Title: Billboards, Web, Twitter Spearhead Bank's Comeback: SpurTheEconomy.com, Royal Bank America's Special Small Business Website, Aims to Help the Bank Reduce CRE Concentration
Abstract: [ILLUSTRATION OMITTED] Community banks venturing into social media remain a minority of the industry, and those using Twitter represent a smaller slice of the pie yet. Many are simply dipping their toes. But at Pennsylvania's Royal Bank America, management has moved into Twitter and a related website in a big way. How big? Billboard-sized big. A need to shift the message This marketing effort came about as the result of a major change in the bank's circumstances. Royal Bank America the $1.14 billion-assets main subsidiary of Royal Bancshares of Pennsylvania, based in Narberth. Its prime markets are in south-eastern Pennsylvania, as well as New Jersey. Since the 1980s Royal Bank, publicly traded today, was under the control and active management of the Tabas family. Dan Tabas, who died several years ago, was patriarch of a clan active in commercial real estate development, hospitality, and entertainment--notably dinner theatre locations--and it was a natural development that the bank evolved increasingly into a real-estate lending specialist. At the end of 2008, the bank's portfolio of nonresidential real estate and construction loans represented 71% of total loans. It was a market that we knew and understood, says Robert Tabas, chairman and CEO of the bank, and son of Daniel Tabas. However, as commercial real estate and construction and development began to deteriorate, the bank's results began to suffer, and management came to realize diversification was needed. While this was seen in 2007, some of what was already in place in the bank's loan and investment portfolios had already planted seeds of trouble, and 2008 saw a large loss of $38.1 million. Among the reasons: a significant rise in loss provisions due to a higher level of nonperforming loans; impairment losses on mortgage-related securities and losses on other securities; falling interest income due to the substantial variable-rate lending done by the bank; and the payout of the former president's contract when it was decided to make changes in the management team effective at the end of last year. While this was going on, regulators stepped up their involvement, culminating in a consent agreement with FDIC and the Pennsylvania Department of Banking that was announced in mid-July 2009. The order addresses agreements to reduce classified assets, to preserve capital, and more. Plus mutual recognition of the need to diversify away from commercial real estate led the bank to step up non-real-estate small-business lending. In series of moves starting last year, Robert Tabas, already chairman, became CEO as well, and COO James McSwiggan also became president. The bank hired a new chief credit officer, a new chief lending officer, and a new CFO, and also hired a banker to head up the new small-business operation, which includes a Small Business Administration loan function. While real estate lending will remain a significant part of Royal's business, the intent to push the commercial real-estate lending ratios down. We want to come out under the concentration limits, says McSwiggan. Shifting to small-business lending is the right product at the right time, he adds. The bank has stepped up its marketing to make the case that while other institutions have pulled back from the small business market, it has funds to lend. Thus was the concept of a marketing campaign born, including a link with the bank's past. Bank officials say the effort has produced $24.2 million in small business loans thus far. Shifting the marketing image Royal Bank had become known as one of the go-to places for commercial real estate funds, and moving the market's perception beyond that niche has taken a number of strategies. Royal was never a traditional bank promoter, according to Marc Sanders, director of marketing. Indeed, for years the bank was known for headgear not generally connected with Pennsylvania: a cowboy hat. …
Publication Year: 2009
Publication Date: 2009-09-01
Language: en
Type: article
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