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What’s driving activity in the Capital Region right now? How are market conditions here compared to the rest of the state and the country?
I share optimism about commercial activity in the Capital Region, centered around our warm, unique culture and all that our region offers to growing businesses and their employees. We may not define this area as a ‘boom’ market or an international hub, but we are seeing steady growth and increased opportunities throughout our area. One of the greatest details we are witnessing is leadership at every level identifying and acting upon the needs of our area to progress forward – from the state government, to regional leadership, down to local municipalities. Leadership is beginning to move in the same direction, at the same speed, and with the same goals in mind to support improvements and growth needs throughout our Capital Region. The Capital Region is a hub for our state government, higher education and health systems along with being a logistics hub connecting three ports, four major railways, and an international airport. Together, this provides explosive opportunity for residents and businesses alike. We have areas like Geismer that are supporting our industrial growth needs. National and global brands are looking at this market as a place to plant deep roots. Our legislators are identifying needs and building plans to solve the issues like workforce development, student retention post-graduation, education and safety. Across Louisiana, leadership is building plans to address fundamental needs so we can answer the call for the outstanding opportunities knocking at our door.
Interest rates are down a little. Are buyers and borrowers adjusting their expectations, or are deals still stalling over rate shock? Are there any creative financing strategies gaining traction among borrowers?
I find that borrowers are starting to have more realistic expectations on the finance side of our business. Most of our loan pricing is based on Wall Street Journal prime, which is a familiar term that business owners are comfortable discussing. It’s been my experience during conversations with borrowers that banks which have good credit-quality are pricing competitively in favor of qualified borrowers. In return, lenders are looking for borrowers to be strong, themselves, exhibiting that they can (and have) withstand the ebbs and flows of their industry during changing economic cycles, and have strong liquidity to withstand unforeseen storms in the future. As for creative financing, this can only be discovered when lender experience is combined with a clearly understood and well-thought-out business plan. An honest relationship between the banker and client becomes critical and must be established. Creativity is defined by understanding ‘sticking points’ and working together to find reasonable solutions to satisfy both parties while mitigating risks associated with the request.
Construction costs have been under a lot of pressure in recent months, and longer. Where do things stand now? Are margins improving?
In the commercial space, project lifecycles are naturally longer. An average commercial construction project is at least 12 months. With a sizable project, you can expect 24 to 36 months for completion and stabilization. In considering the pressure of construction costs, we focus on the quality of the borrower and the borrower’s expertise in their industry, critical relationships that can impact the project, and understand their ability to leverage those relationships to get to the finish line. In best case scenarios, I have witnessed phenomenal borrowers who deliver exceptional projects at the end of construction. One of my personal favorite conversations was with a borrower who recently told me, “My two favorite things have happened—we are under budget and ahead of schedule.” It’s rare, but that outcome is the result of a team of great, qualified borrowers who are top in their industry, have teams who work together like a well-oiled engine, and they have great relationships in their field. Character plays a role in every credit scenario. On the less fortunate side, some borrowers building a new project can be their own greatest obstacle to reaching the finish line. I have seen difficult borrowers flip contractors mid-project and get too deeply involved in the day-to-day contractor details, putting an entire project at risk. A borrower who understands their role in a construction project, flexes properly when a challenge arises, plans for the unexpected, and has a positive reputation in the market will succeed. At JD Bank, we take a wholistic view of not only the credit details of a project (cash flow, collateral, capital, and conditions) but also the experience and reputation of our borrowers in our community (character).
Mixed-use and live/work/play developments have been talked about in Baton Rouge for years. Is the concept gaining momentum, or a passing fad?
In commercial banking, we are experiencing an increased desire for the development of mixed-use communities. Any development project includes a discussion about amenities and market demand. I believe mixed-use developments are gaining traction and we’ve tasted success within our market and surrounding areas. People don’t just want to buy experiences, they want to live experiences. They want walking and golf cart communities. They want their children to have a place to safely ride bikes and walk their pets. The Mississippi River is a gorgeous backdrop for future mixed-use developments. Baton Rouge has a beautiful culture which is a perfect foundation to provide the experiences and lifestyles described in these special projects. Two immediate communities of people calling for these mixed-use developments are those over-55 who are looking to downsize and remain active and younger people who need a more budget-friendly but active community. Living is about experiences and this type of development delivers. I’m optimistic about the growth of this project model in this market.
JD Bank is new to Baton Rouge, but not new to Louisiana. What do you want Baton Rouge residents to know about your financial institution that sets it apart?
We are a community bank at heart who has centered our brand on understanding the needs of the communities we serve. We take pride in having a seat at the table when our clients and our communities discuss both short-term and long-term plans, goals, and needs to achieve those goals. Our investment in relationships have been the most critical part of our success for nearly 80 years. Amongst the many things that we do well is our delivery of “time to money.” We reduce the stress of a credit request for our clients by acting quickly, being nimble, setting realistic expectations for our clients and ourselves, and working together as a bank to meet those expectations. During a commercial transaction especially, time to money is extraordinarily important. Every day equates to dollars. By the time a large commercial project is presented to a bank, It is common to learn that the principles behind the transaction have already invested a couple of years into it. One of the most common early questions we receive as commercial lenders – “ When can I put my shovel in the ground?” At JD Bank, our “product” is our people and our service. We take our business very seriously and we work together in every situation to deliver a stellar product to our clients. The way in which we deliver differentiates us when we become your partner in a project. One of my favorite quotes remains very true and I have the privilege of experiencing it daily – “there’s no shortage of banks, but there’s not another JD Bank.” I invite you to experience the service we have waiting for you.
