Choosing the Right Banking Partner for Your Business

Finding the right bank is about much more than opening a checking account or securing a line of credit. In this episode of Hot Takes with Jim Baker, Jim Baker and Bill sit down with Dave Byerly and Preston Bergen from Fifth Third Bank to discuss what business owners should really expect from a banking relationship—and what banks look for when evaluating growing companies. 

The conversation explores everything from commercial lending and relationship banking to financial statements, cash flow, projections, asset-based lending, private equity, acquisitions, and why communication is one of the most valuable assets a business owner can bring to the table.

Whether you're launching your first company, growing beyond $1 million in revenue, or preparing for significant expansion, Dave and Preston share practical advice on building a banking partnership that can support your business through every stage of growth. They also explain why transparency, long-term planning, and surrounding yourself with trusted advisors can make all the difference when it's time to secure financing. 

00:00 – Welcome to Hot Takes with Jim Baker
01:00 – Meet Dave Byerly and Preston Bergen from Fifth Third Bank
02:30 – Why banking is more than deposits and checking accounts
03:00 – The story behind the Fifth Third Bank name
04:00 – How technology is changing modern banking
05:00 – What industries banks like to finance
06:00 – Why leadership matters more than the industry itself
07:00 – The value of long-term banking relationships
08:00 – What makes a business attractive to a bank
09:00 – Why financial statements matter
10:00 – Tax returns, QuickBooks, and professional financial reporting
11:00 – The value of a fractional CFO
12:00 – Why communication builds trust with your banker
13:00 – Exit planning, succession, and business transitions
15:00 – A real-world business growth success story
17:00 – Personal guarantees and business lending explained
20:00 – How banks evaluate risk
22:00 – Understanding asset-based lending (ABL)
25:00 – Financial projections and avoiding the "hockey stick" forecast
29:00 – Why regular communication with your bank matters
31:00 – Funding growth versus funding losses
33:00 – Why some businesses aren't bankable—yet
35:00 – How banking regulations affect lending decisions
39:00 – Why some banks say "no" while others say "yes"
41:00 – Technology, AI, and the future of banking
43:00 – Why physical bank branches still matter
45:00 – The Triangle economy and current business trends
46:00 – Private equity, acquisitions, and the business transition wave
49:00 – Five key takeaways for every business owner
53:00 – Final thoughts and closing

Creators and Guests

Host

Bill LuMaye

Talk Host WPTF and Voice Over Talent

Host

Jim Baker

Author of "The Adventure Begins When The Plan Falls Apart" Converting a Crisis into Company Success, Jim is a husband and father of 4, Baker has spent the last 30 years in the business world as an entrepreneur, investor, and advisor. He had a successful exit in 2014 after owning and managing a CRO and functional services company, Ockham, specializing in Oncology. During that time prior to exit, Baker grew ASG and then Ockham both organically and through M&A. Over time Baker has experience in acquiring and selling companies, working with investment bankers, private equity, and mezzanine debt funding. In addition, has vast experience in business branding and managing and leading people. After the sale to Chiltern International, Baker started Sumus Development Group, an advisory business focused on operational excellence, exit strategy and marketing. In addition, Baker is an active investor in the business community.

Guest

David Byerley

Senior Vice President, Commercial & Middle Market Banking at Fifth Third Bank

Guest

 Preston Bergen

Commercial & Middle Market Banking Leader

What is Hot Takes, Presented by Sumus?

Hot Takes with Jim Baker is where real-world business experience meets honest conversation with Host, Bill LuMaye.

Hosted by entrepreneur, advisor, investor, and CEO Jim Baker, this podcast explores the challenges leaders face every day—from raising capital and managing growth to hiring, firing, sales, culture, leadership, acquisitions, and long-term value creation.

Through the Hot Takes series, Jim sits down with business owners, executives, investors, and industry leaders to discuss timely issues shaping today’s business landscape. These candid conversations offer practical insights, hard-earned lessons, and perspectives you won’t find in a textbook.

The podcast also features the Wisdom Series, in which Jim and Bill interview accomplished guests whose decades of experience offer timeless lessons on business, leadership, success, failure, and life.

Whether you’re a CEO, entrepreneur, business owner, executive, or aspiring leader, Hot Takes with Jim Baker delivers actionable insights to help you build stronger organizations, create greater value, and lead with confidence.

Presented by Sumus Development Group, LLC. Helping organizations enhance value, strengthen leadership, and prepare for what’s next.

37 - Hot Takes - Fifth Third Bank
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[00:00:00]

Bill LuMaye: Well, hello, everyone, and welcome back to Hot Takes, presented by Summa. And of course, my good friend and a very successful entrepreneur, Mr. Jim Baker, is sitting to my, my left.

It's good to see you, Jim.

Jim Baker: Yeah, you as well. How are you today?

Bill LuMaye: I'm doing pretty good, pretty good, and we're here to talk again about businesses. Yeah. And of course, Summa advises businesses, and this is just another in the series to help those who are watching who own businesses to, to kinda get an inside scoop as to what they could be doing to be more [00:01:00] successful.

So Jim, I'll, I'll throw it over to you. We have a couple of great guests.

Jim Baker: Yeah, and I think, um, you know, as you're starting a business and growing a business, you obviously, once you start generating some revenue, you need a bank.

Bill LuMaye: Yes, you do.

Jim Baker: Um, but I think for today's listening audience, there's much more to a bank than just a place to deposit your money and have access to be able to pay your bills, et cetera, et cetera.

So I wanted to have my good friend, Dave Byerly, to join us today, and his colleague, Preston, um, from Fifth Third Bank. And Dave has been in the banking world, and Preston, for years, and years, and years. Long time. Yeah.

David Byerley: Absolutely.

Jim Baker: And you know, I just wanted to hear their story today and, and hopefully- Right

have them give advice to some of those businesses out there that are looking for a banking relationship going forward. So guys, welcome, and if you could do, do a quick intro on yourselves, that'd be great. And then we'll get started.

David Byerley: Sure. Thanks, Jim. Bill, nice to meet you as well.

Jim Baker: Yeah.

David Byerley: Yeah, I've been, I'm Dave Byerly, Fifth Third Bank.

