CEO and chairman Steven Schnall (right) and Frank Melia (left), a certified mortgage planning specialist, serve low-income families at Quontic Bank, a mission-driven community development financial institution. Photo: Dan Bigelow
Community banks operate with a mission of serving their customers and supporting their communities. To celebrate Community Banking Month, here are stories from five banks that are each making a difference in their own way. Warning: You might want some tissues handy.
By William Atkinson
Quontic Bank is a community development financial institution (CDFI), a U.S. Treasury designation awarded to fewer than 2 percent of banks in the U.S.
“As a CDFI, our mission is to lend to low-income families and in low-income communities,” says Steven Schnall, chairman and CEO of the $375 million-asset community bank in Astoria, N.Y. “We finance hundreds of homes for first-time homebuyers every year, many of them immigrants with limited resources. We also help low-income seniors tap equity in their homes so they can age in place.”
Such a mission yields many meaningful interactions, and Frank Melia, a certified mortgage planning specialist, vice president and senior lending/reverse manager for Quontic Bank, has such a story.
In 2017, Melia helped a family secure a home equity conversion mortgage (HECM), an FHA-insured reverse mortgage, for their mother, who has Alzheimer’s.
“Her financial resources were limited, and it was putting a major strain on the family,” Melia says. “The HECM enabled her to tap into the equity in her home and continue to age in place, so that she didn’t have to enter a nursing facility.”
One of the woman’s four daughters had power of attorney and noted, with sadness, that she hadn’t been able to have a conversation with her mother in some time, because her mother simply didn’t talk anymore. “When I arrived at the mother’s home, however, she stood up, approached me and told me that she thought I was from Dancing with the Stars,” Melia says.
Melia didn’t have to think twice. He put out his hand, she took it and they danced around the kitchen for about 15 or 20 seconds. He then helped her back to her chair. “The daughters were there and started crying because their mom hadn’t spoken in two years,” he says. The daughters told him that their mother had been a dancer as a young girl and had continued to love it throughout her life.
“Something triggered her to speak to me, and it was pretty emotional. She was able to be her old self, even if just for a few seconds,” Melia says. And even after she sat back down, she continued to smile at Melia the whole time.
I still receive cards and calls from the daughters because we were able to help them get the HECM loan so that their mother could stay in her home.” —Frank Melia, Quontic Bank
“I still receive cards and calls from the daughters because we were able to help them get the HECM loan so that their mother could stay in her home,” he says. “They also tell me she has been a different person since then. It’s been good for her and for her family.”
Turning a customer into a small‑business owner
In preparation for the opening of Farmhouse Bar & Grill, Mike Hegnet (left) sought financial guidance from Tim Treml (right), CEO and president of Bank of Luxemburg.
The success story that occurred for two customers of $356 million-asset Bank of Luxemburg in Luxemburg, Wis., simply would not have happened if they had been customers of a regional or national bank. That’s because those institutions wouldn’t have been able to strategically “connect the dots” the way that Bank of Luxemburg did, says Tim Treml, the community bank’s president and CEO.
“Recently, we had a customer come to us who wanted to be in the bar/restaurant business,” he says. “He had put together a list of who his staff would be, including people to manage the front and the back office.”
At the time, there was a bar and restaurant in town that happened to be on the market, which attracted the customer’s attention. When the customer sat down with Treml and others at the bank to discuss purchasing it, they saw his excitement and passion for the business. However, in reviewing his financial information, they saw he didn’t have sufficient capital to purchase the business and make a successful start. “The price was just unattainable for him,” Treml says.
If he had been a customer of a regional or national bank, the story probably would have ended right there. But due to its deep community connections, Bank of Luxemburg’s lending team knew that one of its other customers who owned a different bar and restaurant in town was starting to think about getting out of the business—something no one else knew yet.
Treml says this knowledge was due to the fact that good community banks often function as business advisors to their customers, since small-business owners usually don’t have access to many other consultants. “As a result, our small-business customers often confide a lot of their business plans with us,” he says.
