Cascade Business News asked some area bank and credit union executives questions relating to the financial challenges facing business owners today. Their answers correlate with the questions below.
For Area Financial Institutions
1) Even though the economy appears to be improving local businesses are still feeling an enormous credit crunch…what is your bank or credit union doing to offer local businesses help during this complicated time?
2) What advice can you offer local business owners who need capital/operating funds? What do they need to do to be approved for a loan from you or the small business administration?
3) Legislature is pending to create a state run bank. How do you feel about this concept? Are there certain aspects that you like/dislike?
Vice President, Marketing & Sales
Mid Oregon Credit Union
1) This last year we hired a local professional, Mike Testerman, who has over 20 years of experience in business lending and expanded our business services offerings and loans. We are currently lobbying Congress to increase our business lending cap from 12.25 percent of assets to 27 percent. This would immediately provide over 13 billion dollars nationally for small business lending through credit unions at no cost to the taxpayers. Senator Wyden is co sponsoring a bill for this legislation that would increase our ability to provide these loans to small businesses. We are strategically using the government guaranty programs offered by the USDA, Business Oregon, and SBA to help
2) A business owner must demonstrate that they running (managing) the business and the business is not just running. Are the business financials current? Does the business owner understand them? Is the business retaining earnings for future investment? Is there equity in the business? Is there a business plan? We love to see a business owner with a written business plan that is actually used, who is tracking the business performance, and knows the key indicators to successful business performance. Does the business owner demonstrate discipline in managing finances on a personal basis as well as the business? Do they have satisfactory credit scores? Is personal spending reasonable? If the business owner is challenged in some of these areas, we may refer them to the Business Development Center at COCC or Central Oregon Chapter of SCORE of which both organizations provide great advice, for a great price (usually free)!
The information is on our website, www.midoregon.com (click on Lending under Business Services in the right hand column). We provide a complete checklist of documents and links to other websites to provide small businesses with the information they need to begin the process.
3) The current economic and financial environment has pushed this idea forward for certain specific sector needs. State resources are already stretched and we feel there are adequate resources currently available that could fulfill these needs without having the state step in and creating another agency. Resources would be better utilized reducing small business regulations and providing support for financial institutions that are already well capitalized, have the expertise, and could move much more quickly to market once lending restrictions were removed or reduced.
EVP/ Central & NW Oregon Regional Manager
Bank of the Cascades
1) Bank of the Cascades is committed to helping refuel local economic recovery through the delivery of loans to businesses in our community. We are making loan and helping our business customers prepare for opportunities ahead. We utilize local deposits to fund these loans and are appreciative of our customers who choose to bank local and support our shared community. Business loans are currently available to borrowers that have the ability to provide adequate cash flow. Additionally, for those businesses that are facing economic financial struggles, our bankers remain committed to assist them as they work through some very difficult challenges.
2) We urge business owners and customers to have a current and focused business plan. A comprehensive business plan is a valuable tool for both new and mature business. It is important to share this information with your banker so they have a good understanding of your business including its needs and opportunity. We also recommend business owners give thought to how they can adapt their business in a changing economy and include this information in their business plan. This information is very important to share with your banker, or government guaranteed lender. In addition, financial statements to support your lending request should accompany your business plan.
3) We are very pleased to see definite signs of improvement as some local businesses have stabilized and even realized some small gains in 2011. In our own company, Bank of the Cascades was pleased to successfully complete our capital raise in January and we currently have 20 new employment positions available across the company. We are pleased to be positioning ourselves for growth while also providing employment opportunities in support of local economic recovery. We also are very aware that there are still businesses and individuals in our community who continue to face financial challenges. Supporting local business is a positive and proactive step we can all take to support each other and our community
Gary R. O’Connell
Senior Vice President
Commercial Banking Team Leader
Columbia State Bank
1) Every day, our local bankers in Central Oregon make an effort to add value to businesses by offering advice to help them succeed financially. This includes helping clients structure their balance sheets, develop financial plans, and make sound financial decisions. Columbia State Bank’s knowledge in this area has made it one of the healthiest financial institutions in the Northwest.
On a community level, Columbia State Bank supports events targeted toward business owners to help them receive the best advice possible. For example, our bank is title sponsor of Central Oregon Pub Talk and the Central Oregon Business Expo. Columbia State Bank is rated by the Small Business Association (SBA) as an “active and preferred lender,” which is the highest level of confidence the SBA bestows upon a financial institution to serve the borrowing needs of businesses that otherwise may not qualify for a typical business loan. Columbia State Bank is also one of only a few local banks that actively participate with Business Oregon, which provides even more opportunities for business borrowers that would not qualify for a conventional business credit application.
