Sunday, June 19, 2011

T-Shirts and Bankers

This article was published in part by The Journal in Martinsburg, WV on June 19, 2011.

It all boils down to a t-shirt and it’s on the backs of volunteers throughout the Eastern Panhandle.  We all have one, and if you don’t, you should.  It’s the t-shirt you receive when you give to your community, whether you’re Marching for Dimes or participating in the Day of Caring.  The logos you see on these complementary shirts are meant to recognize those businesses in our area who have invested in a local cause.  Many of those logos represent our local banks and it is our local banks that make up a large part of the philanthropic base here.

Make no mistake about it; you won’t typically see the likes of Citigroup or Goldman Sachs on these shirts.  Bank of America and JP Morgan Chase are not donned there.  Rather, what you will see are banks like the Bank of Charles Town, Centra, Citizens National, Jefferson Security, MVB, and City National, to name a few.  It’s what separates the small bankers of America from the mega-bankers of the world and it’s a distinction many of us fail to appreciate.

Bob Baronner, past President and board member of the Community Bankers of West Virginia and CEO for the Bank of Charles Town, spent some time with me recently to help me understand the distinction.  He describes community banks as having little turnover where bank employees are well known and established in a community.  “Decisions are made locally and community banks give their folks autonomy so that service is better,” says Baronner, “you don’t see that as much with the megabanks.”  Baronner goes on to explain that bankers who live in the community are going to be more interested in the community, so when people go through hard times, a community banker will do more to try to help than a megabank would.  “A community banker will sit down with you, understand your situation, and come up with a solution for your needs.”

What Barroner describes as a local community interest can be easily demonstrated if you think of our local bankers and realize how often you’ve had the opportunity to interact with them in your day to day activities.  How often have you shared lunch with a bank vice president at a Rotary Club meeting or a Chamber function?  People here can walk into their local banks and talk to the bank President if they need resolution.  The local banker’s children go to school with our children.  We sit next to each other at little league games, band recitals, and church functions.  And you just don’t have those same opportunities if you don’t bank locally.  Quite the contrary, megabank CEOs are known for their ability to avoid the general public and to shelter themselves in private elevators and high rise offices so they don’t have to face the realities of the common person’s financial situation. 

But it goes beyond just a simple conversation over lunch or a mutual cheer when our kids’ teams score.  Barroner also describes local banks as being the most charitable businesses in the community, both through financial contributions and volunteer work.  Executive Director of the United Way of the Eastern Panhandle Jan Callen concurs. “It's not just the dollars; it's the volunteers at all levels.  They are so engrained and integrated into the community.”  Callen says the volunteer support from local banks is priceless and describes their willingness to get involved as a culture of community service.  He says that a lot of the big chains are not connected to the community like local banks so you don't see that culture of giving back. “Community service is good business,” says Callen, “and it's just like community banks and megabanks are not from the same breed of cat at all. I just couldn't be more grateful to our local banks.” 

Callen shares that the United Way campaign alone benefited in actual dollars of over $134,000 last year due to local bank support, but he described that as only a small portion of their philanthropic effort.  Callen estimated the value of volunteer support by local bankers to be worth around a quarter of a million dollars, as he described the many projects that local bankers get involved in each year.  “BCT every year takes on a major project.”  Last year they remodeled an entire non-profit office house including laying floors and painting.  Callen describes school business partnerships, 4-H programs, the Future Farmers of America, and the local county fairs as all benefiting from what our local banks provide.  He says that a lot of the local banks even include community service in their mission statements.  “The non-profits could not do it without the local banks,” says Callen.

As banks generally have gotten their fair share of criticism over the last several years, community bankers often feel unfairly lumped in with those mega-bankers whose predatory lending practices helped drive the global economy into what feels like a perpetual state of intensive care.  But the sub-prime mortgage and derivative activities that were occurring at megabanks are based on a different focus than what you see at local banks, where Main Street takes priority over Wall Street. Baronner describes the balance sheets and associated transactions at megabanks as being extremely complicated, but he stresses that local banks’ investments are simpler than that and focus on improvements for the greater community.

The Dodd-Frank Wall Street Reform and Consumer Protection Act was designed to shelter consumers from practices that contributed to our current financial crisis, but regulations and amendments associated with Dodd-Frank have been hotly contested recently by those representing community banks.   Last Wednesday, when the Senate failed to pass the Tester/Corker Amendment to Dodd-Frank, our local banks cried foul.  Barroner explains the purpose of Tester/Corker as one that would give banking regulators an opportunity to study the effects that new interchange regulations would have on community banks and, ultimately, on the consumer.

“Interchange fees refer to the debit card transaction fees that merchants pay to banks and the big box retailers think it’s unfair to charge them for this payment system” explains Barroner.  He describes how the current law if implemented would place restrictive caps on these merchant fees and how small banks who rely on these fees as a source of revenue will now have to compensate for the loss by revising programs like free checking that are designed to make banking affordable to their local customers.  “The cap is a kind of price control and in any kind of business where price controls are present, the small business still has to pay the overhead and will ultimately have to raise fees to compensate for that,” says Baronner.

How the debate nationally will be shaped by the Senate’s inaction and what affect implementation of new bank regulations will have on you and me locally remains to be seen.  It took years to see what affect deregulation of the banking industry would have on our local communities and it will take years to restore an appropriate balance to regulating the industry in a way that doesn’t choke out local banks.  The current economic slump has lingered now for the better part of five years.  Barroner doesn’t give much hope for an economic rebound any time soon and predicts that the real estate market locally will continue to struggle for some time, but what he does assure me is that, as long as local banks are able, they will continue to be an active part of our community.  Baronner sums it up like this, “It’s not all about the bottom line.  It’s about helping people.  And that’s what separates us.  When you experience problems, we’re going to be more understanding.”  So the next time you get one of those t-shirts, whether at a march, or a walk, or any other volunteer effort, pay attention to the logos on the back of the shirt and take the time to thank your local banker.  

Looking forward to seeing you about town!  ~L

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