Been in the industry, boy, [00:02:00] going on 30 years. Spent 25 years with, um, BB&T and Truist, and actually retired last August and joined some of my former colleagues over at Fifth Third Bank, and it's been a, you know, welcome change. Um, very enjoyable. And I'd worked with these guys, how many years, since 2008, Preston?

Yeah,

 Preston Bergen: yeah. Yeah, a long

David Byerley: time. Or

 Preston Bergen: more, or longer.

David Byerley: Or longer, that's right.

 Preston Bergen: So Preston Bergen. I'm also with Fifth Third Bank, and I've been in banking for 38 years. Started my career with Wachovia, and after a merger, made the transition to BB&T. Another merger happened, and Fifth Third threw me a lifeline, and so I've been with Fifth Third five years here in Raleigh, and, um, just we're doing a lot of things right, I think.

Jim Baker: So just going through the, the banking world, you, it seems like the whole industry is acquiring, consolidating, and hopefully it's not [00:03:00] gonna be the pharmaceutical world someday where there's, like, four big banks throughout the entire country and that's it. Um, but two questions. One, Fifth Third's from Cincinnati, I believe.

David Byerley: Correct, yep.

Jim Baker: And where did you get the name?

 Preston Bergen: Well, I, I believe it was 1910, there were two banks in Cincinnati, Third National Bank and Fifth National Bank, and they merged. And three-fifths didn't sound very compelling, and so we became Fifth Third. And so one of our mottos is we're 167% better. So that's how we came.

And a- as a former engineer, you know, improper fraction, but doesn't roll off the tongue always. But, um, I'll tell you an interesting story. We recently dropped bank from our official name because we're such a progressive use, um, a company that is very progressive in the use of technology that, um, we're, consider ourselves [00:04:00] more than a bank.

And several times this year, we've been competing with other companies for treasury management to, that automates systems for large companies, and we were competing with no other banks. We were competing with all fintechs. So it's interesting reflection of our company's focus on harnessing technology to bring better solutions and automation.

Bill LuMaye: Well, I used

Jim Baker: to write a lot of checks to Fifth Third.

Bill LuMaye: In fact, most of the banks you've worked at I've, I've had a mortgage with- ... so I'm familiar with them. But I come from a perspective where I I am a very small business, so it's a little different than what you guys do. But maybe you could explain what it is that you look for, because I think a lot of people think of banks as a place that they need.

Why do banks look for businesses?

David Byerley: I think one of the things we look for is really what is ... We need a perfect fit. So we, we wanna interview you just like you would interview us as a bank. So we wanna make sure that [00:05:00] the customer fits what the bank is offering, and that we can offer what the customer needs.

 Preston Bergen: That's a good way to look at it. And I would tell you, David and I are in the segment that serves companies from 20 million in revenues to 500, and that's because we're in, frankly, a development market. We've been in North Carolina about 15 years, and so that's a good way to start. But as you know, our retail operation's grown dramatically.

We now have about 100 over 100 retail branches in North Carolina. But one of our biggest investments more recently is building our team that serves the companies in the range of one million in revenues to, to that 20. So that's coming on strong. We're making big investments there so that we can serve sort of the full range of companies.

Jim Baker: If you were f- ... $10 million company- Right ... let's say, becomes a client of the bank, then they grow to 30 or 40, do they get switched over to you, or do they stay with [00:06:00] that advisor, banking relate manager for-

David Byerley: Sure. That's a good, that's a good question. Oftentimes it really depends on what does a customer want.

At the end of the day, it's up to the client. If they like to stay with their banker that they've had forever, then they can certainly do that. We've had cases where a smaller company's grown quite a l- you know, quite a lot, and they've really outgrown, you know, the business banker. But in some cases they wanna

You know, they're friends, they wanna work with that fella or that lady. But in that case, then somebody like myself or one of our middle market team members would kind of work in conjunction with the, the business banker to help them down the road.

 Preston Bergen: Yeah, one of the greatest things we get to do, most satisfying things, is help companies and owners grow the business.

That's probably the most fun we get to have.

Jim Baker: And is there a certain, um, industry you don't like? Because I remember with another bank that I'm a part of kinda during COVID stayed away from the hospitality industry and [00:07:00] real estate in general. Now they're back in of course. Um, so what are the some of the, the, these businesses that you really like to potentially do work with?

What, what do you like to see from a-

David Byerley: Well, we, there, there isn't really one industry that we don't like. We're looking more at the management team. If the management team is capable and has a, you know, a, an objective and a strategy, then we'll work with them, you know, as best we can. There's some industries that maybe we don't take a huge whole position on, but for the most part we're gonna work

We're kind of industry agnostic. Is that a good way to put it? Yeah.

 Preston Bergen: Yeah. I think that's fair. It, it really comes down to leadership, a coherent plan, and, um, frankly, we tend to favor the owners and executives that have a relationship orientation. Um, really- The optimum outcome of any kind of partnership is a long-term partnership because you develop trust.

Um, we strive to be a reliable source of capital, [00:08:00] consistent service. And so in any good relationship, um, in my career, there's always that you've established pr- professional competence from the, or credibility from the banking side, and you've developed rapport, a personal rapport, and that's really, again, where it becomes fun because it's not just a transaction, it's really a friendship and a partnership helping each other over time.

Bill LuMaye: Well, what about the businesses that might be just on the cusp? What do they need to do to, um, or should be doing in order to be attractive to folks like you? Mm-hmm. Does that make sense? Yeah.

David Byerley: Yeah. No, that's a good question as well. Yeah, I think first and foremost is have proper financials. You know, a company, you know, a business may come in and, you know, talk to a banker and they don't have, you know, proper financials.

Um, I think that's key is to have that, so the bank doesn't have a bunch of questions. They can see the story right there on [00:09:00] paper. So I think, you know, get with a good team ahead of time, so your CPA, you know, have a good attorney, and have things k- you know, have a strategic plan of w- you know, how you wanna move forward, and then come to a bank at that point.

 Preston Bergen: Yeah, and I think at the root of everything is good communication, and, um, and that serves a relationship over time. Some of the best CFOs I've worked with with larger companies would, um, provide not only the financial information, but the management discussion around why margins were up or sales were down and that sort of thing.

And, um, we always say it's not good to have surprises, surprises between the bank and the client or the client and the bank. And so it just boils down to communication.

David Byerley: Communication, yep.

