The First National Bank of Orwell

Vermont Bank Thrives While Others Cut Back

Excerpts:

While many of the nation’s large and midsize banks are staggering under the weight of bad mortgages piled up during the housing boom, the First National Bank of Orwell, Vermont’s smallest bank, founded in 1832, is having its best year in recent memory. Loans are up 22.6 percent from a year ago, and deposits are up 7 percent in the same period, Mr. Young said. The bank has $36.5 million in assets.

“If the banks maintained the lending standards that they had established in the past, and had not and did not buy a lot of securities from Fannie Mae and Freddie Mac, they’ve got no problems and they’re sound,” said James F. Gatti, a finance professor at the University of Vermont.

“There is a value to sticking to your knitting, if you will,” Mr. Gatti added. “And I think banks that did will prosper, and prosper nicely, in the next few years.”

...

First National, whose main branch is next to a village store where local residents sit on the porch, drink coffee and chew the fat, has stayed successful because its employees know the area and their customers.

“Having the borrower sit in front of us is very meaningful,” Mr. Young said. “We’re not massive brokers, trying to underwrite a loan from the 55th floor of an office somewhere. There’s serious value in looking someone in the eye and understanding what their drive is, where they’re coming from and how serious they are about the project.”

The employees at the branches here and in neighboring Shoreham also know where a building project is and what it looks like.

“We benefit from knowing what house they’re talking about, what shape it’s in and what neighborhood,” Mr. Young said. “We benefit from a very detailed knowledge of our community, its people and its geography.”

Many times, the project is on one of the dairy farms that dot the verdant, rolling hills here. Or a couple are asking for a mortgage to buy their first home. No matter who the prospective borrower is, the bank requires a 20 percent down payment for every loan, Mr. Young said.

Comment: It's that face to face, know the customer, know the community that I like about the First National Bank Of Orwell. Apparently they do not have a website!