Local lender KeyBank is succeeding by going back to its roots, lending to small and mid-size manufacturers
By James Sterngold, Wall Street Journal
MENTOR, Ohio—The recession threw up plenty of hurdles for MT Heat Treat, an industrial heat-treatment plant here in the Rust Belt.
It struggled to hold onto employees as revenues fell by nearly half and some customers went bust, said Sonja Mathews, whose family owns the operation. But one problem was unexpected: The banks she thought they could rely on turned them down for loans, even when offered ample security.
“At one time we wanted a $300,000 loan, and for that they wanted almost $2 million in collateral, including this building,” she says. “But even with that, they still wouldn’t do it.”
These days Ms. Mathews, 48 years old, is too busy for bitterness. The giant ovens in the hangar-sized plant are roaring and she is running three shifts, 24 hours a day, thanks to the company’s new bank that has kicked in all the financing it needs.
KeyBank, based in nearby Cleveland, provided last year not just an initial $680,000 loan but another $200,000 for a new conveyer system so the company could speed up the heating and hardening process of steel parts. The components are used in everything from industrial machinery to military hardware and power plants.
Such prosaic lending has brought new life to Ms. Mathews’ business—and also to her bank.
“They’re the kind of client we want now,” says Ed Korsok, a KeyBank vice president in Mentor, about 25 miles east of Cleveland, who initiated the relationship as part of the bank’s new focus on industrial businesses—right in its backyard.