Opening its doors in 2019 in midtown Manhattan, Piermont Bank is one of a recent crop of de novo banks that got off the ground before the coronavirus recession. Led by Wendy Cai-Lee, a veteran of East West Bank, Deloitte, Citi and Chase, Piermont focuses on the financial needs of small and midsize businesses and their owners. Currently operating in the greater New York tri-state market, Piermont has plans to branch out to California and other East Coast markets. Edited excerpts follow; listen to the full interview, which also covers Piermont’s de novo experience, on the ABA Banking Journal Podcast.Q Tell us about Piermont Bank. A We’re pretty simple and straightforward. We were put together as a pure commercial bank to focus on the lower middle market. So, we define lower middle market as a loan sized between $1 million and $10 million. Primarily, these are still privately owned, often multigenerational family-owned business or still entrepreneur-led. Often the business itself has a core business but also has the real estate arm to it. It may have other ancillary businesses, because often a family-owned business tends to do that after a few generations of owning it. So that’s our target audience. Q How do the business needs of multigenerational family businesses compare to those of other small middle-market businesses? A I think that difference tends to be the real estate component. For example, we often see that the family started out with, say, an apparel business. Now they have learned throughout the years that it’s best that if you purchase the building that you’re occupying, in the event of a landlord increasing your rent or potentially asking you to leave. So often they end up becoming landlords by accident. I have a few clients now in the third generation; they own a portfolio of 20 to 30 buildings, and they call themselves “accidental landlords.”
That’s really the main difference. I have seen where other small business, especially the ones that are around for less than five years, tend to be still at a phase where they’re focusing on their core business. When it comes to lending and banking services, then these multigenerational family-owned businesses tend to need much broader sets of banking services. They need the working capital line, they’ll need commercial real estate, owner-occupied sometimes; just as often, they own multifamily assets. So [the services they need]tend to have a broader range.Q One of the biggest advantages that de novo banks report is that a new bank can build its tech stack from the ground up. Can you talk about how Piermont Bank approaches technology, and how this approach helps you serve these core clients? A The way that we built Piermont was exactly what you just said. Essentially, we have a much more streamlined platform that we can execute to deliver the same products and services, just much more efficiently. We like to call ourselves tech-enabled, but not tech-driven. For us, it’s about how to leverage technology to allow us to deliver the services and the product better. We want to be that human touch and provide that creative thinking.
That’s actually coming back to why we started Piermont. After 10 years of no de novo banks, 10 years of consolidation and lots of M&A activity. Now we have two extreme ends. You have much larger banks—even the regional banks are much larger—where they can’t afford to have that one-on-one hand-holding approach, or you have the tiny community banks, where they may not have the right product knowledge as well as the banker expertise to actually deliver those. We thought that we could fill that void: let’s take technology, make this platform really easy to use, while we can still do that hand-holding, that one-on-one approach—combining the best of both worlds.
To illustrate my point, we do our loan decisioning in three days, versus usually two to three weeks for the larger bank to turn around a term sheet or get a loan decision made. We can book a commercial loan in under 35 days. That’s what technology has been able to do for Piermont. And we built up one fully integrated platform. Whether it’s our operations team or our lenders, they don’t have to log on to five different screens internally to get something done
Obviously, Piermont wasn’t built anticipating there will be a global health crisis that led to our financial meltdown. But for us, it worked out nicely because we were able to go 100 percent remote back in early March and be able to book loans, talk to clients, serve clients, send wires—everything from everyone’s home.Q How does being a woman-founded bank with a board that is 50 percent female affect Piermont’s ability to serve its target market? A It’s obviously not by accident. It was really about keeping our eyes wide open and being conscious about looking for the right mix of the people to be on the board, and then we ended up with a board that’s half women. It’s resonated in the marketplace, even though we’re not designed to be just focusing on women-owned businesses, but we certainly do have a keen interest because of who we are. Female entrepreneurs feel quite comfortable reaching out to us.
We’ve received a lot of proactive outreach to the bank, saying “I’m running this type of business. I’ve been in this business for this many years. I hear that your new bank is run by a group of women so we figure we’ll have better luck in getting the right service from you.” It’s been very interesting to see how well it’s been resonating among female entrepreneurs.Q Can you talk about some of the unique challenges women-owned and minority-owned businesses face and how Piermont responds to those? A As institutions, we get into, after being in operation for X number of years, a bad habit of saying, “Okay, these are our products and services; this is what we want to push.” But for us, we have made a very deliberate decision that as we grow, we need to constantly be reflecting on what does the client want versus what do we want to sell.
And what’s important to them is not very different, meaning that whether it’s female or minority-owned or anything else. I think if there’s any special need or difference in needs, it’s really about the business size: What stage of the business are they in? We’ve been telling clients that right-sizing your support is important. The right size for your business at that particular time makes a big difference because you don’t want to be the small fish in the giant pond, and you also don’t want to be the biggest fish in a small pond either.
If they serve your type of business, your size of business, then they understand the pain points that you’re going through. We really don’t see anything that’s very specific to minority-owned, but it’s more about the stage of business that they’re in.