Weekly Adviser: To Keep Your Bank Alive, Help Your Community

A banker visiting the Museum of American Art in Philadelphia might be taken back by two photos in a group by William Christenberry, a famed photographer of the rural South.

One is titled "Streetcar in Field near Moundville, Alabama, 1971" and the other "Bank Used for Storing Hay, Sumpter County, Alabama, 1974."

There they are, two decaying remnants of our economic past. One-part of the basic means of transport in the nation for over two scores; the other, the kingpin of finance for most Americans for generations-the rural bank.

The streetcar was killed by technology and greed. Many streetcar lines became unnecessary when the nation's roads improved and cars started to be mass produced. But many were killed by a combined attack from bus manufacturers, oil companies and tire makers, who did their dirty work by buying up the trolley lines and replacing them with buses.

Today we are spending billions to replace some of these abandoned streetcars (now called "light rail vehicles") because their private rights of way allow much faster travel than can be achieved on our gridlocked roads.

The death of community banks, like the being used to store hay, is also the result of economic decisions-some necessary and some wrong.

We lost half of our banks between 1920 and 1933 (dropping from 30,000 to 15,000).

The vast majority failed because their communities failed; many people left the farm, and those who remained could no longer support a bank. But other banks went under for such reasons as failure to diversify, excessive salaries for the owners, and government regulations. (It would be unfair to ignore the failures that stemmed from dishonesty in lending, insider credit granting, and a willingness to put friendship with the potential borrower ahead of sound banking practice.)

How can you ensure that your bank won't wind up a place to store hay?

Be optimistic. There is no reason that a community bank that is doing its job should die. The public wants personal attention, quick decisions, and an attentive ear to problems and mistakes.

Put the bank's survival ahead of benefits for employees, owners, and good friends.

Work for the community's survival. Lead drives for new industry. Help local employers improve financial techniques. Take a prominent role in service groups that fight legislative and regulatory policies that might hurt the town. Look at lending from a long-range perspective; think about whether the loan would create jobs-and eventually bring in deposits and more loans.

Sometimes it's hard to help your community and your bank as well. But many community bankers looking at that picture of the bank that turned into a barn would say, "Had I been running that bank, I'll bet this wouldn't have happened."

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