OP-ED TO THE POST STANDARD
Friday, March 6, 2009
Why 'Bank' Is Not A Four-Letter Word
Washington and the media have painted banks with a broad brush dipped in blame. Banks are to blame for failing to lend money that would stimulate the economy and help recovery. Banks are also to blame for the billions of dollars in bailout money to help keep them afloat.
But in the rush to judgment about banks, distinctions are quickly lost. The fact is not all banks are alike, and the very few of the nation's largest banks that have been at the epicenter bear little resemblance to the 7,000-plus community banks, most of which had no involvement in the subprime meltdown.
It's easy to understand how distinctions would be lost: We tend to blend into the communities in which we operate. We're conservative in our fiscal management. We're not much for the exotic. We're rather plain and straightforward.
The vernacular of community banks is spoken in words like "town, neighborhood, stores, businesses and homes." Our meetings are typically conducted face-to-face; our customers don't have to resort to toll-free numbers that ring in distant cities or overseas call centers. "Local" is the nature and scope of what we do.
We're not only banks; we're underwriters and boosters whose logos are imprinted on youth sports program jerseys and in the programs for local concerts. We sponsor the 4th of July fireworks and send employee volunteers to serve meals to the homeless.
In 2005, an FDIC Banking Review on "The Future of Banking in America" noted that 10 years earlier there were predictions that community banks would disappear. While the number of community banks contracted, they didn't disappear. The FDIC concluded that, "Since community banks have not vanished, it appears that many of them must be doing something right; ... That 'something' right is strongly related to community banks' economic role ... in providing credit to certain business sectors, their ability to attract retail deposits and their capacity to build on the provision of personal services to customers."
In 2009, the economic role of community banks is even larger. We, the unencumbered, are filling the breach. Instead of writing down subprime loans, we're making conventional residential mortgages. Instead of curtailing credit, our well-capitalized banks are making loans to keep viable, creditworthy businesses growing.
A disappointment to speculators and some would-be investors, our business model isn't transactional or short-term. We build our business on relationships. Having worked hard to know and obtain a customer, we don't view that customer in terms of an average life cycle or single product.
We don't think our customers come to us because of the premiums we offer. We think they come to us because we take seriously the money they've worked so hard to earn, the house or car for which they've saved, the business they've struggled to build or the retirement for which they've planned. We respect hard work. We respect the time it has taken to build security or success. These are values that are part of what we do every day in working for our customers.
Community banks are intrinsic to the towns in which we do business. Our success is dependent upon the prosperity and well-being of the people and businesses in those towns. When we finance a strong, growing business, see it hire new employees who buy homes, eat at the local restaurant, shop at area retail stores and buy a new car for the family, we prosper.
The fact is, community banks are very different, and we're going to go on doing what we've always done: taking in deposits locally and loaning them back out to good, creditworthy local customers.
Paul P. Mello, president and CEO of Solvay Bank, contributed to this article.