At the corner of Route 1 and Richards Avenue in Norwalk, one can spot as apt a sign of the state of Fairfield County”™s commercial lending situation as any street corner in Connecticut can boast.
There, a First County Bank branch is being erected on the rubble of what until recently was a Wachovia Corp. branch, a signal of continued confidence in the viability of commercial, retail and residential opportunities in the neighborhood where parking lots were jammed with shoppers on President”™s Day weekend.
Within a stone”™s throw of the planned branch, however, sits First County”™s reminder of the risks inherent in rushing into commercial banking opportunities ”“ 93 Richards Ave., a residential complex that turned into one of the bank”™s biggest flops in the 1990s, when a $10 million loan on the property failed.
The irony is not lost on Richard Taber, who has seen the effects of four recessions in the quarter century he has served as CEO of Stamford-based First County Bank. If it is an understatement to say that Taber is putting every lesson learned over that period to use in the current crisis, in the next breath he is quick to note that the commercial lending sector is by its very nature a creative enterprise ”“ and so may not be as responsive to additional creativity in the way that some banks have bent residential lending paradigms in an attempt to get capital flowing.
Those efforts have ranged from North Carolina-based Citizens South”™s widely lauded decision to use federal bailout funds to offer discount loans to homebuyers who bought a property from a builder that was in hock to Citizens; to Bridgeport-based People”™s United Financial Inc. decision to launch a “pilot” program, in its words, for jumbo mortgages in Fairfield County.
Taber has coined no similar term for any residential or commercial lending program at First County, but has allowed his loan officers free rein to build their book of business even as the economy collapsed. At the close of the fourth quarter, First County had $907 million in loans on the street at year-end, up nearly $25 million from the close of September.
On one hand, small community banks have been handed the opportunity of a lifetime, as major national banks retrench and hunker down in the uncertainty of the recession and federal bailout.
“We”™ve had people who had their (credit) lines reduced who have come to us,” Taber said. “We”™ve been thrilled.”
Commercial loan officers, on the other hand, must balance their roles as bank salespeople with the responsibility for putting together deals that will stand the test of time ”“ and economies. That goes for newcomers through the First County doors, as well as for longtime customers who are seeking extensions on loans as the recession deepens.
“They”™re first duty is to protect interests of the bank,” Taber said of his staff of a dozen commercial loan staff. “If you”™ve been with the customer through good times and bad ”¦ you develop a sense of who you can trust, and who is blowing smoke.”
To date, First County is in an enviable position, having foreclosed on exactly one home in the current recession ”“ a two-unit rental in Bridgeport on which the tenants are making their monthly lease payments.
Taber says the current downturn has yet to reach the epic proportions of the early 1990s, when real-estate values collapsed and 160,000 Connecticut residents were thrown out of work.
That happened to be the time when First County Bank, then still a neophyte in commercial-scale lending, issued its biggest-ever loan: $10 million to fund the construction of the Richards Avenue project.
First County Bank lost money in the transaction, one of several tough lessons in commercial lending for a company not averse to employing a creative approach. In another example, the company attempted to build up commercial lending accounts by joining syndicates, but ended the experiment after discovering the limited influence such deals bring for lenders who lack a majority stake.
Even as workers ready the foundation for the Norwalk branch, First County is upgrading many of its dozen branches to feature a homey atmosphere, including a branch adjacent to its Stamford headquarters building which is also undergoing a large renovation.
For Taber, it is about positioning the bank for whatever shape the new financial services landscape will take.
