March 25, 2019
AS SEEN IN
Banking pioneer scores with own venture
Savoy Bank survives crisis to prove doubters wrong
Senior Reporter - Finance
After 25 years at Citibank, Elena Sisti decided she wanted to start her own bank. Her husband begged her to reconsider. "He offered me $200,000 not to do this," she recalled. Nevertheless, she persisted. In 2008 she launched Savoy Bank.
The institution is one of only a handful of new commercial banks to open in the U.S. since that time and only the second woman-owned bank in the city's history. The initial one, First Women's Bank, got started in 1975 and changed its name to First New York Bank for Business in 1989, but regulators closed it in 1992 after a pile of real estate loans went bad.
Savoy looks as if it will be around awhile. With just a single branch in a Midtown office building, it has grown to about $350 million in assets, $35 million in capital and 41 employees. Despite having opened just as the financial crisis started and taking five years to break even, last year Savoy generated $4.4 million in profit from serving small businesses, such as supermarkets and gas stations.
"It's been a struggle, but the bank is doing what I wanted it to do," said Sisti, who has handed over the chief executive position to a male colleague but remains on the board and sits on the committee that approves all loans. "We can't grow any faster than this."
Sisti's success raises a lot of questions, beginning with: Why is a woman-owned bank still unusual? Bankers talk all day long about the importance of diversity and inclusivity, but they struggle to back up their words with deeds. In New York, women hold only 21% of the senior-level positions in finance and insurance, down from 23% in 2008, according to figures from the U.S. Equal Employment Opportunity Commission. Bloomberg News recently reported that UBS docked the bonus pay of some women who took maternity leave.
Sisti said she encountered none of that boys' club stuff during the three years that she was organizing her bank. "The female thing never came up," she said.
Still, she talked to 200 potential backers before finding the right 20. Federal regulators would not approve her application because they did not like her plan to focus on Washington Heights, so she turned to New York state regulators. They required that she have a lease, a CEO, a strategic plan and investors committed to putting up at least 30% of the capital. She then had 90 days to raise the rest or the whole thing would be off. Sisti put in $570,000 of her own cash.
The arduous process surely helps explain why the formation of new banks has ground almost to a halt. Since 2008 no new banks have been launched in New York, and only 11 have opened nationwide since 2010. Combine that with a seemingly endless consolidation wave and the number of banks in the U.S. has slipped to 5,450 from 8,000 in 2010, according to figures from the American Bankers Association.
In December the Federal Deposit Insurance Corp. said it was seeking to streamline the application process. Banking groups say regulators need to do more than that for startups. Among other things, they want regulators to ease capital requirements and shorten the application process to no more than 120 days from the average of 174.
"There needs to be a fundamental shift in the overly conservative attitude of regulators towards de novo banking," wrote the Independent Community Bankers Association in a comment letter. "No longer should the FDIC expect that every de novo applicant must convincingly demonstrate that there is zero chance the bank will fail."
Sisti said she could see taking Savoy public one day and building it into a bank with $1 billion in assets. "We can easily get there just doing what we're doing," she said. "Just don't give up control."
MAGDA SOUFFRONT / Vice President,
Marketing Manager / SAVOY BANK
Magda Souffront helped found Savoy Bank in 2008 and currently serves as its vice president and marketing manager. A native of the Dominican Republic, Souffront moved to New York as a teenager with her family. She spent 32 years at Citibank, where she started as an account officer and climbed her way to vice presidentin charge of branches. She left the firm in 2005 to help establish Savoy Bank, a community financial institution that focuses on local small businesses, particularly those owned by underserved members of the community. She previously served on the board of the Washington Heights and Inwood Development Corporation.
ELENA SISTI / Founder, Chairperson Emeritus
and member of board of directors
Elena Sisti became only the second female bank founder in New York City when she
launched Savoy Bank in 2008. Now chairperson emeritus, Sisti sits on the bank’s board of directors, as well as its credit, asset-liability and audit committees. Prior to founding Savoy Bank, she spent 25 years with Citibank, where she served as director of strategic planning and head of an initiative to re-engineer the bank’s branchnetwork. Sisti serves her community as the treasurer and a board member of the Washington Heights/Inwood
July 19, 2018
Lofts at Lincoln Park Center Opens with Funding from Savoy’s CDFI Program
By Elana Knopp,
Newark Mayor Ras Baraka joined Mid Atlantic Alliance LLC executives Thursday to cut the ribbon on the Lofts at Lincoln Park in the city’s East Ward. The 55,000-square foot, four-story building was developed by Mid-Atlantic and built by local MBE contractor Homeworks Construction and Maintenance. Both the developer and the contractor are MBEs (Minority and Black-owned Enterprises).
