Paul had looked out his window and watched Katherine Winter in her car. She could have been crying but he couldn’t be certain. He thought about going outside to comfort her. He badly wanted to hold her in his arms and tell her that everything would be fine, that he would see to it. But what could he say to her that would make a difference? That would be appropriate? Sorry, Frank Winter had screwed up? Sure Frank was intelligent, but he was also naïve. Too naïve to be a successful investor. The man knew how to lend and provide great service to his bank customers; he should have stuck to that. He was too trusting. Especially in the case of doing business with Gerald Folsom.
There was nothing Paul could legally pin on Folsom, but the man always seemed to come out ahead of his partners in any deal. That was the scuttlebutt, anyway. When Frank came to him with Folsom’s prospectuses, Paul told him to walk away. Frank was putting up all the equity; Folsom was getting a significant percent of the deals in return for sweat equity and managing the properties. But Frank ignored his advice. And, to make matters worse, Frank had borrowed much of the equity he’d invested.
Paul reflected on how quickly the banks had indicated they would consider taking over the properties. He’d expected a bigger battle. None of the bankers even hesitated in offering to write off the loans if Katherine signed the properties over to them. He scratched his head and wondered if there was something sinister behind their decisions. Even the banks holding Frank’s First Savings Bank stock were quick to strike a deal in return for Katherine signing away her interest in the stock. Normally, the stock would have had significant equity over and above the loans against the shares. But First Savings Bank’s loan portfolio had deteriorated with the real estate depression brought on by the Tax Reform Act of 1986, so its stock value had declined as well.
Paul told himself he would have to look into all of this at some point. Maybe after things were settled for Katherine and her children.
THURSDAY
JULY 14, 2011
CHAPTER ONE
Katherine Winter looked up at the dais and felt warmth of pride in her son course through her. Twenty-two years had passed since her husband had died, and her son had not wasted one minute on self-pity, nor used his father’s death as an excuse for not giving his best.
Edward attended Central High School, finishing at the top of his class. Then he attended the University of Pennsylvania on a full scholarship, and received his MBA from Harvard Business School, again on a full ride. And he’d always held down a job, even while in school, to cover his out of pocket expenses. Carrie too, had soared, earning her own scholarship. The money Katherine had put aside for their educations had not been needed.
After graduate school, Edward joined the U.S. Army, went to Infantry School at Fort Benning, Georgia, and graduated first in his officer candidate class. His three-year hitch was almost up when Islamic extremists crashed airplanes into the World Trade Center towers and the Pentagon on September 11th. He extended his tour for one year and was assigned to Iraq, where he earned two Purple Hearts, a Silver Star, a Bronze Star, and a Meritorious Service Medal.
The night Edward returned to Philadelphia and civilian life from Iraq, Katherine disclosed to her children she had $425,000, half for each of them. She’d invested the money from Frank’s insurance wisely. But neither of them wanted the money. Katherine was adamant, however. “Just tell me when you want it and it’s yours,” she told them.
Two months later, Edward and Carrie came to her with a proposal. The family of one of Edward’s Harvard classmates owned a chain of fast food restaurants named Hot N’ Chili, specializing in Mexican food in the New Mexico style. Edward’s friend, Peter Mora, had worked in the company’s Santa Fe headquarters since he’d graduated from Harvard and was now in charge of national franchising. Mora had contacted Edward with a proposal to take over the franchise rights for all of Pennsylvania, along with two restaurants that were floundering. He made them a sweetheart deal, waiving the franchise fees in return for them assuming two $250,000 delinquent loans at a local bank covering the costs of the two existing restaurant locations.
Carrie partnered with Edward in the restaurant investment, and both of them agreed to take the money from Katherine only if she joined them as a one-third partner. That was in January 2002.
Carrie worked in the business for two years, but then decided it wasn’t what she wanted. The business was just starting to take off when she announced she was going to join the Army. She went to Officer Candidate School, graduated with her commission as a Second Lieutenant, and was recruited by Special Forces, being promoted to First Lieutenant within the year. She had quickly earned her green beret, jump wings, and a reputation as a rising star. After a year of language training in Arabic, she was assigned to Iraq in an intelligence role. Although women were not permitted to serve in Special Operations assignments, she came as close to being a Special Ops officer as a woman could.
A noise brought Katherine abruptly back to the present. Someone had tapped the microphone on the dais. She refocused on the day’s event and Edward’s recognition for his achievements with Winter Enterprises. Now nine years since forming the company, they owned twenty-four restaurants in and around Philadelphia. The business grossed over $58,000,000 annually and employed four hundred people. Katherine’s dividends from the business enabled her to move from the tiny bungalow in Germantown to a new three-bedroom home on five acres on Philadelphia’s Main Line. Edward and his wife, Betsy, owned their own home in Chestnut Hill. Betsy was pregnant and due in less than four weeks. Carrie was still happily single at twenty-nine years of age and running around the world doing God-knows-what for the Army.
