Welcome to the Neighborhood

Bank of Lancaster’s John Powell (left) and Randal Greene (right) visit with Francis Christman, a Westhampton-neighborhood restaurant owner and bank customer. Photo by Matthew Rakola
Bank of Lancaster’s John Powell (left) and Randal Greene (right) visit with Francis Christman, a Westhampton-neighborhood restaurant owner and bank customer.

Photo by Matthew Rakola

Richmond, Va., is a vibrant hotbed of community banking

By Michael Blankenheim

It has been said there is no stiffer competition than community banks going head to head. A bustling entrepreneurial part of Richmond, Va., the state’s capital, will soon find out if that’s true. By the end of summer, it’s expected there will be four community banks within walking distance of each other in the city’s Westhampton section.

Banking observers and community bankers agree the Westhampton area of about 17,000, described as being quaint, trendy and vibrant, is ripe for relationship-based financial services. From a consumer banking perspective, the area is economically bustling, with a median household income of $72,000. And from the standpoint of commercial banking, the locale has about 3,000 small businesses with revenues of up to $1 million locating there.

All four community banks will have full-service branches in Westhampton. Chesapeake Bank plans to open its branch by late summer. The Bank of Lancaster opened there last November. Park Sterling Bank has the opening of its branch there scheduled for the second quarter. Middleburg Bank opened a branch there in late 2013.

FDIC data shows that the average deposit base for the area has been “huge” and the probability of loan default extremely low, says Kent Engelke, chief economic strategist and managing director of Capitol Securities Management Inc. in Henrico County, Va. “Westhampton and it’s wealth has grown so dramatically that there is plenty of business to go around.”

Demand for the superior service and customization provided by the community bank business model is taking hold at the expense of large banks in the area, Engelke says. “People here want banks where they know your name.”

“People here want banks where they know your name.”
—Kent Engelke, Richmond economy expert

Officials at the community banks downplay the idea of competing against each other and only talk about their competition in polite terms. They agree, however, that the opportunities in Westhampton are great—for local residents, business owners and community banks.

And that’s what is drawing them to make large investments to put down stakes in the area. As an example, Chesapeake Bank of Kilmarnock, Va., is spending more than $4 million to renovate an existing Westhampton building into a retail branch, for both consumer and commercial banking.

“I’m sure the other banks are good institutions, but I can only speak for Chesapeake Bank, and what we will emphasize is being a friend to many small businesses in the area,” says Frank Bell, a senior vice president with the bank.

Chesapeake Bank, which has more than $600 million in assets, plans to offer small-business products that include a full array of lending opportunities, such as lines of credit, term loans for expansion, receivables financing and Chesapeake Payment Systems, which is a processor of credit cards.

“We feel we can come in and bring in a lot of new products that aren’t already in the market,” Bell says.

Randy Greene, president of the Bank of Lancaster, also based in Kilmarnock, says the amount of business from the Westhampton branch has greatly exceeded his expectations. “Deposits grew significantly as a result of our new branch in Richmond, which opened in November, and our loan portfolio continues to grow,” he says.

A $390 million-asset community bank, Bank of Lancaster is focusing on both consumer and commercial business. An example, Greene says, is the bank’s Extreme Banking suite of services. The suite includes online banking, mobile banking and mobile deposit, a customized debit card with photo ID, and 10 foreign surcharge-free transactions per month at any ATM Bank of Lancaster doesn’t own.

At Park Sterling Bank, based in Charlotte, N.C., bank CEO Jim Cherry says the Richmond area provides unique opportunities for all the community banks joining the market. “Everybody will have their own niche and ways of doing business,” he says.
“I hope the competition will be friendly,” Cherry says. “All of my friends are bankers, and I think we all genuinely like each other even when we compete.”

Michael Blankenheim is a freelance writer in Maryland.