Banks making the most out of late '90s

Vermont Business Magazine, Mar 01, 1998

The Internet? Try the intranet. "Without a company-wide Email system you're really lost," Hashagen said.

Like many others, Hashagen sees a difference between Chittenden County's economy and most of Vermont -- thus the value of a move into that territory -- but he doesn't see a single dividing line. The White River Junction area is doing well, too, he said, and Brattleboro has been increasingly an engine of growth in its own right.

In the end, it depends on the company or individual. "Loan quality is probably the single most important thing for the banking industry," Hashagen said -- and non-performing loans have been reduced to a minimum.

"Once you do that," he said, "all the other stuff is on top of that."

OR IS SMALL BEAUTIFUL?

Believe it or not, there are banks whose missions do not include maximizing returns, even when stockholders are involved. For some of Vermont's independent community banks and the local families that hold (and hold and hold) the bulk of their shares, it is enough to post a reasonable rate of return and to be of major service to households, businesses, local governments and schools, and to the downtown business districts where the historic brick bank buildings are often vitally important anchors.

But even they have been tempted to broaden their scope in recent years, albeit in suitably cautious ways. Adding a branch in a neighboring town is easier now, especially with automatic teller machines to expand the hours, and such expansions may do as much to protect the flanks against a larger institution with a larger mission.

At the National Bank of Middlebury, president Ken Perine said, "We're doing just fine, coming off a very good year in a lot of ways." Stockholders liked the upswing in retained income, assets were up about 12 percent to $113 million, and the $70 million in loans was up about 12 percent as well, he said. Even deposits, which totaled $93 million at year's end, were up about 9 percent.

Mainly, though, "We'd like to be stable from year to year," Perine said.

It's a tough environment, in which people don't want to pay high interest rates on loans, but want them on deposits, and in the end often become desensitized to interest rates and go to mutual funds. Everyone from money stores to credit unions to insurance companies acquiring unitary financial charters wants in on the commercial loans.

"It takes a lot of work," Perine said -- but the National Bank of Middlebury isn't afraid of work.

Where community banks have staying power is in the trust built up over the years -- 160 years, in NBM's case, Perine said. "To the public, it's like a Good Housekeeping Seal of Approval. When a bank gets into investment services or insurance (as NBM is doing with Boston-based mutual fund giant Linsco/Private Ledger and with the Bristol Insurance Agency), people know the products come with no strings attached, and "nothing will come up and bite them later on."

"We want to create a financial services company," Perine said. There are many places to buy the particular products a person or household may want, but not that many places to pull it all together and do an overall assessment and plan for asset management.