Jim Baker: So in your market, you're the 20 million plus, so in most cases, most of these companies will have some type of, I would call, disciplined [00:10:00] financials.

Mm-hmm. They might not be perfect. In, in our market, yeah. But they're gonna be QuickBooks- They're similar, right ... or they're gonna be, you know, some other type of- Yeah ... Software that you could easily spit out and you're used to seeing or whatever. But for the one million to 20 million that may not be sophisticated enough, what advice would you give them from a financial package that you would like to see from a financial package?

 Preston Bergen: our business banking and emerging middle market, there's different labels, it doesn't really matter, but they're accustomed to working from tax returns. And, um, one of the things that we often guide business owners with is as they grow, there's always a step function in things like financial preparation, internal systems, you know, IT platforms, eventually ERPs and that sort of thing.

But as they grow and evolve, there are times when they need to work, move from tax returns to QuickBooks, or QuickBooks to a more something more [00:11:00] sophisticated. And, um, we can help guide them, but typically, they, they will need tax advice, and so they'll need a professional that can provide that. And usually that person is also able to give them guidance on either preparing those financials for public, you know, or bank use, that sort of thing.

David Byerley: You know, one of the things that I like to, um, you know, a smaller company would be, there's a lot of fractional CFO companies in town. Yeah. I, I think that's a great way, you know, for a, a smaller, a growing company to get that professional advice without having to hire somebody full time. So if you can go find a fractional CFO, that's, that's pretty key, 'cause they can put together, you know, a prop- They know what a bank is looking for, you know, to do underwriting, and they can put that together without a lot of effort.

So that's definitely a, a key point.

Bill LuMaye: And also picking up on the fact that th- this relationship, I've heard you say that a number of times. So how important is... Well, I know [00:12:00] that's important, but how important is the, the owner or the, the leaders of a particular company, just their personality and how you all get along with them in moving forward?

 Preston Bergen: It's interesting. We, we get exposed to lots of personalities. I bet you do. And, and, um- ... and, and, and as you know, they're all different personality types. And, um, and we work with people that are incredibly successful, very rapid growth, um, kinda thing. And so you just have to appreciate what they've accomplished, and sometimes there's that kinda w- work.

Um, oftentimes when we're advising, when we're really being an advisor, um, y- you almost have to be a psychologist in a way, um, more than, you know, a finance guy. And that's always interesting, particularly when people are talking about their strategic alt- alternatives like, "I'm considering selling my company," [00:13:00] or, "I'm considering, you know, selling it within family, allowing, you know, my children to buy in."

Um, there's a lot of emotion behind that because these people have invested so much to create this, this company or grow it to where it is. And so, um, that's always kinda fun. But it all boils down ultimately back to, you know, communication and viewing your, your bank as really a partner. Um, and that's, that serves you well for all, all kinds of reasons, including...

Companies hit a bump in the road sometimes, and if you have established track record with a company and, and owner or executives, and they've, they've managed through difficult times before, then you have confidence to give them, um, to be patient, to allow them to recover or whatever. But, um, the, the alternative of relationship, just to mention that for a [00:14:00] minute, is there are times when we all make myopic decisions, sorta serves the short-term but we're not thinking long-term.

And, um, I see that happen at times based on pricing. And, you know, banks should all be within a narrow range for a given situation. Sometimes, sometimes not for all kinds of reasons, but we differentiate more on our service delivery, the kind of, um, proprietary information we can provide on things like systems industry backdrop, that sorta thing, and we have the resources to do that.

And, um, whereas there are other institutions that focus differently, and they're really competing on price more

Bill LuMaye: What about a, a success story? Can we go there? And then I'd like to, to also hear about a failure, but I mean- Yeah ... just if you don't mind sharing, you don't have to name names, [00:15:00] but I mean, um, give, give us a success story that you're really proud of.

David Byerley: Yeah. Um, so about five or seven years ago, I started working with a company kind of in the life science space. They were doing maybe $5 million in top line revenues. A lot smaller than what I would typically work with, but it was somebody that we knew. Um, they basically broke even in that first year. Um, had a great, you know, great product.

Fast-forward seven years, we put together $130 million revolver. We syndicated it with two other banks. Their last fiscal year, they hit over 405 million in top line revenue with a 16% EBITDA, so $65 million EBITDA. I mean, fantastic story. That's a very valuable company today. Um, we're now working with them to kind of improve their efficiencies through bringing in, you know, treasury systems, um, using some of our products that Preston alluded to earlier.

Um, helping with their AR, their [00:16:00] AP. But I mean, this is a, a local company. Just phenomenal story. To see that type of growth in that period and, and they got through COVID was the other issue. I mean, they, they managed through it. They had a, you know, a down, a down year, but they said, "Here's what we're gonna do.

Here's our plan to move forward," and they did exactly what they said they would do. So I, I consider that a huge success.

Jim Baker: Yeah, it sounds like one.

David Byerley: Yeah.

Jim Baker: Yeah, it's a great success. Yeah. So take us back, though, when they were- Right ... $5 million in revenue- Yeah ... and they were breaking even and they wanted a line of credit.

Give us the ratios and how you were biting your nails at that point in time. That's a good question. You know- In terms of giving

David Byerley: them ... that, that's a good one. Just it's tough, oftentimes tough to you know, a small company trying to get a credit line. Um-

Jim Baker: Yeah ...

David Byerley: in this case, you know, the owner, um, you know, we kinda looked at him from a guarantor's perspective.

But, you know, we knew- We can talk about that,

Jim Baker: too.

David Byerley: Yeah, you know the When does the personal ...

Jim Baker: Yeah. So ... But go ahead.

David Byerley: But in this case, this was a fellow that had been in the industry for many years. He had been [00:17:00] with a much larger company. He knew the industry like the back of his hand, so we had good faith in the ability or his ability to grow that business, to operate the business.

I mean, I, I don't think I've ever met another owner, maybe other than Jim, who knew more about his business than this fellow did.

Jim Baker: So but that's ... I, I think for some owners out there, they- Might be at the $5 million, $10 million- Right ... revenue. They have AR, um, but their backlog isn't significantly high. They maybe have some profit.

