Q & A: Community banking keeps Gibbon's interest

Vermont Business Magazine, Mar 01, 1998

As financial institutions evolve, banks are consolidating and non-bank institutions continue to poach on turf once regarded as the exclusive territory of banks. What banks will become and what they will do is an open question, and the future of Vermont's banks may depend on the outcome of changes under way in other places.

However, Kenneth D Gibbons, president of Union Bank in Morrisville, is confident Vermont's smaller community banks will have a place in the niches between the mega-banks, predicted to dominate US banking within the next decade. People in rural areas and small towns still value the personal service small banks can provide.

Meanwhile, the cost of the technology customers expect banks to offer is declining, bringing sophisticated services within the reach of small banks.

Gibbons is chairman of the Vermont Bankers Association, which aims to protect the ability of banks to compete as nonbanks are allowed to offer more traditional banking services. He also is chairman of the Vermont Small Business Advisory Council, which advises the federal Small Business Administration on conditions and needs in Vermont.

Richard Andrews interviewed Gibbons in the Montpelier office of the Vermont Bankers Association in early February, on a brilliant clear Friday morning that promised the first sunny ski weekend in more than a month.

VBM: How did you happen to get into banking?

GIBBONS: That's an interesting question. I studied opportunities when I was living on the South Shore of Massachusetts as a full-time college student attending school at night, and I decided banking would have a future. I started work for a small savings bank in Plymouth, and one thing led to another.

I worked for two small banks in that area, and it was fascinating. I learned a lot about the area -- I grew up on the South Shore -- and I enjoyed it.

VBM: Why did you come to Vermont?

GIBBONS: Why does anybody come to Vermont? There's a lot of positive influences here, and our family decided this was definitely a place to stay.

I purchased some summer property three or four years before I moved here, and we came up weekends and vacations. On one winter vacation it rained the whole week, so we decided to drive around. We had no idea we would end up buying a small 15-acre farm in Greensboro. That's what finally did it, I guess -- the rainstorm.

VBM: Is that where you still live?

GIBBONS: No. We live in Hyde Park.

VBM: A lot of people think banking is dull, What do you find interesting about it?

GIBBONS: I've given that thought many times. I find it most interesting that, as a community bank, we're able to work with the community, small business, mortgage lenders, mortgage borrowers. I like the day-to-day interaction with customers, the challenge of a competitive industry. It's not at all mundane. We're never sure what the day will bring. There's something interesting every minute.

VBM: Can you give examples?

GIBBONS: Well, this morning I met with an architect. We're looking at upgrading one of our bank offices. I met with a couple of gentlemen who operate a small business. They've been having some cash flow problems, and we discussed ways to alleviate that, maybe restructuring, maybe looking at their business plan again.

VBM: So you help people solve their problems.

GIBBONS: Right. We hope to. We don't like to think we're part of the problem.

VBM: You said Union Bank is a community bank What does that mean exactly?

GIBBONS: Community banks are normally independent banks and smaller banks -- less than $250 million to $500 million in assets, depending on who you talk to. They usually serve a more rural area.

VBM: What's Union Bank's market or mission?

GIBBONS: We serve the town of Hardwick, Lamoille County and the towns surrounding the county. We're a niche bank. We don't cover the Burlington or Montpelier or Rutland areas.

VBM: What kind of businesses are important in your area?

GIBBONS: Actually, they're all important, because they all add diversity to the area.

VBM: I was hoping for a profile of the economy you serve.

GIBBONS: We have quite a bit of service industry -- hotels, motels, restaurants -- plus quite a bit of smaller manufacturing. We have the Turtle Fur Company. We have the Concept II folks that developed their rowing ergometer and sculling oars. Butternut Mountain Farm, who makes maple products. We also have some software firms that are getting some pretty good worldwide recognition. That diversity makes the business pretty interesting.

VBM: Do you serve the forest products industry?

GIBBONS: Yes, we are very much involved. We finance loggers and lend to a couple of sawmills. Right now the forest products industry and the related businesses are doing quite well.

VBM: Most community banks came out of the recession of the early '90s pretty well, compared to large banks. Now that the larger banks have recovered, they're making good money. How are the small ones competing?

GIBBONS: Well, there is no lack of competition, I can tell you that. There are 29 banks in the state, and almost 300 licensed lenders.