Katherine smiled at Betsy, seated to her left, and then turned to the right to smile at Paul Sanders. Paul had bloomed into a dear friend since Frank died and he now handled Edward’s legal affairs.
“Quite a ride, Kat,” Paul said. “Frank would be proud of all of you.”
FRIDAY
JULY 15, 2011
CHAPTER TWO
Edward Winter was still riding an emotional high from the Chamber of Commerce luncheon yesterday when he arrived for his appointment with Stanley Burns, his account officer and Senior Credit Officer at Broad Street National Bank. He stopped outside the bank entrance and buttoned his suit jacket. He’d worn his banker’s outfit for the appointment today: Blue pinstripe suit, red power tie, and black Ferragamo tasseled loafers. Shifting his black leather briefcase to his left hand, he walked confidently through the entrance to the elevator at the back of the lobby, then rode up one floor to the mezzanine to stop at Burns’ secretary’s desk on the edge of the bank’s executive level. The building dated back to the 1920s and looked like what Edward always thought banks should look like: Marble floors and counters, brass teller cages, and lots of heavy mahogany furniture. He smirked to himself. Considering the amount of interest he paid to the bank on his loans, the least the bank could do was create a plush environment for the customers.
“Hello, Helen. How are you today? Is Mr. Burns treating you well?” This was a standard part of the banter between Edward and Helen. He always told her she could come work for him if she wasn’t being treated well.
“Everything’s fine, Mr. Winter,” the woman said in a monotone, dry voice. “I’ll tell Mr. Burns you’re here.”
Edward was surprised at Helen. She must be having a particularly bad day, he thought. Helen returned a few seconds later.
“You can go in now, Mr. Winter,” she said, an apologetic look on her face.
Edward walked past Helen’s desk into Stanley Burns’ office. Burns stood and greeted him, then ushered him into his usual chair. “Please sit down, Edward,” Burns said, closing the office door and seating himself opposite Edward.
“You look beat, Stan,” Edward said.
Burns shrugged. “The economy’s impacting a lot of our clients.”
Edward passed Burns a financial report his Chief Financial Officer, Nick Scarfatti, had prepared for the second qu
arter ending June 30. “Thank God our business hasn’t been impacted.” He didn’t want to gloat, especially when so many other businesses were suffering, but Edward was more than pleased with the condition of Winter Enterprises, Inc. “You will see in those reports that our sales are up. We’re requesting an increase in our credit to finance the acquisition of seven new sites and the construction of new restaurant buildings in Pittsburg. We’ve already identified the managers for all seven of those stores. We—”
Burns held up a hand, stopping him. “Before you get too far along with this, I need to tell you there are a lot of changes going on around here. We’re . . . I’m sorry to tell you, we will not be able to finance any more of your sites.”
Edward felt as though he’d been punched in the gut. “What are you talking about? Our financial condition has never been better.”
“We just can’t extend you any more credit. That’s it. Plain and simple.”
Edward tried to calm his anger. “Stan, do I recall correctly that you begged me to move my business to Broad Street National three years ago and told me at that time your bank had a statutory loan limit of $40 million to any one customer? We currently owe you $20 million, secured by at least $50 million worth of real estate. We’ve never been late a day on any of our loan payments, and we keep several million dollars in deposits with you. So what the hell’s going on?”
“It’s a different environment out there, Edward. We can’t do what we used to do. It’s just that simple.”
“You keep saying that, Stan. But it’s not simple. We’ve got a huge growth opportunity here. We’re growing market share as our competition is falling by the wayside, closing locations, or going out of business entirely. There’s never been a market more conducive to growth, and now you’re telling me you don’t want to be our financing partner anymore?” Edward stood and looked down at Burns fiercely. “This is a hell of a shot out of left field, Stan. I’ve already signed purchase agreements, put down forfeitable earnest money deposits on lots in Pittsburgh, and signed employment contracts with the seven store managers based on your past assurances of financing support.” He turned to leave the office when Burns’ tired voice halted him.
“Edward, please sit down. I haven’t told you everything.”
He whipped back around. “What more could there be?”
“The bank’s under a great deal of pressure. The Federal bank regulators ordered us to reduce our exposure to commercial real estate. You’re one of our largest commercial real estate borrowers, so the loan committee has instructed me to reduce our commitment to your company specifically.”
Edward, still standing, glared malevolently at Burns. “You’ve already explained that to me.”
“No. You misunderstand. We want you to pay off all of your loans as soon as possible.”
Edward laughed bitterly. “What are you smoking, Stan? The bank is making a lot of money off my business. You probably don’t have a better client than Winter Enterprises. We’ve got a large amount of equity in the real estate you’ve financed and we pay our bills on time. Is this a joke?”
Burns’ face had turned beet red. “This is no joke. I can’t tell you how badly I feel about this. I’m just following orders.”
“We have a loan commitment from the bank. We signed a master note with a twenty-year maturity on it, backed by all twenty-four of our restaurant properties.”
“That’s true, Edward, but the bank has the right to call that note at the end of each five-year anniversary of the note. The first five-year anniversary is July 29 of this year. We will need you to make other arrangements so you can pay us off entirely by no later than that date.”