You know, they're running anywhere from, let's say, 2 to 5%. And they have their advisors, accountants, "Hey, you ought to be getting a million dollar line of credit, you know, with a $5 million revenue company that's making 5%." And that's not realistic. So what can you tell some of these folks out there that need money to grow that w- in actuality, the line of credit's gonna be a [00:18:00] certain percentage of revenue.

And then on top of that- Yeah ... what do you need to do, the personal guarantee, um, to make sure that the bank isn't, you know, too risk- too risky in this case of y- of getting this line of credit? So, kinda walk us through that. Right.

 Preston Bergen: Realistic situation. Yeah, I'll jump in. I'll just say w- that when you're working with companies in that range, that's probably the most difficult credit, um, analysis or, or banking decisions because the business is not separable from the owner- Mm

or owners. And I often thought that's, that's the toughest thing. And I will tell you, in the old days, we had the discretion to make, you know, character loans we called it, right? Where you're familiar with somebody and you have the hard data, but it's, it's colored by your confidence in that person's [00:19:00] skills and acumen and that sort of thing.

And some of that has been regulated away which is unfortunate. But again, you make a really good point because that's, that's really the tough part. And if, and if a bank can do that well, frankly as companies gain scale, it's, it's, it's easier. It frankly is just easier.

Jim Baker: Right. So but- Yeah ... let's say, so it's been regulated away.

When was that hap- did it happen? Is that- It,

 Preston Bergen: it's happened- ... '08? It's happened over the years. There's more oversight, and so if you get certain parameters, exceed certain parameters, it, it, you have to assign more capital. It gets very expensive to the bank, which makes it not only unprofitable, but maybe at a loss.

And there are things we do that are still not profitable because it's part of a bigger relationship, but our discretion was hemmed in ov- over the- Yeah, we- And again, I've been around for 38 years. Sure. So we're talking about over a long term. W-

David Byerley: we've had a look ... In [00:20:00] cases like that, we've had a look at, you know, you have your AR, of course, you have the owner, but what other assets could he pledge to make it less risky for the bank?

So we might look at, you know, would you take the, a second lien on somebody's house or something? Or is there another guarantor that can come in and step in? Um, or I mean, may- you know, his advisor may say, "Hey, you need a mil- you know, $1 million line of credit," but maybe you only need 250,000, which is a lot more doable, and kinda start there and work your way up.

Jim Baker: And that's what ultimately what I'm getting at.

David Byerley: Yeah.

Jim Baker: Um, from an advisory standpoint, if you're advising your potential clients, um, and you don't wanna take this risk, whether it's regulated or not- Mm ... realistically in that scenario, the $5 million company 100% owned by the, the CEO-

David Byerley: Right ...

Jim Baker: um, who has a house, but he's got a mortgage on the house, or she's got a mortgage on the house.

Um, and they're returning 2 to 5% in profit in the business. [00:21:00] What are you w- willing to give them? Well,

David Byerley: you can look at, there's other avenues. Um, you can go look, work with the SBA is one good, you know, good- But

Jim Baker: let's forget all that stuff ... forget SBA. Let's make it simple.

David Byerley: Okay.

Jim Baker: All right? Okay. Do you like that person?

Yeah. You want them as a relationship. You feel like there could be a long-term play here. What... Unless, no one's gonna, by the way- Right ... call you tomorrow and say, "Hey, you said today-" I want a loan. "... you can get a $100,000 line of credit." Right. But just give me a ballpark- Yeah ... as to what you think you'd be willing to do for them.

David Byerley: Yeah, I, you're probably looking at a maybe 250 to a half a million dollar line, you know, provided it's cash flowing. Mm-hmm. You know, if you have some cash flow, you know, some history, and a, and an owner who's invested. I mean, we, you know, obviously the guarantee of the owner is important. And we're not looking to him to, to cut a check for half a million dollar.

We just want him to come to the table should there be a problem.

Bill LuMaye: Sure.

David Byerley: Right?

 Preston Bergen: Right. And, and have skin in the game. Yeah. And one of the most elegant solutions when people have not people, but companies have a, um, a, a high working capital component, so [00:22:00] accounts receivable and inventory, is to do what's called asset based lending.

And so you may have a million dollar line, but your a- availability on that line is based on a percentage of ARs and inventory. And for companies of any scale that are growing rapidly, that's one of the best solutions, and it also has fewer loan covenants, so cash flow leverage becomes not an issue.

It's really just more can you pay your fixed charges?

Jim Baker: Okay, so we're gonna get into the weeds a little bit.

 Preston Bergen: Yeah, sure.

Jim Baker: Let's talk about that asset based

 Preston Bergen: lending. Lending. It's called ABL in the industry. And again, it's typically a r- primarily a revolver, and your ability to draw on the revolver is based on, and I'll give you some, just some estimated ranges, but typically 80 or 85% of accounts receivable.

And inventory, depends on the composition of the inventory. If it's all commodities, it could be a [00:23:00] relatively high percentage. If it's perishable bananas, it might be really low because, y- you know, if the bank has to take possession, they're all a puddle of goo. But, um, but often it's 50 percent-ish. And, um- And what the borrower provides, and again, depending on the situation, is it could be a monthly accounting of here's the total ARs at the end of the month, our total inventory.

You put the advance rates it's called, and, you know, we're, we're able to draw up to 500,000, but we're only outstanding about 405,000 for example. Mm. You have to stay within the, it's called the borrowing base. And, and again, um, when companies are growing rapidly, and a lot of times they have high ARs, um, you think about staffing, um, or, or other kinds of service work, it's the perfect or can be really optimal solution for them because there's typically [00:24:00] no measure of cashflow leverage, which is more common in more normalized situations.

And it's just can they cover their fixed charges, which is things like interest, rents, other obligations- Sure ... term loans, that sort of thing. And so, um, it gives them the freedom and it's also the flexibility to grow. And a bank will typically underwrite more than they need currently to accommodate that growth that's expected over time.

Jim Baker: So from a, just a simple example standpoint, if your average AR per month is $500,000, you're basically saying that that business has the ability to potentially use 400,000 of that million dollar line of credit.

 Preston Bergen: Yeah. Yes. Yeah. It-

Bill LuMaye: Okay. Yeah.

 Preston Bergen: Yeah. And it's always se- well, we could get down in the weeds and we won't do that today, but it's, um, very formulaic.

