Fallout: The Financial Crisis

Vermont bank invests in staying small

Marketplace Staff Sep 11, 2009
Fallout: The Financial Crisis

Vermont bank invests in staying small

Marketplace Staff Sep 11, 2009


TESS VIGELAND: Vermont is one of only two states in the nation that doesn’t have a single bank that took bailout money. That’s because the Green Mountain State has no large banks chartered within its borders. In fact, you can’t find a single branch of the big institutions like CitiBank or Bank of America. It does, however, have one of the smallest banks in the country with just 5,000 customer accounts.

From Vermont Public Radio, Jane Lindholm has this profile.

Jane Lindholm: The First National Bank of Orwell is the only bank in Orwell, Vt. Orwell is a farming community with about a thousand people at the southern end of Lake Champlain. Dairy farms dot the countryside and the bank sits in the small village, not far from the school and the general store. The bank is the kind of place where everybody knows your name.

Teller: Hi, how are you, Mr. Goddard?

Mr. Goddard: Quite well, and you?

Teller: I am good today.

Mr. Goddard: I can see that. If you was any better, you’d be too good, right?

Teller: Oh, yeah, right.

Mr. Goddard: Hi, Diane.

It’s been this way for almost 200 years. This is the oldest nationally chartered bank in New England and the bank is still in its original brick building — the word “BANK” spelled out roughly in marble letters above the entrance. Inside, warm light filters through antique green lamps. Some of the furniture has been in place for at least 100 years.

The tellers use old wooden coin trays and they talk to their customers through brass grates worn dull, below original signs that just say “Teller.” Like on this day when a group of second graders crowded around.

Child: Can we please have a check for $350?

Teller: Now how are you going to pay for that check?

Children: Right here. That’s how much there is.

Teller: OK. Well, you know what I have to do. I have to count it.

Children: OK. Yup, Mrs. S said.

Teller: And who is the check going to be made to?


Teller: OK! It’s going to take me a minute, OK?

One of these Orwell second graders had a grandmother working as a teller. And their teacher, Mrs. Young, who corralled the rambunctious class into the small lobby, is married to the bank’s president. Her son, Bryan Young, is the bank’s vice president. The bank has been in the family since 1888 and Bryan Young is the fifth generation to actually live in the bank — he and his siblings grew up in the attached house.

Bryan Young: It’s always been an extension of our home. So it wasn’t unusual for us to come home from school and come into the bank and play around. They’d set us to work at counting a stack of cash and I’m sure most of that was done just to keep us busy. But that was not an unusual pastime for my siblings and I.

In fact, this bank might seem a bit unusual. Young says the bank doesn’t offer credit cards and its four loan officers didn’t make subprime loans.

Young: Our size gives us the distinct advantage of being able to underwrite every loan. All of the loan officers sit down and discuss the merits of a loan and we can truly make a decision on every loan individually and there doesn’t have to be any set of underwriting rules or any manual to follow. As cliche as it sounds, it’s definitely not by the book. There is no book for us.

Young admits that the small size of the bank is a challenge. There are only two branches and the bank can’t compete with larger chains. Its ATM machine has a dial-up modem. Vermonters have to cross state lines or bank online if they want to access a national bank, like Bank of America or Citibank. Some do, but Young says his bank has an advantage.

Young: I guess every part of Orwell is tied into the bank and the bank’s probably tied into so many others. The relationships between stores and churches and organizations and the bank are so intermingled that they all mean a great deal to each other.

And a great deal to Orwell’s balance sheet. Young says both loans and deposits have increased significantly over the past year.

In Orwell, I’m Jane Lindholm for Marketplace Money.

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