“That’s two weeks from now. Impossible.”
“Nevertheless, that’s the way it’s got to be.”
“I want to talk to Sol Levin.”
Burns sighed. “That won’t do you any good.”
“I’ll be the judge of that,” Edward said.
“The regulators ordered our board of directors to terminate Mr. Levin this morning. He’s no longer the president of the bank.”
CHAPTER THREE
Edward was as angry as he could remember ever being. He didn’t quite understand the machinations behind the bank’s actions, but he sure as hell understood the implications. Now he had to go through the painful process of establishing another banking relationship in two weeks, putting together a massive loan application package and then schmoozing some new banker who knew nothing of his business and escorting the new banker to some or all twenty-four of his restaurant locations. By the time he reached his dark-blue Corvette parked in the bank parking lot, he’d calmed down enough to plot out a course of action. It would take a lot of time and effort to get together the package, but there had to be at least half a dozen banks in the area big enough to handle Winter Enterprise’s business and which would salivate at the opportunity.
After driving out of downturn and getting on the Schuylkill Expressway back to his office in Mt. Airy, Edward called Nick Scarfatti, his CFO, on his cell phone to ask him to clear his schedule that afternoon.
“What’s up?” Nick asked.
“Broad Street National Bank just dumped us as a client. I’ll explain when I get there.” He paused for a second and added, “You should call Paul Sanders; have him come in about three this afternoon. And you’ll need to start working on a finance package.”
Edward signed off and slammed his palm against the steering wheel, knowing the poor position he’d put Nick in. Nick Scarfatti was scheduled to go to Hawaii at the end of the week for a two-week, well-deserved vacation, but there was no way Nick could be out of the office at this time. “Damn bankers,” he growled, hitting the steering wheel again for good measure.
Edward was back in his office by noon. He called Nick Scarfatti into his office. As usual, Nick looked as though he’d stepped off a page from Gentlemen’s Quarterly. His blue pinstriped suit showed no wrinkles, his white shirt was starched, and his red power tie was perfectly knotted. His black wingtip shoes were spit-shined and his hair and mustache were perfectly cut in a conservative style. He was dressed like a stereotypical Wall Street banker. Luckily for Edward and Winter Enterprises, Nick was as conscientious about preparing accurate financial reports as he was fastidious about his personal appearance.
“I hate to do this to you, Nick, but I need you here until we resolve this financing issue.”
“I figured that already,” Nick said with a wry grin. “My wife’s going to kill me.”
“I’m sorry, Nick. We’re on the ropes here. Stan Burns only gave us until the end of this month to pay off our loans at the bank.”
Nick waved a hand. “Annie’ll understand. Eventually. I’ll get started on a presentation for the banks. Which banker are you going to call first?”
“Probably Van Snowden over at Curtis Bank & Trust. He’s been after me for years to take some of our business over there.”
“He’s a good banker, Eddie. I think Curtis Bank & Trust would treat us right.”
Edward shook his head. “I just don’t get it. Broad Street was kissing our butts a couple years ago. Now they, in effect, kicked those same butts out into the street.”
Nick started to leave, but Edward stopped him. “Nick, don’t argue here, but the company’s going to pay for a trip to Hawaii for you and your family. Hopefully soon, right after we get past this hiccup. It’s the least we can do.”
Nick smiled, genuinely this time, at Edward. “That will take some of the heat off me when I talk to Annie. Thanks.” He hesitated a second and then said, “Can I convince you to call Annie and tell her about postponing our trip?”
“I’d sooner go back to Iraq.”
“Chicken.”
Edward laughed. “You got that right. When do you think you’ll have an updated financing package?”
“It’s Wednesday. Make an appointment with Van Snowden for Monday.”
“I’ll do it. Thanks.”
As Nick left the off
ice, Katherine walked in.
“So, what happened at the bank?” she asked as she took a seat on the couch. “Nick told me right after you called him that they want us to pay off our loans.”
“Mom, I don’t have a clue. There’s something really wrong at Broad Street Bank. Burns told me the regulators ordered the directors to fire their president. Sol Levin’s been at the bank for twenty-five or thirty years. Wanting us to move our business can’t have anything to do with us; it’s got to be an internal problem at the bank. Our business is very profitable and we’ve always complied with the requirements of the loan agreement.”
“Maybe Paul will know something; he’s usually got his ear to the ground.”
“He’ll be here this afternoon,” Edward said, nodding.
“I pulled all the bank loan files for him to review,” Katherine said. “Maybe there’s something in there that will give us more time.”
“Good idea,” Edward said, “but don’t count on it. Burns wouldn’t have pulled the plug on us unless he’d done his homework.”
“You seem pretty calm about this.”
“I am really angry at the way Burns treated me. But I’m not worried. With our history and financial position, every bank in the area should be begging us for our business. This is just a little bump in the road, albeit a painful bump.” He grimaced and added, “I had to ask Nick to postpone his vacation.”
Shell Game (Stand Alone 2) Page 2
