3c hapter - Index of
3c hapter - Index of
3c hapter - Index of
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66 Locavesting<br />
As an editorial in Vermont Business noted after Davis passed<br />
away in late 2004: “He was famous for scheduling weekly board<br />
meetings and making his directors work. He was famous for knowing<br />
<strong>of</strong>f the top <strong>of</strong> his head the condition <strong>of</strong> every commercial<br />
account at the bank. And he was famous for helping out a couple<br />
<strong>of</strong> guys named Ben and Jerry make it through the day with a creditor<br />
nipping at their heels.” Maybe, the piece concluded, “Dudley<br />
Davis was the last real banker in America.” 1<br />
Old- fashioned community banking, the kind based on personal<br />
relationships, is not entirely dead. There are still banks,<br />
like the family- owned Sunrise Banks in Minneapolis–St. Paul, or<br />
Broadway Federal in Los Angeles, which has been serving the<br />
area’s middle- class black neighborhoods since 1946, that pride<br />
themselves on knowing their customers. Community banks<br />
are typically defi ned as banks with less than $1 billion in assets,<br />
although many have less than $250 million in assets, and focused<br />
on a particular geographic region. These institutions have traditionally<br />
been pillars <strong>of</strong> their communities, <strong>of</strong>ten for generations.<br />
Their owners and decision makers tend to be locally based,<br />
with all <strong>of</strong> the familiarity and accountability that comes with<br />
those roots.<br />
“These are the businesses and people that go to school<br />
together and churches and synagogues together and live and work<br />
in the same community, so it’s kind <strong>of</strong> a little ecosystem,” says Paul<br />
Merski, chief economist for the Independent Community Bankers<br />
<strong>of</strong> America. “If the small businesses in the community are doing<br />
well, then the community bank is doing well. They’re dependent<br />
on each other.” For those reasons, a community bank is not going<br />
to put someone in a loan that they know they can’t pay back, says<br />
Merski. (In contrast, putting people in mortgages that would<br />
later balloon in cost was precisely the business model <strong>of</strong> subprime<br />
lenders such as Countrywide Financial, now owned by Bank<br />
<strong>of</strong> America, and Long Beach Mortgage, a unit <strong>of</strong> Washington<br />
Mutual, now part <strong>of</strong> JPMorgan Chase.)<br />
Similarly, a small business owner has a better chance with a community<br />
banker who will take qualitative factors into consideration—<br />
reputation in the community, track record, and the unique