Edward W. Nunes
Edward W. Nunes
Title: Vice President, Market Manager, Healthcare Professionals Group, TD Bank
Age: 50
Experience: 30 years
Ed Nunes entered the banking industry as a part-time teller at the tender age of 19. He spent the early part of his career in retail banking at various New England banks. At one point in his career, he realized he had a lot of doctors as clients, and the more he worked with that industry, the more it stirred his deep appreciation for medicine and science. Eventually, he came to TD Bank, where he became one of the chief architects of the bank’s health care lending policies. When Nunes isn’t banking the medical space, he loves cars, boats and motorcycles.
Q: You lend to medical, dental, veterinary … What are some of the nuances in those fields when it comes to lending?
A: When I came to TD, we had sort of a primitive incarnation of a dental policy. I was not particularly aware of the dental industry, so I thought, that’s an interesting segment to call out, and I started to do dental deals. When I had an acquisition of a practice, I would get it and run with it and I would also seek that from all of my referral sources.
The distinction between dental and physician is that the dental practice, 50 percent of their revenues are from fee for service from patients, 50 percent is from third-party payers, so a dental practice, as well as veterinary, starts to resemble more of a small business. With a physician, their client base is kind of fixed, their revenue sources are from different sources like Medicare or commercial payers, but traditionally they’re not a classic small business.
Inherently there’s a much larger lending need and the shortage of practices that I allude to is due to a couple things. The biggest one is the practice for dentists is their everything. They’ve gone to school for 10 years, it’s their career, it’s their livelihood, it’s their retirement because eventually they’ll sell the practice, and they oftentimes won’t have large retirement accounts because they’re banking on their practice. When the economy fell apart, their investments went down and a lot of them have chosen to work longer because they simply have to, so there’s fewer practices available.
Q: How did you go about crafting TD’s health care lending policy?
A: The mechanism that we were using to underwrite them didn’t always align with our dental practice and our vet practice, so I as a lender really went out and learned the business. I called in specialty CPAs to mentor me and tutor me, I brought in transition consultants. I started to go to the bigger conferences just to learn … I was the guy who kind of built the policy. I had the fortune of being able to write the small business policy.
We had to do some research about is this is a performing industry and come up with a logic behind it, which we did and since then we’ve been improving and improving and growing and growing. I’m proud to say that we today have solutions from A to Z for a doctor, whether they’re studying for a practice or need to grow a practice, write a credit, acquisition, merger, all of that. We have a very robust product offering and we have extremely talented folks to get it done and of course the brand. We’re well know, we’re respected.
I got into it really because of a personal love of being able to help people, but also, banks are always looking for growth – and this is an area of growth – but TD doesn’t take risks that we don’t understand and it just required understanding it better.
It wasn’t me by myself, but I was one of the primary architects and pretty influential to get it done, I think. It’s really about educating folks on the industry and mitigating risk and that unfortunately takes a long time. We got it done but it’s not something you can do in a day.
Q: How is underwriting in this space different from underwriting in more traditional commercial lending?
A: The analysis for traditional underwriting is not applicable to what we do. Dental, vet and most medical is cash-flow lending and very different. In a traditional model, you’re looking for primary, secondary and tertiary repayments and in our model, you’ve got great cash flow so it’s a profitable practice, which is great and we love, but from a collateral perspective, it’s intangible.
Also, there’s personal net worth, where you would normally be lending to folks who have liquidity, cash, marketable securities, real estate, a lot of our folks are younger doctors who simply don’t have that and it’s actually upside down because what they do have is hundreds of thousands of student loan debt. In a traditional analysis, you might say, “Hmm, maybe I shouldn’t do this,” because the whole underwriting mechanism is different, but the loans perform.
For more about Nunes’ expertise in medical lending, click here to see his exclusive video interview with Banker & Tradesman.
Nunes’ Top Five Motorcycles:
- Harley Davidson Street Glide
- Harley Davidson V-Rod
- Yamaha V-Max
- Polaris Indian Chief
- Suzuki Hayabusa
