Sometimes mutual thrifts forget that their charters, like those of hospitals and charities, stress service to the community. Gorham Savings Bank in Gorham, Maine, surely hasn't.

Talk to Ronald B. Demers, president and CEO of this 126-year-old, $260 million-asset thrift, and you find that customer service is the key to everything they do.

* There is no service charge for using ATMs, even overseas at the bank's expense.

* If customers keep $300 in savings, the only service charge on deposits is for an overdraft.

* About 99% of mortgages are at fixed rates, because that's what the customers want.

* Savings rates are over 1% higher than those offered by the competition.

* If summer jobs are available at the bank, local children get them, and college students from town are kept on as weekend employees to help them pay their tuition and expenses. The bank also pushes student loans with a big banner that reads, "We have money to learn."

Though the town has three banks and a credit union, Gorham Savings gleans a full 80% of the savings deposits in town.

Willing to Pitch In

The bank is still able to earn a healthy 1.55% on assets, despite all these giveaways, and Ron attributes this to efficient operations. As example, he admits that when three of his four customer service reps, the people he feels are the way to his bank's reputation, are at lunch, he himself answers the phones - without telling the customers who he is - so that service can continue uninterrupted.

One can ask, why don't the service reps stagger their lunch breaks? But Demers' answer is that they like to eat together, and this keeps morale high.

Of course, another reason for the high return on assets is that the bank is well capitalized as a mutual, with a reserves-to-assets ratio of 10.99%. Thus the interest it earns on using its capital is another force adding to the return it earns on depositors' funds.

Other tricks of the trade that Ron Demers talks about:

* The bank has perfected the use of biweekly interest payments on consumer and mortgage loans, thereby reducing the maturity of its portfolio well below what it would be with just monthly payments. Where possible, in addition, the payments come out of accounts directly, so the bank doesn't lose that float time on payments.

The bank has made an agreement with a local supermarket for the customer service reps of the grocery to encode the amounts on deposited checks, with the bank giving a 30% discounts in the account analysis for this service. It makes sense, Ron explains, because it costs less to have supermarket people do this that to have it done at the bank.

Credit Union Connection When any local group needs a contribution, Demers calls the local credit union and agrees to share the cost and the credit, so that both local institutions benefit from the program. This helps explain why the two other banks in town, both branches of superregionals, hold so small a share of the public's deposits.

But basically the bank thinks of community service as its mission.

By law the bank must have corporators, and those chosen show real pride in the bank, although the 62 corporators meet only one a year with the basic responsibility of electing the eight trustees who run the bank. But here, too, the bank's pride in the community comes to the fore.

For example, when former CEO and now trustee chairman Allison Edwards talked to me about the bank, one of his greatest triumphs, he admitted, was getting the new president of the University of Southern Maine to sit on his corporators' board.

Sure the bank is not insulated from banking problems elsewhere, as indicated by the fact that they just hired an in-house lawyer whose biggest job is compliance.

But when you talk about interstate banking and competition from investment houses and others to the Gorham Savings Bank's people, you get a big yawn. They are far more interested in the fact that nine employees out of a staff of 82 are either pregnant now or had babies in just the past year.

Mr. Nadler is a contributing editor of American Banker and professor of finance at the Rutgers University Graduate School of Management.

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