If you want to understand how community banks survive and thrive in a world of giants, just spend some time visiting one.

I did that recently, meeting with Dale Potter, president and CEO of the 4 1/2-year-old $104 million-asset Growth Bank in Harding Township, N.J.

In the first 10 minutes I was at Dale's desk, a call came in from a lending officer of a major bank, asking Growth to participate in a loan. Potter picked up the phone himself, explaining that the bank has a policy of four rings, maximum.

"Why did they ask you, with your obviously lower lending limit?" I asked.

"Because we give answers fast, and they were probably tired of the runaround larger banks would have given them before approving the participation," he replied. "They probably get a quicker yes from us than from their own hierarchy."

Other examples of why Growth can thrive in a world of giants:

Dale told me of a local businessman who came into the office and broke down in tears. His own bank had refused to renew his $250,000 commercial loan at maturity, even though he had never been late on his payments for the previous five years and his financials were fine.

"They just decided my business was too small for them, so they cut me out," the businessman explained. Dale indicated that a substantial percentage of Growth's loan portfolio Originated with other unhappy customers of larger competitors.

In another case, a large competitor closed a local office with over $60 million in assets and moved the accounts to a branch three miles away. The popular branch manager was moved about 15 miles to a new office. Growth Bank seized the opportunity to purchase the branch real estate. Ten months later, it hired the manager and her assistant and gained tremendous good will in the community, not to mention over $30 million in deposits.

In discussing this and the importance of customer convenience and relationship banking, Dale reminded me of the major New England bank that bought a smaller organization and closed a branch with $80 million in deposits because it was only three miles from their own branch in the same city. Expecting that people would go three miles to stay with the same bank, they found instead that $60 million of the $80 million walked out. It seems that poor judgment knows no geographic boundaries.

All community banks can point to cases where their large competitors have shot themselves in the foot. These include moving popular tellers to other offices, changing forms, service fees, and lending terms overnight, and putting in operations programs that complicate the conversion to new ownership.

Dale also indicated that, strange as it may seem, Growth Bank's employees have frequently interceded with larger banks on behalf of customers who have been ignored or mistreated.

In one situation where a larger bank's customer had been erroneously overcharged, Dale overheard a Growth loan department employee telling the larger bank's employee, "You can't treat your customer like that!"

But it is the positive actions of Growth Bank that Potter stressed when I asked how his bank has been able to do so nicely. "We don't believe in bashing big banks. We have simply created a philosophy of 'no-excuse banking' that emphasizes relationships and attracts customers like a magnet."

For example, Growth has a proverbial little old lady in tennis shoes who comes to the bank each week and goes around to every desk, availing herself of Growth's famous cup of coffee and talking to all the customer service reps about what is happening.

On the morning I visited Growth, she was in Dale's office asking him about treatment for her husband's asthma. Sure, she takes up time, but she also has recommended the bank to all of her friends and neighbors, making her a wonderful unpaid marketing officer.

In this age of increasing fees for services, Growth offers absolutely free personal checking with no minimums and no gimmicks, as well as free MAC usage at the other banks. Charges for overdrafts and other fees are set at levels well below the larger banks.

Increased market share is the direct result of these strategies. Dale again indicates that a substantial majority of Growth's deposit customers were driven into its arms by the aggressive fee policies of competitors.

Potter also states proudly that over 100 people show up for the annual meetings of this relatively tiny company. When a show of hands was requested to indicate how many shareholders were customers, over 75% of those in attendance raised their hands.

Remembering that the best customers a bank can have are its shareholders and that statement stuffers promoting your bank's stock that say something like "Put your money where your money is" are true winners, you can see why Growth is happy with this statistic.

But undoubtedly most typical of why community banks will continue to thrive was the story another Growth officer told me of a major client closing a deal on an office budding who suddenly discovered that he needed certified checks.

The closing was 15 miles away at an attorney's office, and Potter himself drove them over within 30 minutes. When questioned by me about this he replied, "Everyone else was quite busy, and rather than wait, I felt there was nothing more important to our bank that day than getting those checks where they needed to be."

In fact, Dale indicated that during the formative years of the bank, senior officers frequently filled in as messengers when needed. "A service mentality starts at the top, not in the middle."

No wonder earnings on assets and on capital are growing, deposits and loans are also moving up, and the bank's shares sell at 1 1/2 times book.

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