Maximum Capacity

Business borrowers should take note of the experience of Meridian Behavioral Health Network, a St. Paul company that operates chemical dependency treatment facilities. Last spring, “three different banks cold-called us,” says Michael Bundy, Meridian’s chief financial officer. “That never happened before.”

After comparing offers from a number of institutions, Meridian had a new bank—and a good deal on a loan. Compared with the second-place offer, Meridian saved half a percentage point on a $750,000 real estate refinancing and a quarter of a point on a $500,000 line of credit, both now with St. Paul’s Highland Bank.

Bundy says he’s seen a new attitude from the banks competing for the company’s business. “Highland and the other banks we considered asked for our business. Years ago, banks’ attitude was that, if you don’t want to be our customer, somebody else does,” he says. “Now they’re operating like regular businesses, much more oriented toward marketing and focused on customers. We’re pleasantly surprised.”

Meridian’s new deal is part of a wave of commercial loan competition that has grown throughout the Minnesota banking industry. “This is as competitive an environment as I’ve seen in the past 10 years,” says Tim Viere, president of the headquarters branch of Eden Prairie–based Voyager Bank.

It’s not easy to put a number on the amount of money Minnesota banks have loaned to business customers, nor on the total amount of money they might be able to lend. “A bank’s total lending capacity is a bit of a moving target,” Viere says. “It’s affected by capital, deposits, other sources of capital, types of loans made to different borrowers, and the risk level of each loan. Those factors are always changing.”

Even so, “banks certainly have money to lend,” says Dick Flesvig, chief credit officer at St. Paul–based BankCherokee. And banks are competing hard for commercial customers.