3c hapter - Index of

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