For a small state, New Jersey is home to an astounding number of businesses that are equally impressive in their range of sizes and the diversity of the products and services they provide. Despite the challenge of online commerce, discount shopping outlets and big box stores, small businesses continue to employ vast numbers of the state’s residents and account for the majority of new business openings. Additionally, New Jersey’s business titans, including more than its share of Fortune 500 companies, are global players and household names.
Providing products and services that meet the wide-ranging financial needs of the vast business community presents both opportunities and challenges. Strict financial regulation of the banking industry in the wake of the economic crisis of the late 2000s thinned the ranks of financial institutions both statewide and nationally. Other banks found competitive strength by increasing their scale through consolidation.
While the total number of banks serving New Jersey businesses in 2018 has decreased since the Great Recession, those that remain are eager to compete to be businesses’ banking partners. With strong balance sheets and deposits, positive commercial lending trends, and the perception of growing consumer confidence and a stronger economic outlook, many financial institutions are cautiously optimistic for the year ahead.
John E. McWeeney, Jr., president & CEO of the New Jersey Bankers Association (NJBA), says that while the association’s more than 90 members may range in size and business models, they collectively offer a wide array of products and services and plenty of lending capacity. “We have banks in Cape May County making loans for commercial fishing boats,” McWeeney notes, “while a bank in another part of the state may have a completely different focus.”
McWeeney adds that all NJBA members provide commercial real estate loans, with 30 to 40 percent also actively engaged in commercial/industrial lending, including business lines of credit and loans for equipment purchases and capital improvements. Increasing FinTech options and the presence of national and regional banks additionally adds to the state’s mix of financial service providers.
He also points out the importance of Small Business Administration (SBA) lending, which helps bridge the gap for many of the state’s banks when it comes to making loans to small business borrowers who might not otherwise qualify under the bank’s lending criteria without the SBA’s contribution.
In 2017, the SBA approved a record 2,326 loans totaling $869 million to New Jersey small business owners, an 8 percent increase in dollars compared to the previous year. That includes a 33 percent increase in loan approvals and represents the first time since 2008 that the SBA made more than 2,000 yearly loans in New Jersey. More than 30 percent went to start-ups, another hopeful sign of economic revival.
Steven Vitale, senior vice president, commercial banking group – divisional manager for Valley National, says the bank does approach small-, mid- and large-sized companies differently. While individual financial institutions may have their own criteria, in general, small businesses can be viewed as: those with revenues under $10 million; middle market as those with revenues up to $100 million; and large corporations as those with revenues over $100 million.
“Companies operating in each of these segments, as defined by revenue size, will have different needs,” Vitale points out. “For example, a small company being run by only a few people may place a greater value on a bank’s product convenience and ease of use, whereas a larger company may be more focused on a bank that can be a one stop shop for their numerous needs. Given Valley National’s experience in these different markets, we bundle the products and services that best align with our clients based on their size and needs.”
Vitale adds, however, that regardless of size, in each case the bank’s customers benefit from the expertise of Valley National’s people, who can further tailor the bank’s products to address their specific needs. Valley offers regionally located lending offices in New Jersey as well as the bank’s growing footprint in Florida, Long Island and New York. This reflects a community-focused business philosophy started 90 years ago in northern New Jersey, now delivered over a larger geography as a mid-sized regional bank.
Technology has also helped level the playing field when it comes to the delivery of many banking services. “Banking technology has allowed companies of all sizes to have more control and access to their capital,” Vitale adds. “For example, the use of remote deposit and online banking allow businesses to deposit checks from the convenience of their office and ultimately see the transaction online almost instantly.”
William D. Moss, president and CEO, Two River Community Bank, says that as a community bank, Two River has found success in delivering high-touch customer care through dedicated commercial loan officers experienced in building tailored solutions for clients of all sizes.
“Accordingly, there is no formal difference in how Two River Community Bank services small-, mid- and large-sized companies,” Moss adds. “Rather, we work with each client on an individual level. This approach allows Two River Community Bank to limit red tape and deliver quick decisions.”
Two River Community Bank does specialize in three areas outside of revenue size. The bank devotes resources to meet the specific needs of medical professionals seeking financing for equipment, working capital, mortgages, acquisitions and expansion, malpractice insurance, and partner buy-ins and buy-outs.
The bank has a department dedicated to supporting its role as a Preferred Lender with SBA. Customers meeting the criteria for SBA financing, which is available to businesses in a wide range of revenue sizes and industries, can expect an expedited process thanks to the bank’s role as a preferred lender.
The bank also specializes in construction financing, which is one of the key areas that have helped Two River Community Bank establish itself as the largest commercial bank headquartered in Monmouth County.
From a deposit perspective, Two River Community Bank offers several options based on volume. These options allow commercial customers to select the most economical fit and are complemented by a full range of services available to meet specific business needs, including remote deposit capture, merchant services, automated ACH, and credit cards.
“Today’s speed of business requires access to financial information and functionality at any time and any place, regardless of business size,” Moss adds. “It is a standing priority for Two River Community Bank to put its clients in the best position to grow and succeed – and meeting the universal need for banking technology is key to accomplishing this goal.”
With nearly $25 billion in assets and 155 branches in New Jersey and New York, Investors Bank is one of the fastest growing financial institutions in the metro area. But CEO Kevin Cummings, who has helped lead Investors’ transition to a full service commercial bank, still believes in the same fundamentals of community banking. “Know your customers,” Cummings says. “Technology is a tool that hopefully improves efficiency, and we are always trying to improve our turnaround process and do things better and faster, but technology can’t replace relationships.”
Cummings believes in a “high touch” approach that clearly conveys to the bank’s customers that a local decision-maker is always in reach to address their needs. “There is no set formula. It might take more time to tailor a solution, but Investors is committed to providing personalized service and relationship-focused banking; there is no difference whether the business is big or small,” he concludes.
The impact of the current administration in Washington and New Jersey’s newly elected governor on issues impacting the banking industry remain to be seen. No substantial change has emerged regarding banking regulation, but a soaring stock market and the promise of a more business-friendly climate has New Jersey’s bankers thinking positively. That’s good news for the state’s business community and the possibility for increased investment, the creation of new jobs and better economic times ahead.
To read more articles in New Jersey Business magazine, visit: www.njbmagazine.comRelated Articles: