Instead of "algebra" or "geometry," the woman in the chair smiled and said, "I'm writing a market trend summary to present at the next board of directors meeting—one that I hope will convince them to let me expand our private label merchandise. Department stores," she explained when he looked genuinely interested, "particularly stores like Bancroft's, make a large profit from selling merchandise with their own labels on it, but we're not taking full advantage of it the way Neiman's and Bloomingdale's and some of the others have."
As he had been last week at lunch, Matt was instantly intrigued by this business persona of hers, partially because it was in such contrast to the other images he'd had of her in the past. "Why haven't they taken advantage of it?" he asked. Several hours later, when their discussion had ranged from Bancroft's merchandising to its financial operations, to its problems with product liability and expansion plans, Matt was no longer merely intrigued, he was impressed as hell with her ... and, in a crazy way, extremely proud of her.
Sitting across from him, Meredith was vaguely aware of having somehow earned his approval, but she was so wrapped up in their discussion, so awed by his instantaneous grasp of complicated concepts, she'd lost all track of time. The page she'd been writing on was now filled with notes she'd made about his suggestions, suggestions that she was eager to think about further. His last suggestion, however, was out of the question. "We'd never be able to pull that off," she explained when he urged her to look into buying their own clothing production facilities in Taiwan or Korea.
"Why not? Owning your own facilities would eliminate all your problems with quality control and loss of consumer confidence."
"You're right, but I couldn't possibly afford it. Not now and not in the near future."
His brow furrowed at her apparent lack of understanding. "I'm not suggesting you use your own money! Borrow it from the bank—that's what bankers are for," he added, forgetting for the moment that her fiancé was a banker. "Bankers lend you your own money when they're certain that what you're borrowing it for is a sure thing, then they charge you interest for borrowing it back from them—and when the loans are paid off, they tell you how lucky you are to have them taking risks on you. You surely know how that works by now."
Meredith burst out laughing. "You remind me of my friend Lisa—she's not very impressed with my fiancé's profession. She thinks Parker ought to just give me the money whenever I need it without insisting on the usual collateral."
Matt's smile faded a little at the reminder of her fiance's existence, and then it turned to shock when she added lightly, "Believe me, I'm becoming an expert on commercial borrowing. Bancroft's is borrowed out, and so am I, to be honest."
"What do you mean, so are you?"
"We've been expanding very rapidly. If we go into a mall that's being developed by someone else, the costs go down but so do the profits, so we usually develop the mall ourselves, then lease part of it out to other retailers. It costs a fortune to do that, and we've been borrowing the money for it."
"I understand, but what does that have to do with you personally?"
"It takes collateral to get loans," she reminded him.
"Bancroft and Company has already put up all the collateral it has, as well as the actual stores, of course. The corporation ran out of collateral when we built the store in Phoenix. I wanted to go into New Orleans and Houston, so I'm putting the stocks and property in my trust fund up for collateral. I'll be thirty in a week, and the trust my grandfather set up for me comes under my control then."
She saw him scowl and hastily added, "There's no reason to be concerned. The New Orleans store has been easily able to make the payments on its loan, just as I knew it would. So long as the store can make its payments, I have nothing to worry about."
Matt was utterly dumbstruck. "You're not telling me that in addition to putting up your own things as collateral, you've also personally guaranteed that loan for the New Orleans store?"
"I had to," she explained calmly.
Matt tried, with incomplete success, not to sound like an irate professor lecturing a backward student from his lofty podium of superior knowledge. "Never do that again," he warned her. "Never, ever put your own money up for a business deal. I told you, that's what banks are for. They make the profit on the interest, let them take the risk. If business were to fall off, and the New Orleans store couldn't make its payments, you'd have to, and if you couldn't, the bank would clean you out."
"There was no other way—"
"If your bank told you that, it's a crock," he interrupted. "Bancroft and Company is an established, profitable corporation. The only time a bank has the right to ask you to personally guarantee a business loan or put up your own holdings as collateral is when you're an unknown quantity without a decent credit history." She opened her mouth to object, and Matt forestalled her by raising his hand. "I know they'll try to get you to sign personally," he admitted, "they'd love to have fifty cosigners on an ordinary home mortgage if they could get it, because it eliminates their risk. But never, ever agree to sign your name for a Bancroft loan again. Do you think for a damn second that General Motors executives are asked by a lender to sign corporate loans for GM?
"No, of course not. But our case is a little different."
"That's what banks always try to tell you. Who the hell is Bancroft's banker, anyway?"
"My fiance ... Reynolds Mercantile Trust," she clarified, watching shock and then annoyance chase across his face in the firelight.
"That's one great deal your fiance cut for you," he said sarcastically.
Meredith wondered if that remark came from male competitiveness. "You're not being reasonable," she quietly informed him. "There's something you're forgetting. There are bank examiners who scrutinize a bank's loans, and now, with banks failing everywhere, the examiners are frowning on banks getting too heavily invested in any one borrower. Bancroft and Company is in debt to the tune of hundreds of millions to Reynolds Mercantile. Parker couldn't continue to loan us money, particularly now that he and I are engaged, without bringing down censure on himself—unless we put up enough collateral."
"There must have been some other form of collateral you could have used as security. What about your stock in the store?"
She chuckled and shook her head. "I've already used that, and so has my father. There's only one major family stockholder in B and C who hasn't already put her stock up."