I became the CEO of Surety Bank in 2009 just as the real estate collapse and The Great Recession took hold. My plan for growing the bank came to screeching halt and I had to pivot into working out our existing loans, raising capital, and saving the bank from becoming another statistic.
We worked through each loan with the goal of modifying terms to avoid foreclosure. As a primarily commercial lender, each foreclosed business could potentially impact many families which would lead to even more foreclosures. Unfortunately, the bank regulators didn’t want us to work with our clients in this way.
Once we lowered an interest rate and reduced payments the loan was flagged as a troubled debt and the whole loan was considered toxic, even for our customers who had never made a late payment. The government then used these lowered rates against us and increased our insurance.
This practice of trying to force us to foreclose on good loans was bad for our customers, and not complying put us at risk for going out of business. This was absolutely the craziest thing I’ve experienced in my time as a CEO. What we saw happening, first hand was the exact opposite of what was being put forth by the media, and we are so grateful we made it through that season unlike many other community banks our size. Things are always what they seem.
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