Federal Reserve Governor Elizabeth Duke, one of the keynote speakers at the upcoming Exploring Innovation conference, earlier this year spoke of her experience as a community banker—experience that she says “adds value” to her service on the Board of Governors.
Speaking to an audience at her alma mater, the University of North Carolina-Chapel Hill, Duke said, “Much of my time as a community banker was spent lending to small businesses. In many banks today, small business lending is an automated process that relies on computers to analyze data and determine a borrower's creditworthiness.
“For me, the process was personal. It involved sitting eyeball to eyeball across the table from my customer. More often than not, the customer was someone I knew well, and had been lending to for years,” she said. “Occasionally, he or she represented the second or even third generation to run the business. Or the business itself was the second or third venture that I had financed for the same borrower. There were financial statements to be gathered and analyzed. Usually it was difficult, if not impossible, to separate the business and personal finances. But understanding the borrower's ability to successfully run a business was just as important as analyzing the numbers.
“I spent a lot of time talking to business owners about their businesses. In fact, sometimes I thought they came in looking for a sounding board for their ideas as much as they were looking for money. And I couldn't always make the loan,” she said.
You can meet Duke at this year’s Exploring Innovation: A Conference on Community Development Finance, scheduled for May 9-11 in St. Louis. See the Exploring Innovation site for more information and to register.