Bank executives talk a lot about being sleek and modern; well, about their banks being sleek and modern. But that may not be what commercial borrowers really want.

Richard Henken, president of Boston-based multifamily affordable housing and mixed-use developer Shochet Assoc. Inc., says he appreciates all the new tech stuff, but has a greater appreciation for banking “like banking was in the old days.”

“You wouldn’t do anything back then without talking to your banker first,” he told an audience of bankers at a recent American Bankers Association lending conference in Boston.

That’s right, talking. And probably in his or her office, all the while knowing the banker was in the same region, city or even building as – and enjoyed direct access to – the bank CEO.

That isn’t to say Schochet, which owns thousands of units across the country, wants to do business with the smallest bank it can find. Nor does it mean very large banks are out of the question.

For Henken, a balance can be reached. All he wants is access, customization and flexibility. He hates being “gouged” by fees. He doesn’t want Schochet to be the bank’s biggest client, but he doesn’t want it to be its smallest, either.

In the end, he said, “We want them to value our business for more than just our balance sheet.”

Flexible Terms

Schochet was started by Henken’s father-in-law, Jay R. Schochet, who did business on a handshake, and leaned on his lenders when he took risks that carried uncertain outcomes, Henken said. Schochet was a customer of State Street Bank, Henken said, “because they stuck with us, and we stayed with them, because that’s how partners behave.”

When State Street sold its lending business to Citizens, Schochet decided to search for a new bank. It is currently with a mutual bank Henken declined to name.

Local mutual banks that consistently do high levels of commercial lending include Eastern Bank and Cape Cod Five Cents Savings Bank, both of which have consistently been in the top 20 banks for commercial lending in Massachusetts for the last five years.

Last year, Eastern wrote 154 commercial loans worth $466 million, behind only TD Bank, Rockland Trust Co. and RBS Citizens in number of loans. Cape Cod Five did 76 deals worth $68 million, good for 12th most, according to data obtained from The Warren Group, publisher of Banker & Tradesman.

“We wanted them to be innovative and have enough lending capacity to do acquisitions and refis,” Henken said of his preferred bank. “They had to understand affordable housing and have creative, non-cookie-cutter solutions. We like the inherent conservatism of a mutual bank. We didn’t want to wake up and read that we had been sold to another bank and had to start over again.”

But Henken wasn’t at the ABA conference to tell community banks how great they are.

“To the extent that your product can be differentiated, you’re at a competitive disadvantage, especially to non-bank competitors,” he explained. “When I had a tight deal…maximum sizing and minimum recourse, I loved those guys. It must’ve been hard for you folks to watch that business go that way.”

But community banks have other things to offer, like a “long term relationship around a full suite of products,” Henkel said, as well as the willingness to “partner with your customer,” the ability to be flexible, “and not attempt to gouge us in the process.”

Individual Circumstances

Dorothy Savarese, chairman and president of Cape Cod Five and a former commercial lender, said Henken is right in many ways, but that smaller banks can’t simply bend to commercial customers’ needs with nothing in return.

“The ability to accommodate change has really been brought to the fore over the last few years,” Savarese told Banker & Tradesman. Commercial borrowers must also demonstrate that they have a good understanding of the market they’re operating in.

On the cape, that means knowledge of what it means to operate in a coastal communities, which have entrenched “heavily seasonal” business cycles.

“Good marketing doesn’t overcome that,” Savarese said. “That’s excessive optimism. You need a willingness to secure appropriate input from a solid team, strong financial assistance, attorneys, and you have to be showing an ability to adapt effectively to changing circumstances.”

But while commercial lending tends to be done face-to-face, technology still plays a key part. For one, banks should be trying to cross-sell commercial customers on other products, including tech products and cash management tools, she said.

And technology allows lenders to do their homework, too.

“We do a lot more research, there’s a lot more available information out there, and it’s a lot easier to get than it used to be, to validate business plans or projections,” Savarese said.

She said a good first step for a commercial client to evaluate whether it might be a good fit for a bank is to ask what its legal lending limit is, and what its often somewhat lower in-house lending limit is.

“That will give you a good sense for where you fit in the continuum so that regardless of your size, you’ll be well-served.”