Getting personal: Community banks survive on service

By TODD A. PRUSSMAN
Essex County Newspapers

You might call it insurance for the future, as well. For community banks, service translates to survival.

"I think there will always be a place for community banking," said Cape Ann Savings Bank President Harold J. Rogers. "We all have our little niches and personal service is what our customers want."

"One of the things that we've found is that people seem to want the availability of a variety of service delivery channels," said David Munroe, vice president of marketing for Danvers Savings Bank.

Munroe sees banking on the Internet as a tailor-made way for customers to tap into their bank accounts.

But it's not going to make the tellers' lobby, the loan officers' offices or the ATM vestibule any less a part of the banking service.

"When credit cards became big," Munroe said, "people predicted that within 10 years the paper check would be doomed. Well, here we are 25 years later."

Danvers Savings Bank rolled out its home banking services in November. Customers want choices, Munroe said.

Bob Becker, president of the Provident Bank in Amesbury, agreed. "We really are in a retail business," he said, "and we have to be much more pro-active about the way we market our products." The Provident, too, is rolling out Internet banking services, scheduled to appear early this year.

Competition has also meant offering investment services to customers, something Becker said many small banks thought would cannibalize their savings accounts.

Not so, he said. The increased array of services at the bank has been a nice fit and brought in more customers for traditional products such as savings accounts, checking accounts and mortgages.

But changes in lending have had an impact on the business done by community banks.

The growing number of mortgage lending companies, which fund home purchases with services delivered over the telephone or computers, has made the mortgage business as competitive as the commodities market, Becker said.

"The residential mortgage has become a commodity," Becker said.

For the Provident, that has meant a shift toward seeking a greater number of commercial and business loans.

Rogers said Cape Ann Savings, which is that area's top mortgage provider, is beginning to look at commercial lending, too.

It's a strategy Danvers Savings Bank recognized 15 years ago under then-President Jim Zafris, who saw opportunity for a community-oriented bank in making Small Business Administration loans.

Munroe said Danvers Savings Bank is now ranked third in the state for the volume of small-business loans it makes.

The top two, incidentally, are the state's behemoths, Fleet and BankBoston, whose merger was approved last year. Danvers Savings Bank is "soon to be No. 2" in volume of SBA loans in Massachusetts, quipped Munroe.

In 1991 the bank became a preferred lender for the SBA, and that means it can approve the loans in-house, without sending them out to the SBA for review.

"It's a huge competitive advantage," Munroe said, "and it really allows us to compete on a level playing field with the bigger banks."

The emphasis on business loans is driving Danvers Savings Bank's growth strategy, as well. The bank opened a branch last year in Newburyport. Another branch application is pending this year in Reading. Both are areas, Munroe said, where market studies have indicated an opportunity to grow in the commercial loan sector.

Becker said the mergers of large banks at the top of the market create opportunity for banks working on the local level.

Rogers said, in fact, the growing size of giants of the industry reinforces a community bank's share of the local market.

"I think people are afraid of these banks sometimes. They want to know who they're doing business with," he said.

"I firmly believe that a true community bank can't serve more than three or four different communities. It's very difficult to serve them all in a manner that adds value," Becker said.

That means the Provident has a stake in Amesbury. It is financing part of a new supermarket development coming to town, and Becker sees a bright future for the Amesbury downtown after a three-year street renovation program is complete.

"We're only going to do as well as the local community does," he said.

Each of the banks makes considerable charitable donations each year. The Provident through its charitable arm, the Provident Foundation, awards grants to non-profit groups serving the region's cultural, social services, youth and economic development activity.

Danvers Savings Bank has forged close ties to the community by making an array of scholarships available for students at Bishop Fenwick, St. John's Prep, North Shore Community College and to seniors from local high schools going on to colleges and universities everywhere.

Cape Ann Savings recently bought a bookmobile for the community and installed lighting to illuminate Gloucester City Hall at night.

"This is what community banks do," Rogers said.

Danvers Savings Bank is celebrating its 150th anniversary this year. Cape Ann celebrated its 150th anniversary in 1996. The Provident was established in 1828; planning for its 175th anniversary is just around the corner.

"I think most community banks offer good service more than anything else," Becker said. "We don't have to match the big guys step for step, but if you focus on the basics, and keep up to date with technology, community banking will always have a place."