More than 90 percent of the residences are currently under contract. “This is another exciting moment in our efforts to build a stronger and more prosperous Newark,” Baraka said. “It brings more and more economic power to our city, enhances our luster as a destination to live, work and play and inspires other developers to join in the transformation of Newark.”
The $7 million development project was funded in part by a $3.6 million loan from Savoy Bank, $600,000 from Motor Vehicle Tax Funding and $300,000 from Newark’s Economic and Housing Development Corporation Funding, with the balance made up by additional redevelopment grants and the developers’ equity.
February 14, 2019
The SBA: Real Estate’s Often Overlooked Capital Source
By Mac Wilcox
President and CEO, Savoy Bank
Embedded in today’s complex web of financing sources, including venture funds, banks, credit unions, fintech lenders and equity investors, is a simple time-tested source of capital for entrepreneurs that tends to become invisible: the Small Business Administration loan.
Smaller firms, whatever their specific lines of business, are eligible for SBA-guaranteed loans for working capital, business acquisition or expansion, retiring more expensive debt, and – often in partnership with community development corporations (CDCs) – acquiring fixed assets, including real estate for the firm’s own use. SBA loans are designed to support small business growth by enabling lenders to originate loans to borrowers unable to meet the down-payment and/or collateral requirements of conventional loans.
Last year, loans guaranteed by the SBA provided approximately $30 billion of financing for smaller companies, and indications are that number will be even larger this year. Women- and minority-owned businesses are accounting for a growing portion of the loans.
As a community bank president, I find that misunderstandings about SBA loans are fairly common. For one thing, neither a perfect credit score nor a lengthy credit history is required for loan eligibility, as some would-be borrowers believe. The truth is, SBA-guaranteed loans generally are available to any small enterprise whose owner can demonstrate a sound business plan, repayment capacity and management expertise.
Equally important, securing an SBA loan is not a complicated, bureaucratic process and even less so if the SBA-approved lender is also a PLP, or Preferred Loan Provider, as Savoy Bank is. A PLP is authorized by the SBA to close SBA loans without prior SBA approval, thereby expediting the closing process.
The SBA administers two widely used guaranteed loan programs: the 7(a) Loan Program, which covers a wide range of small-business needs; and the 504 Loan Program, designed to provide relatively low-cost fixed-rate financing for acquiring fixed assets, such as real estate and machinery.
Under 7(a), the lender closes loans with a partial guaranty from the SBA. The 504 program is a little more complex, however. As noted above, for 504 financing, a small business must apply in partnership with a CDC, a non-profit organization set up to promote economic development within a community. If the application is approved, the SBA and CDC typically loan a total of 40 percent of the project cost, and an SBA-approved lender will make a loan to cover 50 percent. The borrowing business is responsible for the remaining 10 percent, although additional equity may be required.
A full list of CDCs, published by the National Association of Development Companies, can be found at https://www.nadco.org/page/cdclistaz. There are more than 270 CDCs throughout the nation.
To smooth the process of applying for an SBA loan, make sure to have a clearly delineated business plan ready to show prospective lenders, together with personal and small business tax returns and interim financial statements for your business. Avoid the common mistake, especially among start-ups, of conflating personal finance data with the finances of your business. That is a primary reason why decisions on loan applications may get delayed.
Above all, don’t overlook this basic financing tool for growing your business!
SAVOY BANK EARNS SBA SILVER AWARD FOR SMALL-BUSINESS LENDING VOLUME
Manhattan-based Savoy Bank continued to raise its profile as a small-business lender in 2017, earning a Silver Award from the Small Business Administration's New York District Office for the second consecutive year. Savoy Bank's SBA-backed loans to small businesses totaled $21.498 million in 2017, the third highest amount in the Silver Award category ($15-$30 million loaned).
"As both an SBA lender, and a member of the U.S. Treasury Department's Community Development Financial Institution program, Savoy Bank is very proud to help capitalize the vital small businesses that fuel economic growth in this region." says Savoy President Mac Wilcox.
"Our mission is to nourish the 'Small Giants' of the business world."
Savoy's efforts last year helped the SBA's New York District office achieve a new record in SBA-guaranteed lending, with the aggregate of loans surpassing the billion-dollar mark for the first time.
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