True Character in Hard Economic Times
From Peter Hickling“Jason Slaughter of GA is heading to prison for defrauding BB&T. His company, S&W Int’l Foods, manipulated accounts receivable and inventory to obtain a $6MM line of credit. The bank caught the fraud when collections fell short and it exercised its right to audit. BB&T will take a $5.5MM write off as a result. Ironically, Slaughter was a former SBA “Business Man of the Year” in 1999.” The above news note was taken from the Banc Investment Daily published by the Banc Investment Group, LLC ( www.BancInvestment.com) on February 12, 2008.When times are good, customers are good and they are treated well so as not to lose them to the competition. Lunches with management, golf outings, and regular visits – the larger clients get the full relationship treatment. These clients are usually the ones actively involved in community affairs, local charity events, sit on local non-profit boards and considered upstanding corporate citizens. The bank relationship manager rates Character at the top of the “5 C’s List” and considers the client’s integrity and honesty to be beyond reproach. But as the news clip above indicates, when times get tough there is no telling what people (our clients and borrowers) will do to protect their own self interests. When a business person is pushed into a corner and all that they have worked for on the brink of extinction, their true character emerges. Now, the above is not to say all bank customers turn crooked when their businesses hit hard times. I am sure that many of us have stories of clients who stood by the bank in a crisis and did the right thing. They lived up to their obligation as a guarantor and did all they could to insure the bank was paid in full. Those are the stories we remember and enjoy talking about for all the right reasons. And then, there are the instances when overdrafts start occurring, collateral statements are manipulated, financial statements are misrepresented and assets we thought were there to protect us are gone. When a borrower has their back up against the wall that is when we will see what their true character is really made of. When it turns out to be untrustworthy, dishonest and deceitful – well, those are the stories we remember and talk about but for all the wrong reasons. Know your customer as well as you can. Be the best judge of character you can. But when hard times come, be prepared to take nothing for granted and to do all that you need to in order to protect your Bank’s interest.
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Upcoming CCRMA Events
Wednesday, June 11 – Regulators’ View of Banking in the Current MarketJoin the RMA Chesapeake Chapter to hear the latest news and thinking from the FDIC, OCC, OTS, State of Maryland and the Federal Reserve. The panel will cover a wide-range of key safety and soundness issues and financial regulations including BSA and recent guidelines on residential and commercial mortgages. Don't miss this unique opportunity to hear from these key agencies and meet banking and financial professionals from all around the region. Panelists to date:
Steve Bareford - Assistant Vice President, Regional and Community Bank Supervision, Federal Reserve Bank of Richmond
MaryAnn Kennedy - Assistant Deputy Controller, Office of the Comptroller of the Currency
Sarah Bloom Raskin - Maryland Commissioner of Banking
More panelists to come... Click here to register today!
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