The reporting, um, is typically not onerous. Um, but there are times [00:25:00] when companies are really pushing the limit. They have to report borrowing base daily, weekly. It's more common to do it monthly. Mm-hmm. But ...

Jim Baker: Okay.

Bill LuMaye: Well how important are projections and how do you prove it? I mean, and this is probably a silly question coming from someone who doesn't have the knowledge you guys have, but if you have a business and you're, you have a business plan and you're projecting into the future- Mm-hmm

how do you substantiate that? Or how does a business go about substantiating to you?

David Byerley: We always, um, want projections for, to ... The only way we can really look at what their capital needs are and their lending needs going forward is to look at their projections. So if they're looking to, they say, "Hey, we're gonna grow, you know, next year we're gonna grow 20%."

Wow. Well, obviously your working capital needs are gonna bump up, so we'll ha- we need to put a larger line of credit in place for them. So projections are quite, quite valuable. Now, the bank will typically take the management projections and then [00:26:00] give them a haircut, 'cause it's always we're gonna take the pessimistic viewpoint, whereas the owner's gonna take the very optimistic.

So- Sure ... we, we, we have what we call, you know, bank projections. So we'll kinda set our covenants based on that.

Jim Baker: So Dave's a big hockey fan.

Bill LuMaye: Oh.

Jim Baker: You were at the parade.

David Byerley: Yes, sir.

Jim Baker: I bet you were. I think I saw you.

David Byerley: Me and 200,000 of my best friends.

Jim Baker: Right. That was something else. Yeah. Yeah. Nice and cool that day, too.

Yeah. The... Do you run into the street and run away when you see projections where you have the, you know, 5 to 10% and suddenly you got the hockey stick- The hockey stick ... um the year after you get a starter banking relationship? So talk to us about that because I think a lot of businesses out there are very optimistic about what they're gonna do.

Mm-hmm. And in reality, it never happens. So I think they kill themselves with banks and relationships when they show the hockey stick. Talk to us about

David Byerley: that. Yeah. That, that is a... [00:27:00] I, I've seen that many times, and it's a tough... We don't wanna, you know, totally say, "Hey, Mr. Owner, you're completely wrong here." You know, we wanna...

we'll listen to what their story is, and there may be a reason for it. You know, a typical example might be, I've seen cases where they've, um... you know, a government contractor, aerospace industry or something, where you could be real flat, and if they win a contract, they will be a hockey stick. They're gonna see a huge increase.

So if we see that coming, then we need... You know, we, we have enough, um... You know, within the bank itself, we have an aerospace and defense group that can help us understand that industry better than we do here. But if we see something like that, we know that they could grow overnight and revenues could skyrocket.

So in that case, you know, we would take that into account when we're providing some credit. But for the average company, that's a tough one. Um, you know, we'd wanna have them make sure they can tell us, you know, why do they expect this growth? You know, what are the... you know, what are the key metrics? You know, why are you, why, why do you project that [00:28:00] growth, um, you know, given what's gone on in the economy?

 Preston Bergen: Yeah, and th- there are lots of cases where companies are growing 20% a year, and so it's logical extension to expect them to continue to do that. But it's often, it's often based on a contract or we've got a new client and we're, you know, we think we're gonna sign the contract. You know, if it's a big retail, a big box retailer, it's gonna drive our sales up.

But it's usually that kinda conversation, "Tell us how you're gonna do this." And sometimes it's really credible and, and sometimes you have to be get back to your psychologist mind- mindset and say, "Dear, you know, how likely do you think you can do this? And do you have the staff to support this kinda growth?"

And, um, sometimes you can lead a horse to water and sometimes you can't.

Jim Baker: Right. [00:29:00] one of the things we probably wanna advise some of these businesses out there is not to project a hockey stick. Under- Right ... promise, oversell. Yeah. I mean, if you get into a bind, um, and you truly have that hockey stick and you need more money, I'm sure the bank's gonna jump on board and help you out, right?

Yeah.

David Byerley: Yeah, well, we... you know, when we're working with clients, we, we wanna be in a communication, you know, a lot. You know, n- just don't come talk to us when you have a need. We should be talking monthly, at least quarterly at the very least. We should be getting financials on a regular basis so that we can be prepared for when they do have a need.

You know, if we know ahead of time, [00:30:00] um- I, I think that's, that's very important to just maintain that, that, to your point earlier, just maintain that communication

 Preston Bergen: You know, some of, some of the best conversations we have and, and we get, um, a higher level of credibility with the client is if we challenge some of their assumptions.

And, and, you know, we need to be diplomatic. Like, "That's the stupidest idea ever," you know? Wouldn't, wouldn't be really good for business. But if you say, "You know, I'd really like to hear more about that because what I'm hearing from other business owners is that the tariff situation's really challenging," whatever, right?

And so, um, it, it can be really good for a relationship, and some people really value that kind of perspective to challenge them sometimes so that they're dr- not unchallenged, right? And, and going down a, you know, path that wouldn't be productive.

Bill LuMaye: Mm-hmm. [00:31:00] Well, what do, what do you even advise businesses if they're in a situation where maybe they don't have the collateral you're seeking or, you know, all of the other things that sometimes businesses, especially young ones, don't have maybe the greatest financials, or they...

You know what I'm talking about. What do you do? Are you open-minded to talk, and is there a way businesses, Jim, can prepare themselves to sit down and talk to gentlemen like this?

Jim Baker: I think ultimately it's just about being 100% transparent and honest. Um- Yeah ... you know, there are situations where you have small businesses that are growing.

The question I've always asked them is, "Are you funding losses or are you funding growth?" If you're funding growth, then let's, you know, let me introduce you to a couple banks and, you know, hopefully, um, there could be some money that could come your way in the form of a line of credit or a short-term loan.

Or if you wanna go through the gauntlet of the SBA... Right ... I don't [00:32:00] know why anybody would wanna do that, um, then go for it. But I do think that... Or if there's other ways. I mean, maybe you're not ready for a bank yet, but you're, maybe there's an individual out there that can be a lender to you or an investor to you.

And I think if we could just get you over that hump, um, where you, because you don't have any personal assets, it's just your business, you know, then you might be more attractive to a bank down the road. So that's a question for you. I mean, do you find it helpful with these smaller businesses that have had other investors that have net worth and/or the angel lender out there?

