Take a chance on me

Community banks put their hearts and souls—and sometimes their manual labor—into lending. Here are just a few examples of how they go the extra mile for their customers.

By Ellen Ryan

When you’re invested in your customers and your community, you’re often more willing to take a chance on a loan than another bank might be. Case in point: A 2015 Federal Reserve report found that small banks approved 76 percent of financing requests, compared with large banks’ 58 percent.

Some of those loans can get pretty creative. Witness the grassroots effort that reopened the Plaza Theatre, which had brought a little slice of Hollywood to Miamisburg, Ohio, from 1919 to 1968.

The former decay of downtown had gentrified into restaurants, shops, offices and condos, but the Plaza was vacant. In early 2014, Clint Morton, senior vice president/senior lender at the $130 million-asset Farmers & Merchants Bank, helped found a nonprofit group that raised $450,000 in pledges to restore the Art Deco cinema.

The group approached Farmers & Merchants for a $350,000 construction loan but had no assets or guarantors. Finally, the city council put $350,000 on deposit as collateral. The theater reopened as a movie and performance venue on Christmas Day 2015—its 96th anniversary. On behalf of Farmers & Merchants Bank, president Shon Myers pledged $5,000, and the bank had 50,000 popcorn bags donated and printed with its logo. “The theater is beautiful,” says Morton, “and a real anchor for our community.”

Getting down and dirty
Community banks go the extra mile for their customers. But sometimes, that involves several miles plus feed and manure. Rex Brotherton, now vice president of the $470 million-asset Bank of Fayette County, grew up tending hogs and couldn’t wait to get away from it. A decade ago, he did a lot of ag loans as vice president for lending at nearby Merchants & Planters Bank. One loan of $25,000 or so was to a farmer to finance his hog operation.

When the market bottomed out, all 100 hogs became the bank’s property: “I had to go to the co-op and buy feed, then every morning before work and every night after work, I drove out to the barn to feed our hogs—the bank’s hogs,” says Brotherton. This went on for a month.

A market offer came in. “We could do no better than the farmer, of course,” Brotherton says. “But first offer I got, they were sold. And I haven’t done a loan for hogs since.”

On a more serious note, Brotherton’s colleague Carol Ann Fort makes one loan a year to a man living on Social Security. He needs $300 to $500 to tide him over for firewood, groceries or pest control.

“I had to go to the co-op and buy feed, then every morning before work and every night after work, I drove out to the barn to feed our hogs—the bank’s hogs.”
—Rex Brotherton,
Bank of Fayette County

“Some banks, if it’s under $5,000, won’t do the loan because it doesn’t pay,” she says. “But it’s about taking care of our customers.”

Sometimes the extra mile means not the loan but the collateral. In 1984, Virgil Johnson was a loan officer at Idaho First National Bank (currently Idaho First Bank now located in Boise) in the town of Weiser, an area where many Japanese people had been interned during World War II. One day, a young Japanese farmer named Peter walked up to Johnson, now vice president/branch manager at the $1.5 billion-asset D.L. Evans Bank. Peter needed $10,000, and for collateral he produced a samurai sword that had belonged to his grandfather, a great samurai soldier in the early 1900s. It was five or six feet long, razor sharp, and in a fancy sheath inlaid with ivory and jewels. It was certified and obviously irreplaceable.

“We held it in our vault,” says Johnson. “Peter paid off the loan, and we made numerous loans to him and his family thereafter. But the collateral was never that exotic.

Bringing up baby

Twenty-six years ago, a young couple came into Happy State Bank & Trust Co., headquartered in Happy, Texas, just as the doors opened. Nervously, they asked for $4,000.

“When I asked why, the woman burst into tears,” says Pat Hickman, chairman and CEO of the $3.1 billion-asset community bank. “Her husband said they banked down the street and had been promised a loan for adoption fees, but when the call came that their baby was available today in Fort Worth, the other bank turned them down.”

Fort Worth was a five-hour drive away. Hickman got the couple a cashier’s check and said, “Get down there and get that baby”—and received a huge hug. “I violated every rule in the book, but it’s a baby!” he says. “But in today’s regulatory requirements, we couldn’t do it.”

The next day at 8:45 a.m., the new family was waiting outside, having driven all night to get there. They told Hickman, “You’re seeing this baby before our parents have.”

“I believe they still bank with us to this day,” he says.

Ellen Ryan is a writer in Maryland.