My job, like most everyone else's, can be frustrating at times. I have friends, clients, or random potential customers who contact me about a financing need or a loan product that they've heard about through some ad on the radio, online, or on TV. Sometimes, what we have to offer may be much better (or at least much simpler) and other times the larger company is simply able to offer something that a bank our size isn't equipped, capable, or willing to offer. I like the way one of customer (and now friend) put it: "A community bank may not be able to do everything, but they can do some things that other banks can't." He unknowingly nailed what sets community banks (and other small businesses) apart - their ability to see more clearly what a customer wants and needs, and the willingness to customize a solution for their particular need (without all of the ridiculous corporate approvals that are sometimes required).
For people who do a lot of traveling, have family in different states, or do a good bit of national and international business - a big bank is probably a better fit for you. Being larger in size geographically, it has the locations, the interfaces, and the processes to facilitate multi-state and country transactions quicker, easier, and cheaper than small community banks. It's not that smaller banks can't offer these services, it's just there is a reason we thrive by being community banks.
So where do the little guys fit in? Jay Blanford writes, "By their nature, 'Main Street Banks' are closely tied to their entrepreneurial communities." Most banks, whether new or old, were founded by an entrepreneur - someone who saw a need and had a passion to fill it. These "Main Street Banks" (since we are located on Main Street I am very biased towards that term now) are also often times located in small towns where everybody knows everybody. These banks (as well as their management) also want to see the towns and businesses thrive. Not solely because of their financial gain from being invested but because it affects them personally. Community bank managers, shareholders, and employees often live in the communities they serve! You want buy in, invest in your neighbors and see what happens.
Let's be clear, banks are for-profit entities. My personal opinion is that credit unions are profiting someone too even if they can't take the profit to bottom line but that's a whole other issue that I've addressed before (http://growinupgregory.blogspot.com/2018/06/a-level-playing-field-banks-vs-credit.html). But just because someone is making a profit, doesn't mean they aren't reinvesting in their community. And it doesn't mean that they steer customers toward the most profitable loan or a product less beneficial to the customer. Please allow me to share a few examples below:
1. Community Investment. For 10 years now, my employer has taken a select group of high school students and given them training in finance, etiquette, business, community involvement, and kindness. They have spent money on this program and invested resources (including employee hours) to invest in the future of Union. They have tried to make a difference in the lives of young people who hopefully one day will contribute to the communities they live in. Your best and most profitable investment will always be in someONE and not someTHING.
2. Once, a customer texted me asking one question, "I'm doing some home improvements, what are your rates on a 30 year fixed loan?" I could have very easily and quickly answered his question by merely looking at our rate sheet and sending him the rate. But in my 13 years of banking, I've learned that sometimes asking questions help learn what the true need is. So I asked the typical banker questions, "How much money do you need," "How much payment can you handle," etc. Then instead of responding to his question right away with an interest rate, I did some calculating and thinking. His first mortgage is at a very low rate and with a much shorter term remaining than what he asked for. While it would have been beneficial and more profitable for the bank to refinance that loan and get that rate off the books, that was not what was in the best interest of the customer. After running some numbers and going over several options, we settled on an option with a slightly higher payment than what he had requested, but with a savings of roughly $90,000 over the life of the loan.
Small community banks and bankers care about the people they serve more than the bottom line. To truly thrive in this arena, you must have that entrepreneurial spirit. You must feel invested in the customers, the businesses, and the families that you help. Unfortunately, every story isn't a success story. But for the ones that are, just know that whoever opened your account, helped with your loan, or even answered your question on the phone, feels like they are at least a tiny piece of your company and we thank you for that opportunity.
For people who do a lot of traveling, have family in different states, or do a good bit of national and international business - a big bank is probably a better fit for you. Being larger in size geographically, it has the locations, the interfaces, and the processes to facilitate multi-state and country transactions quicker, easier, and cheaper than small community banks. It's not that smaller banks can't offer these services, it's just there is a reason we thrive by being community banks.
So where do the little guys fit in? Jay Blanford writes, "By their nature, 'Main Street Banks' are closely tied to their entrepreneurial communities." Most banks, whether new or old, were founded by an entrepreneur - someone who saw a need and had a passion to fill it. These "Main Street Banks" (since we are located on Main Street I am very biased towards that term now) are also often times located in small towns where everybody knows everybody. These banks (as well as their management) also want to see the towns and businesses thrive. Not solely because of their financial gain from being invested but because it affects them personally. Community bank managers, shareholders, and employees often live in the communities they serve! You want buy in, invest in your neighbors and see what happens.
Let's be clear, banks are for-profit entities. My personal opinion is that credit unions are profiting someone too even if they can't take the profit to bottom line but that's a whole other issue that I've addressed before (http://growinupgregory.blogspot.com/2018/06/a-level-playing-field-banks-vs-credit.html). But just because someone is making a profit, doesn't mean they aren't reinvesting in their community. And it doesn't mean that they steer customers toward the most profitable loan or a product less beneficial to the customer. Please allow me to share a few examples below:
1. Community Investment. For 10 years now, my employer has taken a select group of high school students and given them training in finance, etiquette, business, community involvement, and kindness. They have spent money on this program and invested resources (including employee hours) to invest in the future of Union. They have tried to make a difference in the lives of young people who hopefully one day will contribute to the communities they live in. Your best and most profitable investment will always be in someONE and not someTHING.
2. Once, a customer texted me asking one question, "I'm doing some home improvements, what are your rates on a 30 year fixed loan?" I could have very easily and quickly answered his question by merely looking at our rate sheet and sending him the rate. But in my 13 years of banking, I've learned that sometimes asking questions help learn what the true need is. So I asked the typical banker questions, "How much money do you need," "How much payment can you handle," etc. Then instead of responding to his question right away with an interest rate, I did some calculating and thinking. His first mortgage is at a very low rate and with a much shorter term remaining than what he asked for. While it would have been beneficial and more profitable for the bank to refinance that loan and get that rate off the books, that was not what was in the best interest of the customer. After running some numbers and going over several options, we settled on an option with a slightly higher payment than what he had requested, but with a savings of roughly $90,000 over the life of the loan.
Small community banks and bankers care about the people they serve more than the bottom line. To truly thrive in this arena, you must have that entrepreneurial spirit. You must feel invested in the customers, the businesses, and the families that you help. Unfortunately, every story isn't a success story. But for the ones that are, just know that whoever opened your account, helped with your loan, or even answered your question on the phone, feels like they are at least a tiny piece of your company and we thank you for that opportunity.
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