Does that, is that a, a positive for you or is that a negative for you?

David Byerley: No, that, that would be a positive. I mean, the first round, go to your friends and family round. So if you can't- You know, get money from a bank. Hopefully you can find some friends or family that would help you, or get the angel investor.

There's lots of... And especially where we are here in the Triangle, there's so many, um, of these groups that will come in and if they see a good concept and they trust the [00:33:00] business owner and the, and the idea, that they'd probably be open to investing in a company. And I mean, oftentimes, you know, we could provide the treasury systems and whatnot, but somet- companies are just not bankable to a certain point, and that's the s- that's one of the troubles with smaller businesses, that they, they have to get to that point.

But I think it's just a matter of continuing to, to meet with banks, talk to banks, um, be open and transparent, as we've said many times, and at some point, if the idea's good enough, I mean, there will be a lender who would be interested in doing that deal.

Jim Baker: I think the bigger question is educate us on...

You're kind of, both of you are kinda stuck in the middle, right? Mm-hmm. Your goal is to... And you get compensated for bringing in companies. Mm-hmm. And so you want it to work. But then you got the- Yeah ... the bowels of the bank. You know, that throw their AI in there and their analytics and everything else, and they could kill a deal.

Um, [00:34:00] so you're trying to finesse the company to provide the proper finances, hopefully advise them on how to run their business a little bit better so they could pass, you know, the dark shade test, you know, behind the scenes. But I think a lot of businesses out there don't really understand how a bank works, and you guys...

And they might be upset sometimes and go, "Wow, I really love Preston and Dave. They're great people. Man, they said they were gonna meet my partner, and then suddenly, boom, I'm done. You know, Fifth Third just kicked me to the curb. Now I gotta go out and find another bank." So walk us through why the regulations and all this other fun stuff that nobody really knows about that, you know, banks have to do, but the rest of the world doesn't really understand that.

So make us sympathetic to a bank if you can. Okay.

 Preston Bergen: So I, so I'll s- I'll preface that with, um- Mike, do you want a

Bill LuMaye: tissue now? 'Cause I think they can do it.

 Preston Bergen: Yeah. I'll preface that with i- [00:35:00] So sometimes the answer is no, right? But it's important to, to inform them why and what their alternatives are. You know, it's easy to say no and walk away, but, you know, we're thinking long-term about our reputation, our brand, and that sort of thing.

So we're typically focused on longer term. Yeah, it doesn't work now. Here's how, you know, my recommendations for in the short term, or you should talk to this person for ideas or whatever that may be. But, um, but what happens sometimes with an existing relationship where there's a real change in the business, right, for the negative We are always, um, grading the risk profile of a given client, and that's, um, we do that because that's good business and understanding what our risks are and the level of risk and that sort [00:36:00] of thing.

That's the business we're in, taking measured risk. Um, it's also required for the regulatory bodies. And, um, when you pass certain thresholds, and some of them are really discreet, you know, leverage for example is really discreet, total debt is really discreet, then you have to reserve a greater proportion of capital and it becomes really punitive to maintain that, that relationship.

And so typically by that point, you know, we're talking with them about how are you addressing the issues and that sort of thing. And, um, they typically comes to either we're not gonna be able to continue, you need to refinance and here are some s- we'll typically help them. Mm-hmm. 'Cause again, we're trying to preserve a reputation and that, and that sort of thing.

But I explained probably 30 years ago to a [00:37:00] client that had a significant negative change because they didn't hedge their foreign currency exposure, lost half their equity, and it was a 30-year relationship with the bank at, at Wachovia when I was at Wachovia. And I said, "Your risk profile is simply moved outside of our appetite."

And, um, and they, they understood. It wasn't, y- you know, w- it wasn't, it could've been emotional, and it wasn't. And, and, um, there were a lot of people that looked at this. This is not me making a caveat or, or a cavalier decision or somebody else in the bank and, but that was the truth of it. They had gone from one position to really another, and they had to transition to a very different kind of lending arrangement.

But it, it happens, hopefully not very often, but it happens.

Jim Baker: And are there times where the regulators will spot check some of your clients- Mm ... and say, "Hey, this company over here is out of compliance. Why are they still working with you?" Does that [00:38:00] happen?

 Preston Bergen: It, it happens. It doesn't happen very much because, um, if you want to be, um- You know, a vibrant company, y- you need to have good systems to maintain compliance with all, all the regulators, and that's always our approach.

We wanna be, um, viewed favorably by the regulators for having responsible systems, being responsive to them, and engaging them when there's any kind of disagreement. And, um, you know, we just completed an acquisition in February that is predicated on us acting responsibly, compliance with the regulations, and, and having good reputation.

David Byerley: Yeah, one thing I might add is, so within any bank, and I know we do, we have what we call credit risk review. So this is an internal group that comes in behind guys like myself and Preston. You know, we've gone ahead and, and done a deal. We've underwritten it. We've risk rated it. So they come in after the fact and say, "Do we agree with the risk grade [00:39:00] that was assigned?"

Because they're trying to look at it in the eyes of the regulators. So there's... I mean, I've had cases where they've said, "No, we, we think you missed that," and then they downgrade the credit, which is, that's an embarrassment for guys like us.

Bill LuMaye: Sure.

David Byerley: So we never wanna get to that point. But that's another, um, kind of a safety, um, measure to make sure that we're adhering to what the regulators are asking for, is that we have that internal group that comes in and does that for us.

Jim Baker: So why do certain banks You mentioned it before, got a relationship with Fifth Third that suddenly the business changes and they need to go elsewhere. So if the regulators are the regulators- Mm-hmm ... why are there other banks that might be willing to take on- Sure ... that client that you can't take on anymore?

Well,

David Byerley: yeah, that's a good question. I mean, sometimes if it, you know, if, you know, a client of the bank, there's been issues, you know, maybe it's a... They've had poor performance for several years. They haven't worked with the bank the way they probably should have. [00:40:00] They haven't been transparent. At some point, the bank, we get...

It's banker fatigue, right? And the bankers say, "Listen, you know, we've tried to help you, but you're not gonna... You know, you're not really listening to what we're trying to tell you. You know, we recommend you go elsewhere." And there's enough new banks, everybody's looking for business, and this is a growing mar- every...