Bank of Luxemburg was able to get the two gentlemen together in a room to talk. “They both got along well with each other,” Treml says. The potential buyer spent a lot of time visiting the existing bar/restaurant, getting to know the clientele and learning how the business operated. The owner was also willing to share some financial information with him.
In time, the sale happened, for about half the price of the original business that the customer had first looked at. “As such, it was much more financially feasible, and it allowed him sufficient capital to cover the first couple of months of operation,” Treml says.
Since that time, the two men have worked through a smooth transition, and now the community is excited for the new bar/restaurant. What made this transaction a success? “As a community bank, we have boots on the ground, and we know our customers,” says Treml. “We are community members, and we walk up and down Main Street. If we didn’t do this, and if we didn’t know our business community on a personal level like this, things like this just couldn’t happen.”
Laying a solid foundation
Heritage Bank covers the operating costs of the Heritage Community Foundation, whose board of directors includes several bank employees and executive director Mark Dose (far right).
Community banks’ impact isn’t limited to the dreams they can make come true through loans. They also help their communities at large.
“As is common among bank executives, I served on a number of nonprofit boards,” says Leonard Moreland, CEO of $520 million-asset Heritage Bank in McDonough, Ga. “One of these boards was for a free clinic where people could go to get free healthcare. We were bold, and we hired a doctor and other staff rather than relying on volunteers.”
As a result, the organization ended up depleting its reserves and fell into a dire financial situation. It faced the prospect of having to considerably scale back the clinic. “I realized that there had to be some organizations out there that could help us,” Moreland says.
He visited a friend who was with the state’s Division of Family and Children Services, and who knew every organization that raised funds for groups like the clinic. The good news was that most of these organizations wanted to help. The bad news was that the help could not be immediate.
“They showed us foot-tall stacks of papers with applications, vetting processes, etc., and told us that, if everything went well, we might be able to receive funding in a year or two,” Moreland says. This was a problem, given that the clinic needed to meet payroll the next month. “As a result, we ended up having to scale back the clinic,” he says.
Jenny Smith, a board member of the Heritage Community Foundation, highlighted its involvement with HOPE Park, a nonprofit supporting children with special needs, at the 2018 Golf Classic.
Moreland decided that he wanted to start his own foundation, one that wouldn’t deliver services but would use the bank’s brand as a way to generate attention, interest and money to provide grants to existing nonprofits. The Heritage Community Foundation launched in January 2015. The bank pays 100 percent of its operating costs, including its executive director’s salary.
The next step was to create a board of directors made up of non-executive employees of the bank, including tellers, bookkeepers and loan officers. Moreland then reached out to the bank’s employees and asked if they would like to support the foundation through payroll deductions, and 100 percent of the employees agreed to do so.
“Then, when word about the foundation started to get out into the community, a lot of people outside the bank wanted to get involved, so we created an opportunity for community partners to come in,” he says. “Most of these are corporations and small businesses that contribute to the foundation, sometimes directly and sometimes through payroll deductions of their own employees.” The foundation hosts a golf tournament and a clay shoot every year to raise additional funds.
[Increased business] was never even a consideration when we started [the foundation]. It was just a way to find a way to fund deserving nonprofits.” —Leonard Moreland, Heritage Bank
Eventually, local media began to pick up on what the foundation was doing, which has projected the name of not only the foundation but also Heritage Bank further out into the community. “The bank gets so much positive feedback, and we have even gotten new customers because of what we are doing for the community,” Moreland says. “This was never even a consideration when we started this. It was just a way to find a way to fund deserving nonprofits.”
In 2015, the Heritage Community Foundation donated $72,400. That number grew to $96,200 in 2016 and $130,400 in 2017. This past year, it donated approximately $150,000, reaching a four-year total of nearly $500,000 in December. And, in that time, the foundation has provided grants to more than 100 nonprofits in the three counties that the bank serves.
