The housing and credit crises are compromising efforts by some pro dealers to keep open lines of communications and credit with their banks, especially now that there's not much borrowing or lending going on.

STATUS UPDATE: National Home Centers in Springdale, Ark., reports daily to its banks about its collateralized debt. But local banks aren't lending, and National has been surviving on cash reserves "that aren't endless," says Brent Hanby, National's executive vice president. Photo: Brandi Simons Banks haven't ostracized building materials dealers to anywhere near the same degree they have contractors and home builders. But dealers say lenders have a tendency to put their companies in the same leaky financial boat as their struggling customers. Those perceptions haven't been helped by consolidation among banks, which in more than a few cases have uncoupled the bond that historically has linked local businesses with their local account managers.

As they've downsized in response to economic turmoil, dealers have also become more financially self-reliant. But growth-minded dealers can't remain estranged from banks for too long; eventually, they will need outside capital again. And most dealers acknowledge that their interests are best served by maintaining regular contact with their banks in good times and bad.

The care and feeding of banks these days involves a lot more than quarterly reports and the occasional round of golf. (See "Greater Expectations," below.) Dealers say banks are demanding detailed financial information on a timely basis. Some are requiring more equity before they'll lend. Others want more of a stake in their customers' businesses through oversight.

Dealers, begrudgingly, are complying with these demands because they know that switching to a new bank that understands their particular needs would be more mental anguish than they're willing to tolerate right now. "Business is a relationship, and it would be hard–not impossible, but hard–to walk into a new bank and have the same thing," says Edgar Buck, a South Carolina?based entrepreneur whose business interests include the pro dealer Buck Lumber.

Longevity Counts

PATIENCE AND PERSISTENCE: It took Wayne Carver of Stephens Inc. in Fuquay-Varina, N.C., three years to get his bank's account manager to understand his company's P&L. Now that manager asks Carver if his line of credit is large enough. Photo: Charles Gupton Financial institutions have been roundly and justly criticized for their unwillingness to lend after receiving billions in federal bailout money. But depending on the bank and market, the spigot hasn't been turned off entirely. (See "Staying Ahead of the Game," page 33.) And dealers who have managed to stick with the same bank, through thick and thin and changes in ownership and personnel, say their companies' access to credit hasn't been impinged for the most part.

"Our bank has said they are ready to loan us money if we need it; in fact, they keep asking 'Why don't you guys do something that you'll need money for?'" says John Ganahl, CFO with the eight-yard Ganahl Lumber of Anaheim, Calif., which has been with Bank of America for 85 years. "The very existence of Bank of America has allowed us to grow."

Super Enterprises, a Marvin Windows distributor based in Melville, N.Y., has dealt with the same bank for decades, even as it went from being a branch of NatWest to Fleet to now Bank of America. "We've been around since 1943, and banks very much want to do business with us," says Super's president, Keith Lavitt. "We've always performed well, and our lender knows what our plans will be for the next several years." He also notes that Super has "significant assets," including the land its facilities sit on, "which give the banks more confidence."

Super recently financed two new facilities in Georgia with bank loans. It also maintains an uncollateralized line of credit that, according to Lavitt, it uses primarily in the early months of the year when it's paying out rebates to its dealer-clients or profit sharing to its employees. And Super calls on its bank to provide occasional financing when it agrees to carry inventory for one of its big customers.

Over the past two years, Lezzer Lumber has borrowed just under $10 million to acquire a lumberyard company with three locations and to expand into commercial framing. It also has a credit line that fluctuates between $4 million and $10 million.

Joel Troxell, CFO for this Curwensville, Pa.?based dealer, thinks Lezzer, which operates 11 yards, has an advantage because it works with a regional lender rather than a national giant. "We're not just another number," says Troxell. He's on the phone with his account manager weekly, which is important at a time when the spread between what his company borrows monthly for its operating expenses against receivables payments coming in from its customers "has been getting a little wider than we'd like it to be."