By Peter J. Sposito
What’s a community bank?” The question surprised me. I had always thought of the business owner who asked it as quite knowledgeable. At first, I couldn’t believe he was serious. But he was.
After thinking about it, he was asking a good question. With all the changes going on in the banking industry, he was looking for clarification.
In many ways, it’s not easy to spot a community bank, since most banks offer just about the same services. Sometimes a bank’s name is a clue to its identity. For example, “Stoneham Savings Bank” is a fairly clear indication that this may very well be a local – a community – bank.
At the same time, there are other, perhaps more important, ways to identify a community bank. It’s almost always a place where the service is fast and where the people who work there know you. Someone may say, “Didn’t I see you at the youth soccer game last week?” The bank has a neighborly feel.
While that may not seem very important, it is to those who want to feel that someone takes a personal interest in their business. If they have a problem or want to discuss a financial issue, they like to think that they can speak with someone with whom they are comfortable, and who isn’t trying to figure out how to get a commission or is pushing a particular product.
There’s another way you can tell if it’s a community bank. You see the officers of the bank, including the president and employees, active in the community. They serve on the boards of charities, churches and civic organizations. They head up fundraising drives and support dozens of youth and senior citizen activities financially. They are good neighbors in every way. They invite groups into the bank lobby to hold blood pressure screening clinics and they always make room for another bake sale. Their commitment is to the community. They’re not just in the community; they’re part of it.
All this isn’t an imposition on community banks or a matter of following a directive from someone far up the corporate ladder. The community is why a community bank is in business.
Making a Difference
Community banks make a difference. A friend of mine, the owner of a small business, tells of the time when he needed to expand his operation. Although he really needed to buy a building, he didn’t think there was any way he could swing it.
One day he was attending a chamber of commerce meeting at his bank – a community bank – and casually mentioned his dilemma to one of the senior officers he had known for several years.
The banker immediately stopped what he was doing to talk about the customer’s problem. After reviewing the situation for a few minutes, the banker said, “First, I’m going to show you how you can purchase the building and then why it would be a good business move for your company to make the investment.” That gave my friend confidence; it was just the encouragement he needed. The banker wasn’t talking about a loan; he was simply showing the business owner the benefits of the opportunity.
Yes, the community banker made the loan. There was never any question in the businessman’s mind where he would borrow the money. While he doesn’t recall the interest rate he was charged, he remembers the banker’s helpful counsel. Looking back, he says it was one of the best investments he ever made.
How different this is from “loan officers” who hear similar stories and say, “Why don’t you get all the paperwork and information together and we’ll take a look at it.” Having gone through such experiences, is it any wonder that many small-business owners feel alienated by some big banks?
As so many banks have merged and grown bigger, their attention has moved to bigger businesses, bigger loans and bigger deals. And without question, the small, local businesses are left stranded, without the resources they need to grow and thrive in a competitive environment.
At one point, a community bank in New England wanted to listen more carefully to what business owners in the town wanted from them. In particular, the bank was planning to launch a suite of products they were getting ready for small-business customers. But before finalizing the small-business suite, it was suggested that it might be helpful if they invited of group of local small-business owners to take part in a focus group.
The bank’s management thought that could be helpful and the arrangements were made for what turned out to be a well-attended session.
At one point, the group was asked, “What do you want most from this bank? What could the bank do to be helpful to you?” The room was silent; no one said a word for what seemed like minutes. Finally, a successful local retailer spoke up. “I’ll tell you what I need more than anything,” he said. “I would like to sit down once or twice a year with a couple of officers from the bank and have a chance to pick their brains. I need to know what they see happening in our area. I would like to talk with people who know my business, who sit on my side of the table, but who also know what’s going on in the local economy. I think this bank has a good handle on what’s happening.”
Again there was silence. Finally, a woman said, “That’s it. A couple of years ago, I had trouble in my business and one person here at the bank met with me weekly until I got through the rough spot. It would be great to have meetings like that.” Quickly, everyone in the room agreed.
Small-business people rarely have the opportunity to discuss their issues and ask questions of those they trust. While everyone would like lower interest rates and lower fees, what was really important was guidance from people they know and respect.
What’s a community bank? For one thing, it’s where relationships matter. For another, it’s where you are respected. Most importantly, it’s where you are made to feel that your small business is valued and important. That’s much of what it means to be a community bank.
Peter J. Sposito is president and CEO of Glastonbury-based Bankers’ Bank Northeast, a wholesale correspondent bank.