With a team of expert local commercial banking officers and seasoned branch managers, combined with more than 50 employees at five Central Oregon locations, and the financial strength and staying power for the long-term, Columbia State Bank is committed to help lead Central Oregon out of the recession toward a healthy recovery.
2) The first thing a local business owner should do is meet with their commercial banker face to face. Prepare for the meeting by updating financial reports and your business plan. In this turbulent environment it is also extremely helpful to try to prepare financial projections. A good banker should help businesses with this, and Columbia State Bank has resources to help do just that. If your local banker cannot provide you on-the-spot feedback or advice about your financial performance, then you are probably dealing with someone who either will not be involved in your credit decision or will have to send the credit request out of our time zone.
A business owner shouldn’t be afraid to disclose to their banker what financial issues keep them awake at night. A good banker will be your best advocate, and by disclosing all details to your banker you will invite the most appropriate solution suggestions, and have a better banking experience. Finally, anyone can underwrite a credit, but it’s important for the bank to meet the business owner’s expectations without surprising them down the road—and that is accomplished through local management of the credit relationship.
Melanie J. Dressel
Columbia Banking System, Inc.
3) State banks have been explored before, so Oregon is no exception. There are several considerations that should be evaluated when considering if it is necessary to have the public sector compete with the private sector in the business of banking:
Available capital—One expectation is that a state bank will increase borrowing opportunities for state residents. While this may be true, it’s important to note that there is currently a healthy amount of capital already available to businesses and individuals through private banking institutions.
Risk—There are always risks associated with operating a lending institution. Taxpayers must decide whether that risk should be shouldered by private banking companies, or shared by the state. Bearing the burden of such a responsibility has the potential to negatively impact the state’s bond rating, causing significant repercussions for other state agencies.
Local economics—Community banks are vital to a local economic environment. Having a state bank competing with private banks could reduce access to capital for those existing community financial institutions.
High Desert Bank
1) We are open for business and will entertain any and all loan needs. The problem we see is that there is very little borrowing activity in the market. We are not seeing loan requests for business expansion, new equipment, lines of credit, etc – there is a lot of “wait and see, where the economy is going and where will we be in the next 18-24 months”. I see this as a very
2) Have a well thought out and manageable business plan. Don’t look for a bank to “bail you out”; be realistic in your expectations. Banks are business just like yours, and they are doing what they need to do during these challenging times – not only from the economy, but regulators are putting a tremendous amount of pressure on all banks.
3) I am a fan of free enterprise, and the government is very helpful is some areas; but I do not think they should be in the banking business. There a lot of State and Federal loan programs they offer through banks; which has worked historically well, and with current revisions they are more beneficial to business owners.
Paul M. Stednitz
Regional Vice President/Central Oregon
OnPoint Community Credit Union
1) It does appear that improvement in the Central Oregon economy is occurring and as a result we are seeing more business owners coming to OnPoint to discuss their overall financial needs. We have been able to help several local businesses with Working Capital Lines of Credit, Equipment Loans, Term Loans, and Commercial Real Estate Loans. OnPoint has a long history of helping people that dates back to 1932 when we were founded as Portland Teachers Credit Union. We have changed our name to OnPoint Community Credit Union and opened three branches in Deschutes County and we are also able to serve consumers and businesses in not only Deschutes County but also the surrounding areas of Crook and Jefferson Counties. With our community charter, you qualify for membership with OnPoint if you live or work in any of the 15 counties that we do business in. As a result of our $3 billion in assets we are able to help businesses with virtually any size loan request. We continue to have a desire to build full relationships with businesses as well as individuals and we have money to lend so please stop by and see us. When you visit you will notice interest rates that are lower than our competitors because we do not have shareholders. Our members are our owners and we invest in them by offering lower interest rates on loans as well as much lower fee structure and competitive deposit rates as well.
2) First, I would tell business owners to focus on what they do well and stick to the basics of what made their business successful. If your business is in need of operating funds we would like the opportunity to sit down and talk with you about those needs. Typically OnPoint will take a look at two years prior tax returns as well as financial statements for the current year to analyze business trends and determine next steps in the lending process.
3) OnPoint is aware that the legislature recently approved the formation of a State run Bank, and we are interested to see how the concept develops and what benefits come to the State and community as a result.