I don't know how many banks are in our market today, but- A lot ... it seems every time you pick up the paper or look online, there's a new bank opening or putting up a shingle. So they're looking for business. So they may take a business that may be a little more risky than what they would typically do just to get a, a footprint and, and gain some business in the market.

Bill LuMaye: May I ask because- Sure ... um, businesses, now let's look from their perspective, um, at you guys. W- they're probably shopping as well, are they not? So- They

David Byerley: are ...

Bill LuMaye: why you? Why should they pick you? What makes you stand out above all the others that are out there?

David Byerley: That's a great question.

 Preston Bergen: It's, it's interesting.

There's a range of size of [00:41:00] banks, and they, um, they behave, um, and have capabilities that are reflective somewhat of their scale. And I like to think that Fifth Third is kind of in the sweet spot, right? We're the ninth largest bank in the country, so we're, we're not, There are four banks that are above a trillion in assets.

Um, we're about 300 million, or billion rather. And, um, but one of the things I mentioned earlier is we've been very... We've led the industry in investing in technology. So of our last eight acquisitions, nine were fintechs, and those are driving systems for both our clients in internal use to drive efficiency, and in the case where we use them for clients, it's automating processes, you know, matching invoices using AI and machine learning.

So it's... That's probably our [00:42:00] most differentiated capability is our commercial payments area, and that is relevant to every company because everybody has deposit accounts- Mm-hmm ... and has to make, you know, make collections and make payments. And so, um, so that's sort of, The technology part. The other side is we're in a, in a situation where we're very ambitious about our growth in the Southeast, and you've seen us grow really dramatically.

Um, we're building, I think, 50 to 60 branches a year in the S- Southeast, and, um, that's just one visible metric of our growth and investment in, in growing in the Southeast. And so we're hungry, if you, if you wanna say it that way, and anxious to do business with more companies

Jim Baker: Digressing for a second 'cause since you brought it up. Right. [00:43:00] I'm an old guy. I don't like going to a bank. I wanna do everything online, and if I need cash, I just pop the ATM and move on The younger people absolutely don't wanna go to a bank. So I'm wondering, and it's not just Fifth Third, but it seems like it's every bank, where is it a real estate play where you're doing all these branches and going old school, or is, is there something I'm missing with having these branches out there that helps you get more business?

 Preston Bergen: So that's a great question. And realize not all branches are the same, and not all companies operate the branches the same way.

Jim Baker: That

 Preston Bergen: is true. And so our CEO is regularly quizzed on earnings calls about, "You're spending so much money on branches." And, you know, until the last year or two, we w- Fifth Third and Chase were the only companies building net new branches.

Now- ... the, the, the market is coming back, but, um, I'll tell you one thing [00:44:00] about Fifth Third branches. Our staff doesn't sit inside and wait for people to come in. They're doing what I call evangelism, right? They're, they're... have assigned hours every week to go outside and do everything from account opening promotions at a new apartment complex to calling on small businesses and, and that sort of thing, and it is very accretive to our shareholders, and we wouldn't do it otherwise.

But it also helps our business because it's visibility, brand awareness. There's a perception by a lot of finance professionals that are clients that they find comfort in having branches nearby, but there's no need for them to ever go to a branch if they're a commercial organization because we have every system to get everything from cash to checks and other payment sources into their accounts without them physically touching it and bringing it to a branch.

David Byerley: [00:45:00] I, I think it also shows a commitment to the community. We have, what, 31 branches here in the Triangle. Yeah. And, um, I mean, if you're a business owner, you see, you drive around, you see a Fifth Third here, you see a Fifth Third there, I mean, that's a commitment that we've shown. You know, it's a big investment.

Each branch is, what, $3 million, give or take?

Bill LuMaye: Yeah.

David Byerley: So it's a sizable amount of money that gets invested within the Triangle community, so.

Bill LuMaye: Oh, I can see where it would be-

David Byerley: Mm-hmm ...

Bill LuMaye: add to the credibility-

David Byerley: Yes ...

Bill LuMaye: of the overall name. Um, I wanted to ask, I mean, how is business? I mean, um, you know how the economy hits and businesses grow and businesses go away.

So from your perspective, you're out there looking at 20 million plus companies. Mm-hmm. How's it going?

David Byerley: Well, we're in a growth market. I mean, the Triangle is terrific. It

Bill LuMaye: is,

David Byerley: yes. Triad is terrific. Um, you know, we're, we're very busy. We're getting a lot of looks. Um, we've had some great successes in 2026, and a lot more in the pipeline.

Yeah. So, I mean, I've been pretty pleased with, um, kind of where we are [00:46:00] right now. And you see it on the bigger scale. I mean, you're looking at the entire region.

 Preston Bergen: Yeah. But- We're seeing... We're doing a lot of acquisition financing So these are acquisitions of new companies by private equity firms or sponsors or family offices.

We work with all of those. And it's customers buying, buying other companies to grow through acquisition. So that's interesting, and part of it's a reflection of the baby boomers aging out, right? Right. Not all of them transition to family. Some of them exit. But there's a lot of activity. We're very busy.

Bill LuMaye: Well, that's probably good news for all of us.

Jim Baker: In

David Byerley: this area- There's a little guy down here saying, "

Jim Baker: Hey,

David Byerley: things are going

Jim Baker: all

 Preston Bergen: right." Yeah, yeah. I, I would tell you, we were just with our chief economist, and if you look at the consumer market, it's very, um, the top third haven't noticed any economic pressures and they're spending a lot.

Bill LuMaye: Yes.

 Preston Bergen: The bottom third are reined in their spending [00:47:00] tremendously- Yes ... but that top third is covering for them, so to speak, and keeping, you know, consumer demand growing. So, um, there, there are some cracks in the economy so I don't wanna make light of it. But the, the business segment we serve tends to be doing generally very well.

Bill LuMaye: Terrific.

 Preston Bergen: This has been great.

Bill LuMaye: It has.

 Preston Bergen: Hopefully the-

Bill LuMaye: I've learned a lot ...

 Preston Bergen: people learn. Yeah.

Bill LuMaye: Yeah. I'm gonna get me that $20 million company soon.

Jim Baker: You should.

Bill LuMaye: You go buy it. And I'll call you guys. Yeah, go buy it. They can finance it. I know. They'd appreciate it.

