NEWTON, Pa. -- Owen O. "Chip" Freeman Jr., chairman of both banks he started in the late 1980s, says community reinvestment was traditional in southeastern Pennsylvania well before the federal redlining law was enacted.

"We're career community bankers out here - as opposed to people who started with Chase or Citi and had a lot of sophisticated training. But you don't need sophistication when you're serving communities."

Indeed, there's nothing very involved about Mr. Freeman's approach to community reinvestment.

Reaching Out to Customers

In Newtown, where his $103 million-asset Commonwealth Bank is based, employees sometimes rely on sign language to work with immigrant borrowers.

And in York, home to his $65 million-asset First Capitol Bank, Mr. Freeman has started helping first-time homebuyers with a program, "Adopt a House," which runs as selflessly as a Pennsylvania barn raising.

As a result, each of Mr. Freeman's banks has a "satisfactory" Community Reinvestment Act rating from the Federal Reserve - ratings which Mr. Freeman describes as "very high satisfactories."

"I think both would have been rated |outstanding' if we had argued for it. We've always sought to be |outstanding,' and that's what's really important to us."

The "Adopt a House" program, devised by the town of York, depends on banks to buy houses in disrepair. The houses are fixed up by the banks, then sold to lower-income people screened by the city - which also picks up closing costs.

In its first "adoption," Capitol this year bought a three-story row house for $35,000 and then spent $3,500 on repairs.

That doesn't sound like much for a rehab, but the dollars were stretched pretty far.

"We have a customer, a builder, who helped out with the work. And I'm damn glad to say that all our bank employees pitched in, too."

The couple buying Capitol's row house a brick one, is African-American.

Mr. Freeman is eager to help out many more minority and lower-income people through the program, but his plate of community reinvestment efforts won't be empty in the meantime.

"We're also involved in a minority-business loan program whose president is a member of our board, and we've raised $250,000 for his lending. We're also lending in significant amounts to women and minority women who start their own businesses."

Loans to Small Businesses

Capitol has a loan-to-deposit ratio over 90%, with 70% of the loans being small business assets. Out at Commonwealth, which is in affluent Bucks County, the deposit ration is 50%, with 65% of the loans in the commercial and industrial realm.

Commonwealth also has an asset presence in Trenton, N.J.-which isn't far from is Yardley, Pa., branch on the Delaware River. Most of the Trenton borrowers are small businessmen, and a few of those are foreign-born Koreans and Vietnamese. Many have not yet learned English - but sign language works just fine in a pinch, Mr. Freeman says. He notes that the Asian immigrants, along with Trenton's African-American borrowers, have excellent payment records.

In Advance of CRA

Mr. Freeman started banking with Harrisburg National Bank and Trust, now part of Mellon Bank, back in 1956. He argues that he and his peers have been supporting minorities and their neighborhoods "a long, long time before anyone told me about CRA."

Frank Pinto, executive director of the Pennsylvania Community Bankers Association, strongly agrees. "Community reinvestment is the only reason for community banks to exists."

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