Bank Profile | By Linda Goodspeed
When the First National Bank of Groton initially applied for a banking charter in 1865, the controller of the currency at the time turned down the petition, saying he did not think the community needed a bank.
The bank tried again. Again, the controller of the currency turned it down. Finally, on the third try, the charter was approved.
On May 1, 2015, First National said, “Told you so,” with a month-long celebration to kick off its 150th anniversary.
Just in time for its anniversary year, the bank received Bauer’s 5-Star Superior rating, an indication of strength and security, and earned the added title of “Best of Bauer Bank” for maintaining the 5-star rating for 25 years.
Typewriters, Buggies and Bridges
Groton (population 5,500) is located about 15 miles from Ithaca College and Cornell University. A thriving manufacturing center in the late 1800s and early 1900s, Groton was known as the typewriter capital of the world. In addition to Smith Corona portable typewriters, the town also built buggies and bridges. As those industries faded, Groton slowly evolved into a bedroom community.
First National Bank, the only bank in town, has $150 million in total assets and one other branch nine miles away in Moravia. Its motto, “Customers for life, one day at a time” could apply to its employees as well. The bank’s top four officers, who all graduated from Groton High School, have a combined 180 years of experience, and its 39 employees have a combined 750 years at the bank.
“We have a lot of employees for our size,” said Stephen Gobel, president and CEO. “We overindulge our customers with service. I think it’s part of our success.”
Gobel, who started as a teller at the bank in 1967, remembers writing loans for customers right at the teller line from a note pad he carried in his back pocket.
Today, First National’s loan portfolio of $76 million is about the same size as its deposit portfolio. About half its loans are residential mortgages, with the other half split among small businesses and municipalities. The bank keeps all of its mortgage loans. Like most banks, it suffered losses during the mortgage meltdown, but its ratio of nonperforming loans, slightly above 1 percent of its total loan portfolio (which peaked at about 2 percent during the downturn), is below its peers.
“We have a conservative lending philosophy, and our area never had the meteoric rise in real estate values that some other areas had,” Gobel said. “It was more slow and steady, not risk-free, but we plodded along and were able to maintain earnings at decent levels.”
Knows Your Name
First National is proud of its hometown roots. It has hosted an annual art show for more than 40 years, and also invites local artists to display their works in the lobbies of its banks. Every summer, employees don aprons and host an annual hot dog cookout for customers. This summer, in honor of its 150th anniversary, the bank will also host a picnic at the American Legion and the whole community will be invited.
Jeff Cronk, president and owner of C&D Assembly Inc., a small contract manufacturer in Groton, said the bank’s commitment to the community is why he does business there.
“I’m proud of the fact that I’m here. First National supports everybody in this town, and I support them. I walk into that bank, and everybody knows me, and I know everybody. My account manager is amazing. He knows all about me and my business. For me, it’s about local and service.”
Cronk, who started C&D 23 years ago with $2,000, has grown the business, with First National’s help, to 30 employees.
Gobel says staying small and local is not easy, particularly as fixed costs for technology and regulatory compliance continue to rise. Like many small independent banks, First National outsources for expertise in these areas.
“Most of us are outsourcing to some degree. It’s not unique to us,” Gobel said. “But it’s a very difficult thing to determine how much control you still want.”
The low rate environment has also been a challenge, as has changing demographics.
“In our rural area, we’re not as young as Ithaca,” Gobel said. “We’re concerned about the generational change. It requires planning.”
He said keeping up with technology is important in this generational change.
“We don’t want to be on the bleeding edge. On the other hand, we don’t want to lag so far behind we become irrelevant.”
To this end, First National has a task force working on a mobile platform which should be up and running within the year.
Gobel said the board is committed to remaining independent and to serving the community.
Noting the bank’s rocky start and two rejections, Gobel said, “We’re still here. We persevered. We feel there’s a need for us to be here in this community.”■