Local lenders are making money and loans the old-fashioned way

Wiseway Transportation Service recently got a $2.1 million loan from Bremer Bank to build a new truck terminal about 60 miles south of Chicago.

"Our business is up this year and we're expecting the next couple of years to open new opportunities," said Bob Schmidt, chief financial officer of Wiseway, a 20-year-old, 275-employee, 160-tractor outfit that hauls furniture around America. "There have been bankruptcies in the industry and the number of trucks and drivers has declined. When the economy turns around, we are looking to expand."

Meanwhile, Brooklyn Park-based Nystrom Inc, a 175-employee manufacturer of custom-made metal products for the commercial construction industry, just borrowed an additional $1 million to finance a small acquisition and for expansion.

"We serve the commercial construction industry and we're still riding the wave," said CEO Scott Sustacek. "We expect economic headwinds by spring. But we're adding products and partnering internationally, particularly in the Middle East -- the United Arab Emirates, Saudi Arabia and Qatar. We're going to earn some of those 'petrol dollars' back."

So if there's a global credit crisis, how do a trucking company and a custom manufacturer get expansion capital?

Because not all banks are created equal.

The Wall Street-induced credit debacle grew out of "money center" banks such as Citigroup and investment banks such as Lehman Brothers, Merrill Lynch and Bear Stearns that got in trouble through heavy borrowing to finance mortgage-backed bond portfolios in the secondary mortgage market.

Conventional banking model

But banks such as Bremer Bank and Venture Bank fund operations largely with low-cost customer deposits through checking, savings accounts and certificates of deposit. So while Wall Street tremors shocked the U.S. and world financial system, community bankers marched along with their conservative but reliable business model.

"It's tough for our bank and lots of other bankers I know to be lumped in with Lehman Brothers," said Mike Zenk, a 30-year community lender and CEO of Venture Bank of Bloomington and Golden Valley. "Customers keep seeing the news and calling to say they heard their line of credit is gone.

"But our loans have grown 20 percent over the last year. Most customers are doing great. We don't buy portfolios of suspect securities and we're loaning money to good small-business customers."

Steve Meads, CEO of Bremer Banks in the Twin Cities, said he expects commercial loan growth of about 6 percent this year. But he said consumer lending is down 2.5 percent this year as wary retail borrowers curb spending in an uncertain economy. Bremer makes loans up to $25 million to commercial customers.

Bremer funded the recent expansions of Wiseway and Nystrom, strong customers growing at a challenging time.

"We're going to look for opportunities to expand and acquire other businesses," said Sustacek of Nystrom Inc., which annual revenues of about $40 million.

The fact remains that the credit crisis is having an adverse impact nationally.

For example, last week the U.S. Small Business Administration reported that SBA-insured lending has declined in recent months. That's partly because huge lenders are cutting all credit, including SBA loans.

Bremer's Paul Flood said SBA loans at Bremer are up 16 percent this year although SBA loans in Minnesota and nationwide are down. The difference is that a couple of years ago, there were more SBA lenders, including General Electric and Lehman Brothers, in the market.