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By Michael Clarke, President and CEO, Access National Bank, Reston VA
How much do you, as an association executive, know about your bank? All too often the answer is “Not much.”
So what should you know?
To begin with you should ask the question “Is my bank financially sound?” Hundreds of banks, large and small have failed over the past three years, with many others on the FDIC “watch lists.”
How can a bank’s financial health adversely affect your association? As a bank’s financial condition worsens, so does its ability to lend. To shore up its capital, a troubled bank is more likely to call your loan. A letter demanding payment is sometimes all it takes. Your association’s line of credit is closed, no further borrowing is permitted and all principal and interest is due immediately. The risk to your association is immense.
1. Making sure your bank is well capitalized and well run greatly reduces the risk of a troubled bank wreaking havoc on your business through no fault of your own.
2. The level of experience of your bank’s lenders is also critical. Experienced lenders have seen many different situations throughout their careers. They can serve as your trusted advisors when you are considering expanding or purchasing office equipment.
3. The willingness of the bank’s executive management to meet with you is also a good sign. These meetings provide forums for you and the bank’s executives to learn more about each other and develop mutual trust.
4. Finally, the closer the executive management of the bank is to the communities or industries they serve, the better it is for you. The bankers who live and work in your community or active in your industry have a much greater sense of the business conditions that affect you and your business compared to bankers living hundreds or thousands of miles away. Community banks are uniquely suited to provide that kind of “in market” experience that cannot be matched by larger institutions.
So choosing the right bank is important. Give it the same thought and analysis as the other key aspects of your association's business so you have a bank that is a facilitator, not an inhibitor, in reaching your goals.
Access National Bank is a $750 million, business-focused bank - 703-871-2100 or www.accessnationalbank.com.