 Preston Bergen: I'll tell you an interesting thing. There are a lot of very unsexy businesses- Oh

that are in, in that size range- Oh, I bet ... or, or bigger or smaller and, and where people are selling to retire and they don't have a successor. You'd be amazed at the valuations for very boring businesses. You know, we're all trained to go to college and be finance professionals, but there are [00:48:00] a lot of folks with plumbing businesses- Oh, I'm sure

electrical businesses- Yeah ... HVAC bus- you know, and o- of course all kinds of companies that are, um, retiring very well

Bill LuMaye: See, and that's where the branches come into play because those are the folks going to the branch. You never know where that next-

Jim Baker: Right ... CEO

Bill LuMaye: is coming from.

Jim Baker: Yeah. I guess I probably wouldn't make any money- You should

Bill LuMaye: go

Jim Baker: to the bank more often

advising banks, but, um, when it comes to branches, but-

 Preston Bergen: Yeah ...

Jim Baker: unfortunately I have to go to a branch once in a blue moon. It's like going into a- Oh, I know, I know ... the gulag. Yeah. It's it's dark. It's yeah, it's just- You

 Preston Bergen: need to go to a Fifth Third branch.

Jim Baker: There you go ... and you guys throw your little polos on, um, shirts instead of your jackets and ties to make everybody welcome and it's like if I can avoid it, I avoid it.

If

 Preston Bergen: you come to a Fifth Third branch, we'll give you a bottled water or a cup of coffee. I

Jim Baker: don't want that. I just wanna do my transaction and leave. That's all I wanna do. Right,

Bill LuMaye: right. I think that was better saved for the other show you had going. A hot take. But no, this has been wonderful. I [00:49:00] appreciate your time, gentlemen.

I know you're busy and I learned an awful lot. This is usually where we say, "Well, we've, we've talked for however long we have. Um, what do we take away from it?" Yeah, so- The five takeaways ...

Jim Baker: we need to hear your wisdom.

Bill LuMaye: Yeah.

David Byerley: Five

Bill LuMaye: takeaways. Y- yeah. Well, you can split it up so it'd be like two and a half each.

Jim Baker: Or you can go three and three.

Bill LuMaye: Or three and three. I don't mind.

Jim Baker: Or you get 80% of that. How's that? Yeah. You can do four. Yeah.

Bill LuMaye: I'd like to see your spreadsheet first, though, before you... No, I'm teasing. Just based on all the things we've, we've talked about, some of the, the maybe the top five things that businesses who might be watching right now really ought to think about.

David Byerley: You know, I, I think number one would be, is form a relationship with a banker. You know, engage a bank early. I think that's key.

Bill LuMaye: You mean they should go to the branch?

Jim Baker: Maybe come to- No, they should probably in this case answer the phone or an email.

Bill LuMaye: Yeah, I was teasing. I'm sorry.

David Byerley: No, if a, if a business owner's looking to, um...

If he's running a business or starting a [00:50:00] business, I mean, get your team in place, which involves, you know, a banker, a CPA, you know, maybe an attorney, a family friend who can be an advisor or a mentor. I mean, I think that, um, you know, for somebody starting a company, if you have an active company, um, you know, I think if a banker calls, you never, you can never know too many banks, right?

I, I think it's important to, um, you know, if you're a growing business, make sure you're connected with a bank that can grow with you, right? And, um, you know, don't look at rate as the s- you know, deciding factor. You gotta look at everything they offer. You know, interest rate, as you said before, could be a 10 or 15 basis point difference.

You know, big deal, but if you can't get what you need from that bank, what's that gonna do for you?

Bill LuMaye: Wow.

David Byerley: Great

Bill LuMaye: point. Right? Yeah.

 Preston Bergen: Yeah, and I'd start local. I I've had the good fortune to talk to CFOs across the country, and I've asked them this question: "Do you prefer local or somebody that gets off an airplane and y- you know, is really specialized in your industry?"[00:51:00]

And every single one has said, "We really love it when they're local." And if you think about it, accessibility, accountability. And so I- my encouragement is to look at, you know, local institutions. And, um, again, think long-term. Who can serve your needs now and, and serve it, you know, in three years when you've grown?

However much you expect to grow, but you wanna find somebody who's got the capabilities that match up with your needs. That's not always easy to know without talking to them.

Jim Baker: It's a good point too- And, yeah ... 'cause in, so by our business we were fortunate to go from zero to 55 million, and we had probably four different banking relationships along the way.

And one of those was terminated because they were acquired, and we couldn't work with them anymore because they're, we were too small for them. But the other three, you know, we just had to... We needed different things. We needed foreign currency. Mm-hmm. We needed, you know, [00:52:00] lock boxes and everything else, so we had to change along the way.

And I will say, if you could find that bank that can grow with you, try to f- you know, get that bank because it's absolutely... It's like going to the dentist. It's torture changing banks as a business. It really is. So try to avoid that if you can.

 Preston Bergen: Yeah. Right. And, and again- Gosh ... think longer term. I- if you think about a partnership, a true partnership, not just a vendor kind of relationship, what you want is, you know, your, your, we call it relationship manager, which is your day-to-day contact.

You want it to be somebody that you get along with. They're pleasant to work with. You know, you shouldn't have, it shouldn't be painful. But but make sure that you meet other people, particularly up the ladder, so that you have a broader interface with the, with the bank and they'll, and they should want a broader interface with your company.

That way if somebody gets hit by a bus, or gets promoted, or [00:53:00] changes companies, you've got continuity. And probably the greatest point of sensitivity for bank clients is continuity when somebody... Especially if they get promoted. So it's one thing if they leave for whatever reason, but if the bank s- takes them away from them it's, it- you, you, you're not starting over, but you're kind of starting over.

Bill LuMaye: Yeah. Sure.

 Preston Bergen: And so, um, and then reputation is, is important, but it's kinda tough to evaluate reputation, and you just have to talk to people. And that might be your, your accountant. It could be other people that you know in the community that have business relationships with banks. That's a good way to get a sense.

Bill LuMaye: Great advice Yeah All of it. Gentlemen, good luck to you. Sounds like you're doing very well, but thank you for your time today. Yeah, thank you. Appreciate it.

 Preston Bergen: Thank you.

Bill LuMaye: Yeah, thanks. Appreciate it [00:54:00]