Surecut Shears

On April 28, 1996, Michael Stewart, senior loan officer at the Hudson National Bank of

New York, was reviewing the credit file of SureCut Shears, Inc. in preparation for a luncheon

meeting with the company's president and treasurer. David Fischer, treasurer of SureCut Shears,

had recently informed Mr. Stewart that the company would be unable to liquidate its outstanding

seasonal loan as initially anticipated. While agreeing to extend the outstanding $1.14 million

loan, Mr. Stewart had suggested that he would like to stop by and discuss the company's recent

progress when he was next in the vicinity of Savannah, Georgia, where SureCut Shears's home

plant and offices were located.

SureCut Shears manufactured a complete line of household scissors and industrial shears.

Its qua1ity lines were distributed through wholesalers to specialty, hardware, and department

stores located throughout the country. Cheaper products were sold directly to large variety

chains. Although competition was severe, particularly from overseas companies, SureCut Shears

had made profits in every year since 1958. Sales and profits had grown fairly steadily, if not

dramatically, throughout the period.

Hudson National Bank had been soliciting the SureCut Shears account for several years

prior to early 1995. After several unsuccessful calls, Mr. Stewart finally co nvinced the officers of

SureCut