One of the single most successful CRE lenders I’ve ever met is Roger Disalvatore. Roger is an excellent human being, a wonderful father and the best CRE lender I know. His approach to all real-estate based lending, including national projects, is firmly anchored in first-hand knowledge and relationship building.
Here are some of the main principles I learned from Roger; they all focus on one thing: building lasting relationships.
- Take a sincere interest in your clients and prospects and their businesses. Understanding your clients’ and prospects’ business is the first step to successful relationship building and sound lending practices. Get to know them not just for the individual transaction before you but as business partners. Understand their own culture and underlying business principles. Compatibility with your own is essential to success.
- Make it personal – “We are in the people business, not the paper business”. If the goal is to build lasting relationships, then the activities leading to a successful loan closing must entail developing a personal relationships with the principals of the client organization. Real; friendships get formed and trust are built during the initial phases of relationship development, and the process never ends.
- Be a special bank for a special few; all things to all people doesn’t work for anyone, including the largest bank in the world. Not all clients or prospects will fit your bank. This isn’t just about lending philosophy, but also about the clients’ business and their value proposition. We are looking for longer-term relationships. Is their approach consistent with ours or will they maximize their value out of each transaction? Many developers look for the best price for each deal; those are not suitable for a full relationship of mutual commitment and trust. Targeted prospects should match your ideal client profile.
- We want to bank generations of clients. When Roger says “long-term” he really means it. He is looking for sound businesses with strong succession where generational continuity is likely on both sides – the bank and the client’s
.
- Display client empathy and loyalty. One principle that many community banks practice is working with clients when they go through difficult times. Being there for them, showing empathy and understanding, and finding ways to work with them through these periods is a near-guarantee for client loyalty. People rarely forget who stood by them when they were hurting. A relationship-oriented bank embodies that approach.
- Earn the relationship is more important than winning the deal. There are instances where the deal is not well-suited for the bank, but the prospect is still attractive for future transactions. Maximize your prospect’s utility by letting someone else win the transaction while you win the relationship. It’s a delicate balance that is founded on client trust. Show them that it is their own interest that you have in mind.
- Target your marketing approach. Profile your best customers and search for others like them. This approach is prevalent in the consumer banking business and can serve you well as you look to grow your CRE book.
- Desire to be different. Show your customers and prospects how you are different from your competition by caring more, helping more and being more creative than others. Bring your knowledge, including operational knowledge, to the forefront of the relationship building. Think like the owner first, then like their lender.
- Earn a premium. Your clients should be willing to pay for the extra value you bring them in deal structuring, operational knowledge tips and overall relationship orientation. Your professionalism and unique approach to the business will earn you that premium from the right customer. Transaction maximizers will not be willing to pay up for the relationship; it is the other customers you want.
- Be transparent and clear. There should be no ambiguity in the documents and i9n your communication.
This approach isn’t easy to implement. Roger personally visits every loan opportunity around the country and his team conducts rigorous analysis on the financial assumptions and overall project worthiness. Consequently the team turns down the overwhelming majority of opportunities presented to them. Also consequently, the portfolio’s credit performance has been stellar over 20+ years.
There is much more to learn from Mr. DiSalvatore. Consistent execution and a team that represents over 300 years of combined CRE lending are an important element of his success as well. The primary lesson I’ve learned from him over the years is, CRE can and should be a relationship business, not a collection of trtansactions.