Moreland sees the concept expanding. “In late 2018, our bank was involved in a consolidation with two other banks, and we are forming a multi-bank holding company this year,” he says. “Both of these banks want to have foundations in their markets as well.”
And the expansion isn’t over. “I have been contacted by at least two dozen other bankers from across the state and even outside the state who have heard about us, and at least three new similar foundations have started as a result, using our policies and procedures,” Moreland says. “We are happy to share it with anyone who is interested.”
First Citizens Bank’s leadership team volunteered at Community Kitchen of North Iowa. The community bank allows employees to pick causes that are important to them to spend time volunteering.
Giving back to the community can occur in ways other than financial, of course. Community bankers can also donate their time.
“The governor of Iowa promoted the [Give Back Iowa Challenge] program to businesses in the state to build a sense of community, and we realized that we wanted to get involved,” says Dan McGuire, chief human resources officer for $1.2 billion-asset First Citizens Bank of Mason City, Iowa.
Launched in 2015, the Give Back Iowa Challenge is designed to engage Iowans in employer-supported volunteering. “Volunteering not only has a significant impact on meeting community needs, but employer-supported volunteering has a positive impact on business, including strengthening employee engagement, organizational commitment, job satisfaction and retention,” its website notes.
First Citizens Bank employees threw themselves into the challenge, winning the award for most employee hours donated among its category of medium-sized employers in 2016 and 2017, and small-sized employers in 2018. The honor is based on the total number of employees, with sizes from small to large, and covers all industries.
During April and May 2018, First Citizens Bank employees volunteered 2,335 hours, an average of 11.3 hours per employee. “We allow employees to select causes that are important to them,” says Jon Prebeck, vice president of retail for the bank.
Some volunteers spent their time cleaning up and fixing a dilapidated area around a high school. Others volunteered at a county museum. “The governor came and presented the award to our CEO in 2018,” Prebeck says.
I have worked at a number of places where management talks about volunteering, but there is no real action. Here, there is action. In fact, senior management is just as involved in volunteering as all of the employees are.” —Jon Prebeck, First Citizens Bank
Why does First Citizens Bank win year after year? “I think it is because of our culture,” Prebeck says. “Our leadership strongly encourages it. I have worked at a number of places where management talks about volunteering, but there is no real action. Here, there is action. In fact, senior management is just as involved in volunteering as all of the employees are.”
A while back, McGuire happened to receive a call from a woman who worked for an industrial plant in Iowa City, Iowa. She wanted to discuss various options for benefits programs. McGuire wasn’t sure why she had selected him to call, but he was happy to talk with her. “However, at the end of the conversation, she explained why she called and how she knew us,” he says. “She good-naturedly explained that our bank had beaten their company two years in a row in the Give Back Iowa Challenge.”
First Citizens Bank recently received an email about signing up for the challenge again. “We definitely plan to participate,” says Prebeck, “and we do plan to keep track of our hours and make sure that we contribute our part—but we would like someone else to win next year.”
Extending a hand
Gov. Kim Reynolds (center, in white top) presented an award to First Citizens Bank for donating the most staff hours among medium-sized companies during the Give Back Iowa Challenge.
Sometimes, even small things that community banks do can make a big difference.
In September 2018, Hurricane Florence ravaged North Carolina. “We wanted to make sure customers had time to focus on important things, such as finding places to live and other things to take care of themselves, their families and their businesses,” says Jonathan N. Krieps, chief operating officer of $897 million-asset North State Bank in Raleigh, N.C. “We wanted to do something so our customers wouldn’t have to worry about one more thing.”
The community bank notified its customers that it was offering an automatic extension to them for payments for that month. “If they wanted to use the extension, all they had to do was let us know, and we would automatically process the extension for them,” Krieps says. “Over 100 customers accepted the offer for an extension, almost all of whom expressed thanks to us for doing so.”
William Atkinson is a writer in Illinois.
This content was originally published here.