October 15, 2019
Lenders across Greater Philadelphia’s financial sector came together to discuss changes in the industry and what they see happening in the coming years. With a possible recession looming, lenders on the Business Journal’s panel — “Transforming Banking & Building Business Lending” — were asked about what they saw in the Philadelphia business community. Panelists said they’ve seen growth in multifamily real estate investment, as well as steady confidence in the economy.
David Swoyer, head of commercial banking at Santander Bank, said he’s bullish on the signals he gets from the local economy in Philadelphia. He said his clients in this region are spending money, and that they have better earnings and cash flow. And he rarely has a call where a client doesn’t say that they’re feeling good about how things are going.
Nancy Broudo, senior vice president of business development at online lender BoeFly, said there’s certainly some concern about when the next recession is going to happen. “Everybody is a little bit more conscious relative with the risk they want to take with each credit request, but I’m still seeing a pretty vibrant market,” she said.
Great Recession erupted around the same time as the technology boom in the financial sector. Panelists were asked about how both the rise of tech and the economic downturn affected.
Tough OceanFirst Financial Corp. doesn’t have to deal with many of the regulations that larger banks do, such as stress testing, it needs to prepare for that possibility, Philadelphia Region President Susanne Svizeny said. When its two latest bank acquisitions close in the first quarter, the Toms River, New Jersey- based bank will close in on the $10 billion marker that triggers enhanced regulatory oversight. She understands why those regulations are in place, she added. “It’s a cost that you have to bear, and as a result of that you have to figure out other ways to do things in a more efficient manner,” Svizeny said.
On the contrary, Swoyer said regulations and compliance have a significant cost and create an unlevel playing field. Olson said on an operational level, Trumark doesn’t have many regulatory hurdles. Spring Garden Lending, which focuses on bridge financing to real estate developers, thrives in the post-recession regulatory environment, CEO Jay Goldstein said. “I believe that without the additional regulatory layers that have been added, we wouldn’t have a niche,” Goldstein said.
Lenders also discussed some mistakes loan applicants make when they’re looking for investment capital. Broudo said she takes pause when a business cannot properly explain their business plan or explain their projections. BoeFly works with many first time business owners and startups, she said. Applications that are only 60% complete make it difficult to bring a transaction to completion, Olson said. “You always have to be mindful,” he said.
Leadership can also be a cause for concern, Svizeny said. She said she looks at a company’s succession plan and its leadership, particularly the depth of the management. She also said a chief financial officer can be a red flag. CFOs have to rely on numbers, and if there are concerns with the numbers, that needs to be taken into account, she said. Leveraging debt at the current low interest rate is a risk businesses need to hedge or determine if it is sustainable, Svizeny said.