – LOC Progressive Professional Personal

  13. Live Example –Manufacturer of Smart Grid products • Long time company that finds itself in at the doorstep to the “smart grid” • Needed money to seriously go after this market, although it was related to the technology they had developed over the last 10 years. • Solution: SBA loan to purchase goods necessary to fulfill new orders and to payoff existing debt Progressive Professional Personal

  14. Live Example – Hardware Component Manufacturer • Incredible technology to increase manufacturing efficiency • Funded with Venture Equity • Bank augmented venture funding with LOC to help cash flow needs • Company exit!!! Progressive Professional Personal

  15. Live Example-Energy Efficiency • Manufacturing and Distribution Growth Company • Needed to leverage A/R and Inventory to maintain growth (fulfill their P/O’s) • TI needs for growing office environment • Term Lending for significant CapX • Company exit! Progressive Professional Personal

  16. Live Example- Commercial Solar PV, PV and Energy Retrofit • Project based • Based on project cash flow • Knowledge of manufacturer and/or installation contractor Progressive Professional Personal

  17. Live Example- Software Company • Mature industry insider with a penchant for software design • Early stage- development • Did not want to bring in significant outside investors • Conventional bank financing using real estate collateral Progressive Professional Personal

More Related