Academic journal article ABA Banking Journal

A Good Time to Be a Community Bank

Academic journal article ABA Banking Journal

A Good Time to Be a Community Bank

Article excerpt

People's Bank of Seneca

Non S-corp bank under $100 million

Bankers Deron Burr and John Klute were talking at lunch recently in Seneca, Mo., about local economic conditions, when Klute observed how interesting it is that many people in town "ask us how we're doing," referring to People's Bank of Seneca, where they both work. Usually it's the other way around.

But times are not normal, and in Seneca, a town of 2,135 on the Oklahoma border, 16 miles south of Joplin, Mo., people want to know how their bank is doing.

The answer is: Quite well.

The $75 million assets People's Bank of Seneca had the sixth-highest return on equity (19.53%) among banks and savings institutions under $100 million in assets that are not subchapter S banks. It is the only hometown bank in the community, up against a branch of a large bank, and is a very active and visible supporter of the community. But such is the effect of relentless headlines about banking troubles, that people have become the questioners of the bank.

There's another reason for the questions, says Burr, who is the bank's president and CEO. They know how important the bank is to the community and figure if we're still lending, then the community is okay.

They are lending.

"Loan demand is pretty decent," says Burr, "though I'm not going to say it's great--construction has declined." Primarily a retail bank, People's does a "little bit of everything" in terms of loans, including non-conventional mortgages. "That's one place community banks have an advantage," he says, "we know people and can structure [a loan] where we're comfortable."

School contest leads to a 3% account

Comfort works both ways, and Burr says that with all that's transpired in the last 9 to 12 months, people feel more comfortable dealing with the local bank they know. In the case of People's Bank's 16 employees, they are "known" quite literally.

Many of them, for example, attended the recent graduation ceremony at Seneca High School, even though they didn't necessarily have any children in the school. It's just a big event in the community, explains Burr.

He's the radio announcer for the high school football games, which in this part of the world are a very big deal. Most of the bank's employees help work the games.

People's Bank adopted another bank's idea for a "Millionaire for a Day" contest and built it into a major event, which led to the creation of a new deposit product. …

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