John Dawson Jr., president of Dawson Stores, Inc., had a discussion with Stefanie Anderson, a loan officer at Springfield National Bank. Both Mr. Dawson and Dawson Stores, Inc., were deposit customers of the bank and had been for several years. Dawsons comments were directly to the point:

It appears that we are going to have some working capital needs during the next year at Dawson Stores, Inc. I would like to obtain a $1,000,000 line of credit, on an unsecured basis, to cover these short-term needs. Could you set up the line of credit for a year to be reviewed when next years statements are available?

I know from my friends that you need information about the company in order to grant this request, so I have brought a copy of the companys statements for the last four years for you. Could you let me know about the line of credit in a few days? We are having a board meeting in two weeks, and I would like to get the appropriate paperwork for you at that time.

In reviewing the reports of previous contacts by bank personnel with Dawson Stores, Inc., Ms.

Anderson found the information summarized below:

Dawson Stores, Inc., had been incorporated in 1881. The stock had been widely dispersed upon the death of John Dawson Sr., who had divided his share among his 5 children and 14 grandchildren.

Dawson Stores, Inc., had maintained its deposit accounts with Springfield for many years, even during the years John Dawson Sr. had managed the company. The accounts had varied over the past few years. Average balances of the accounts were $350,000 for the past year. The company had occasionally purchased certificates of deposits for short periods.

Dawson Stores, Inc., had not used bank credit in the last 10 years. A recent Dun & Bradstreet (D&B) report requested by a business development officer reported all trade accounts satisfactory and contained only satisfactory information. The D&B report showed the officers were John as president and his brother Bill as vice president and treasurer.

The directors were the officers, their two sisters, and two cousins, the latter four residing in other states. Credit terms included both revolving (30-day) accounts and instalment sales. Dawson Stores, Inc., has operated seven stores for the past six years. All store locations have been modernized frequently. One store location was moved during the past year to a new location two blocks from the previous location.

The call report from the business development officer reported the premises orderly and well located for this chain of small retail soft-goods and hard-goods stores (based upon visits to three of seven locations), all located in the Springfield trade area. The president was happy with his present bank services, but in the opinion of the business development officer there was little possibility for further business.

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