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Main Street without bandwidth

Economic development may hinge on high-speech connections—or some bankers’ time and sweat

Main Street without bandwidth

There was an interesting article in The Wall Street Journal this week discussing the impact that availability of high-speed internet access is having on housing values. Homes lacking access to broadband have simply become “off limits” to a rising tide of young to middle-aged home buyers.

Where it is a factor, this collective shunning of homes without broadband is negatively influencing “days on the market,” markedly slowing turnover of housing inventory in many communities. If one town or city lacks connectivity and a neighboring one has it, then the “bandwidth-poor” community faces a disadvantage. And such negatives carry specific financial costs.

Could this be a form of “redlining” of neighborhoods or whole communities? But one that’s wholly legal—at present—and a consequence of the inevitable growth and omnipresence of technology?

Thinking about this internet issue got me thinking about my days as a community banker involved in all sorts of projects of a civic and charitable nature. It’s what community bankers do. Without them, often something goes missing.

Bankers as economic engineers

We are a reliable source of manpower—and perhaps brainpower—with our specialized experience and skills in finance, administration, marketing, and other specific areas often lacking in employees of not-for-profit enterprises. We often represent sources of funding too, as our employers expect to allocate contributions budgets at least in part guided by the services contributed by its employees.

Several years ago I read an article in Fortune magazine that gave an extensive profile of the career and views of Charlie Agemian, who had at one point served as head of correspondent banking for Chase Manhattan Bank in the 1950s. Charlie was one of the grand old men of the post-World War II banking era and at the time of the article was CEO of a large regional bank holding company in New Jersey following his retirement from Chase.

Drawing on his correspondent banking experience, Charlie observed that he could always tell as he travelled around the countryside visiting his customers how well the local banks were serving their local markets.

He said that it showed on the face and façade of the communities themselves. Was it a prosperous appearance? Or one suggesting a “down at the heels” mentality and outlook?

Community banks and bankers are the primary recyclers of any community’s wealth held in the form of the community’s bank deposits. Banks investing their loan portfolios in local infrastructure and projects is economic development at its most basic—and perhaps at its most efficient level.

Drive through town like a stranger

Living as I do in Texas and New Mexico, I drive through many communities, large and small, in the course of my travels for business and pleasure (such as visiting grandkids). I see lots of community downtown centers and in the years since reading that Fortune article, I’ve noticed just how accurate that observation by Charlie Agemian truly was.

Perhaps it’s just a blinding flash of the obvious. But this is one of the primary means of how community bankers differentiate ourselves from our big-bank cousins. We hear laments by community leaders and business people at the news of a local bank’s acquisition by a large regional or top-tier sized institution.

The issues are all familiar: community projects and endeavors lose what previously was a reliable source of funding for quality of life projects. And also lost is a presence in the acquirer’s business activity, such as representation on its board of directors or loan committee and perhaps access to its contributions budget.

Thinking and acting in economic development terms is probably the best and most visible way of demonstrating our commitment to our local communities. We need to be the names and faces of those on the front lines of improving our local environments. We assist and improve on the scope and scale of quality of life activities and protect them as custodians for our children and future citizens.

Too often we tend to see economic development projects solely as individual economic opportunities of a lending or deposit-generating activity. As true as that often is, it’s silo thinking. We can all be guilty of at least some of it some of the time.

The broader picture strongly favors community banks and the front and center position that their staffs take in the community’s life. Today’s tendency by larger banks that enter our markets by acquisition is to automate key aspects of credit underwriting and to centralize decision making on everything from marketing to resource allocations to loans at headquarters or regional centers in a distant city.

This often results in a vacuum of leadership, empathy, and involvement by the new players or owners. Our communities are the losers.

Play the community card

We should acknowledge the success of the larger banks’ business models in a purely financial way. They work well for them and their shareholders. But let us never fail to fully appreciate what we can and do bring to our local marketplaces. We should not be bashful about what we do or whom we tell about it. Happily, these activities are both good for our own business and good for the community as well.

Charley Agemian was astute in his observation. Yet it’s more than whether downtown looks like it needs a fresh coat of paint. It’s whether we have the buoyancy of attitude and outlook to create and perpetuate our own success.

I suspect that we’re better at it than we often realize. But make sure your town has great internet!

Ed O’Leary

Banking Exchange Contributing Editor Ed O'Leary, a veteran lender and workout expert, spent nearly 50 years in bank commercial credit and related functions, working with both major banks as well as community banking institutions. His last job before retiring was as the CEO of a regional bank headquartered in Alburquerque, N.M. He earned his workout spurs in the dark days of the 1980s and early 1990s in both oil patch and commercial real estate lending. O'Leary began his banking career at The Bank of New York in 1964, and worked at banks in Florida, Texas, Oklahoma, and New Mexico. He served as a faculty member and thesis advisor at ABA's Stonier Graduate School of Banking for more than two decades, and served as long as a faculty member for ABA's undergraduate and graduate commercial lending schools. Today he works as a consultant and expert witness, and serves as instructor for ABA e-learning courses. You can e-mail him at [email protected]. O'Leary's website can be found at

In mid-2016 O'Leary's "Talking Credit" blog received a bronze excellence award for the Northeastern Region from the American Society of Business Publication Editors.

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