Banks making the most out of late '90s

Vermont Business Magazine, Mar 01, 1998

"It all revolves around accessing the financial services to lead the lives they want to live and buy the things they want to buy," Perine said. "It's all very simple when you take that approach."

That said, Perine went on to observe that most people have limits to their resources, and survival can be "scary." But for anyone of any level of income, the bank as a community institution has a major goal "to provide community resources that have value."

Things have gone well enough in recent years to branch out from Middlebury, the Addison County seat and commercial center, to establish a Bristol branch, open a branch in the Shoreham Service Center in 1997, plan a branch for the Kampersville motor home encampment by Lake Dunmore in Salisbury, and sketch out a couple of other possibilities, Perine said. Acquisition of an adjacent multistory building in downtown Middlebury let them consolidate operations (closing an office in the town's industrial zone). Employment is up to 56 full-time equivalent positions.

Behind everything is their ability to make loans based on individual circumstances rather than the specifications of what will sell in the secondary market. "That is our niche," Perine said. As a result, "We mostly had a very exciting year, did a lot of new things, and were able to operate profitably."

In upper Rutland County, the tiny First Brandon National Bank brought in a new president, Scott Cooper, a veteran of community-level operations in Randolph. "We had a very profitable year," he said, between their Brandon and Pittsford branches, doing about a third of their business commercially and a two-thirds in consumer and residential loans.

As with Middlebury, creative lending is a big plus. The presence of a cottage industry can trigger a rejection in some quarters, in a state where one popular bumper sticker says "Moonlight in Vermont, Or Starve." Excess acreage, beyond homestead value, is often discounted for purposes of collateral at big banks. And so on. But, "There are ways around these issue," Cooper said.

Brandon, hit by the 1990-91 recession and then in 1992-93 by the closing of the state's facility for the retarded (the Brandon Training School), may be one of the few places where the local bank is still working off "other real estate owned" (OREO) from the recession era.

But Cooper said they are moving swiftly to bring that chapter to an end -- something the other sources contacted said was already accomplished. Meanwhile, redevelopment of the Training School and the arrival of an adjacent industrial park seem to be reviving the town's fortunes, and those of many of First Brandon's customers.

Larger than the community banks but not yet regional in scope are a number of mid-size Vermont institutions. An example might be Merchants Bank, headquartered in Burlington, under the holding company Merchants Bancshares, Inc, which has branches in 30 small towns.

"We've had an excellent year, in a number of ways." said president Joseph Bouton. "Most of the problems we had in the 1993-1995 time frame have finally been worked through," either by clients returning to profitability, refinancing, or being charged off. The recent increases in bankruptcies are a personal/consumer phenomenon, not a commercial weakness, he said.