“Shortly before my arrival in 1964, Roy’s first broadcast investment was funded by Wachovia, with help from the Society Bank of Cleveland,” Babcock recalls. “Roy had applied at Society for a loan to pay cash for his first TV and radio stations in Greenville, NC. His research revealed that Society Bank was uniquely experienced in broadcast financing, and at first it was the only major bank Park dealt with. The people there welcomed him and his balance sheet. With the anticipated loan, Roy eventually reached the maximum dollar limit allowed a single client by even that large bank. The ever-strong attraction of his home state, North Carolina, was to lead him to Wachovia Bank’s Raleigh office, where he was taken in practically as a favorite son. Alarge regional money center, Wachovia eventually became his lead bank. Contact with bank officers became so frequent as to make the bank’s senior loan officer a virtual partner in his holdings.
“But before he reached his limit with Society Bank, when he was ready to buy his second and third TV stations in Chattanooga and Johnson City, Tennessee, he asked me to take a break from my job and the two of us took a charter flight to Cleveland. He liked the idea of my participation in the negotiation because I was conversant with broadcast management terminology and was deeply involved in fashioning the pro forma operating budgets for the stations we sought. His trusted senior financial officer, Kenneth B. Skinner, prepared the business plan, filling in the below-the line items of debt, amortization, depreciation, and taxes. This is where Park shone, and he gave Ken close scrutiny and guidance. He had become adept at scanning a balance sheet and immediately flagging any incorrect or weak entries,” Babcock remembers.
“To lighten things up on this particular mission, as our cab made its way to downtown Cleveland, I asked if it was true that the senior bank officer at a prestigious place like this would have one glass eye. ‘No,’ Park replied. “A really top banker has two glass eyes.’ When we finally met with the senior loan officer, Park was a humble but chatty new client, doffing his Chesterfield velvet-collared coat and homburg hat, and settling in a high-backed leather chair. He sported solid gold cuff links, and a gold chain coursed across his middle to the watch pocket of his crisp Sulka black suit. Roy had fine, soft hands with tapered fingers that suggested artistic capabilities. In addition to a couple of heavy ornate rings, he wore a wristwatch that fairly shouted of opulence and good taste. As for our host, he was polite, not much for small talk, and whether they were glass or not, he had a steady eye that hinted of inherent distrust.
“The talk turned quickly to business. Park knew financing and how to focus attention on his own personal account. Stepping up to the plate as ‘banker up,’ he conceded that the bank officer knew salient facts about him from his first loan, but to spare the gentleman the gesture of opening his own client file folder, Park laid an updated balance sheet that could be quickly and easily scanned on the adjacent coffee table. He then went on to explain the amount of the credit line he wanted to establish at the bank. He said that in his practice of cash acquisitions of businesses, he made it a condition to withhold 10 percent of the purchase price for at least a year—longer if he could persuade the seller—as a reserve against any claims of unforeseen liability. He wanted to protect himself from defending possible claims with his own money. Bankers seemed to like that feature.
“Confident that his portfolio of Procter & Gamble stock easily collateralized the loan he sought, he opened the point of compensating balances. More often than not, big banks liked to have their borrowers keep a percentage of their line of credit as cash in the bank as a key condition of the loan. This was negotiable, replied the banker, and something that he would review with the bank’s loan committee. Park did not imply that the amount of the compensating balance could be a deal breaker, but he made no concessions on the spot. The banker needed two good eyes, not glass, to size up this potential client.
“Park’s negotiating skills were super smooth, always just a bit vague and underplayed. He was tough to size up. In a few minutes, he stood up and suggested that he and I head out to our charter plane. With appropriate exchange of good will signaling end of the meeting, we were alone in the elevator with Park wearing a big smile,” Johnnie recalls.
“It was evident that Park was fascinated with the big regional banks and their management. Those banks had the one single commodity that topped his wish list: money! Building a bankroll for expansion was his obsession, and doing it with no financial or equity partners his unwavering method. No trusted employee ever shared in his ownership, and he was painstakingly careful in his prime motivation that no relative or family member had even a small piece of his growing fortune.
“Park did have oft-repeated advice for anyone dealing with a bank. Never surprise your banker. If you are in or foresee trouble with your account, tell the banker up front. When the bank discovers bad news as a result of an audit or just plain snooping, it goes much harder. His final word was a good maxim: Never try to fool your banker. Give him hard facts and let him come to his own conclusions.
“When Park finally signed the loan agreement a few days later with its negotiated compensating balance, he leaned back, smiled and said: ‘Thanks a million!’ He had his money and a track record of how to get more. Profits from present holdings built reserves and gave him even greater leverage,” Babcock points out.