“Which is the best bank for my company, John?”

This is the question business owners pose to me most often.  In response, I always ask them three questions.

The first is about their bank’s financial condition.  We covered that subject last time.  Our Columbus-area banks are healthy, but the data posted at www.fdic.gov provides great insights into your bank’s behavior.

“How much does your company rely on bank borrowings?” is always my second question.

If “not at all” is the answer, then they are in the majority.  Half of every bank’s commercial customers do not borrow. 

Although businesses must have a checking account, many owners avoid bank loans. 
They understand how balance sheet leverage can drive faster revenue growth, but for them indebtedness causes insomnia.

By their nature they are averse to debt, so they’re only interested in banks’ non-credit products.  The bank whose operating services excel in cost, quality and quantity is the best bank.

What if you aren’t allergic to debt, and your company relies on bank borrowings?  Then the loan is the product of paramount importance to you.  In this case, your best bank is the one whose lending practices are the most predictable and consistent.

Do you remember your company’s first loan?  Many owners never forget the banker whose confidence in them overshadowed their company’s lack of an impressive track record.  Without that initial loan, their company would never have gotten airborne.

Hopefully, your banker has granted additional loans that have propelled your company upward, enabling it to accelerate and gain altitude.

But the banker to revere is the one who provides steady and constant lending support when your company encounters significant turbulence.

Understanding your financial needs and determining which bank products provide the best solutions might appear to be your account officer’s greatest challenge.

Enter the account officer

The far tougher task, however, is to champion your company’s borrowing request to the bank’s credit department when your performance has slipped.  Back at the bank, your only advocate may be your account officer.

For borrowing companies, an account officer who can consistently deliver the bank’s credit support in troubled times is invaluable.

That’s why the third question I ask company owners is: “What would you do if your account officer moved to another local bank?” 

The purpose is to distinguish between their regard for their bank and their bank representative.

The institution designs and delivers the products your company uses.  However, it is your account officer who determines your level of satisfaction.  The most important product your bank can provide you is an outstanding account officer who orchestrates the delivery of the bank’s services.

What does this say about the importance of a bank’s size?  We have 199 banking companies in Ohio, so clearly you have a wide range of alternatives.  Is the best bank for your company a large or small one?

You’ve probably heard a similar line from officers representing the behemoth banks: “Our economies of scale enable us to design and deliver leading-edge products which we combine with our ubiquitous branches to give you an unbeatable combination of creativity and convenience.”

Officers carrying the calling cards of smaller banks counter with: “Our size enables us to deliver attentive, personalized service, which we can combine with access to our top executives, so you’re never just a number with us.”

Both sales pitches are valid.  So, is the best bank for your company a large or small one?

Regardless of whether or not you borrow, that’s easy to answer.  It’s neither.  Your best bank is the one which assigns the best officer to your account.

ACTION STEP:  Ask yourself if you’d follow your banker to his or her new bank. If your answer is “no,” then ask for a replacement.

If  your answer is “yes” then you have already cracked the code on banking.

You realize that your banker is more important than your bank.  Cherish and nourish this relationship, regardless of which bank logo might appear on your account officer’s calling card in the future.