It's A Wonderful Bank

Orwell, Vt., is way off the beaten path. To get there, I fly from New York to Burlington, then drive over an hour south--well past where the strip malls and Dunkin' Donuts franchises give way to tidy fields and occasional farmhouses. After spending the night at an inn near Orwell, I discover that the proprietress doesn't take credit cards, and I've left my checkbook at home. No matter. She tells me to mail her a check later.

I drive over to Orwell's town center, where rain has kept almost everybody off the streets. The village green is empty, as is the elementary-school yard. I've come to this community of 1,100 to visit the First National Bank mf Orwell, originally chartered as the Farmers' Bank of Orwell in 1832. It has just one office and $23 million in assets--small potatoes. As BUSINESS WEEK's banking editor, though, I focus mainly on the country's biggest institutions, so I have come here looking for a financial outfit that still does business the way Jimmy Stewart did in It's a Wonderful Life. I want to find aut if a bank can prosper by offering simple, straightforward service, the kind provided by the savings and loan in Frank Capra's Bedford Falls.

When I arrive at First National shortly before 9 a.m., I'm met by Mark Young, the 42-year-old president. The three female tellers are getting ready for the bank to open as Young steers me through the tiny lobby into his office. His house adjoins the bank: Like his father and grandparents before him, Young's commute consists of walking through a hallway door.

The Young family connection to First National dates from 1880, when Davis L. Wells, Mark Young's great-grandfather, was hired as the bank's telegraph operator and eventually took over. Now, as Young sits at great-grandfather's rolltop desk in his office, which doubles as the boardroom, he can point to the original charter hanging on the wall. Young's grandparents, Russell and Mabel (nee Wells) Young, ran the bank. (Mabel also played the piano for silent movies in the town hall.) Russell's son, Robert, took over in the 1950s, and he turned the institution over to his son in 1979. Mark remembers playing as a toddler in his playpen behind the teller windows. A scar on his little finger is a reminder of how he used to swing on the vault door--and how the door could shut suddenly and hard.

First National offers few of the services most Americans take for granted. There is no mutual-fund salesperson, no ATM. But then, as Young says, "there is not a whole lot that someone needs cash for at midnight in Orwell, Vt." Sometimes, when Young is at a big supermarket in one of the larger towns nearby, customers hand him their paychecks and ask him to deposit them. He does it.

GOOD SHAPE. The bank's delinquent loans have increased of late. Young says that one $115,000 mortgage, the bank's largest, is past due, and "it plays havoc with our delinquent loans." Overall, though, First National is in good shape. It gets an A rating from Sheshunoff, a rating firm in Dallas. It's hard to believe that Young is in the same industry as Citicorp, with its $161 billion in loans.

Unlike other parts of Vermont, the out-of-the-way region around Orwell has a dearth of development. So there's little loan demand from real estate speculators and less chance of First National's going overboard. "We're kind of out here in Nirvana," says Young, grinning.

Orwell benefits from having its closest rivals 20 or so miles away, in Fair Haven and Middlebury, and most of the banks there don't offer Young's personal touch. "The bigger the big ones get, the better off I am," he says. "A lot of people want somebody to take a personal interest in them. They want to know the teller and be treated with respect." David Girard, a credit specialist at the Agriculture Dept.'s Farm Services Agency who has worked with Young on many loans, says some people go out of their way to bank at First National rather than at big bureaucratic institutions.

MATTER OF CONSCIENCE. Even so, business is getting harder, what with the troubles besetting dairy farmers, Young's biggest customer group. Milk prices are level with those of 18 years ago, but prices on feed, cattle, and equipment have all increased. Rising costs are also squeezing owners of apple orchards. Still, Young keeps making agricultural loans. "The temptation is to run for cover, but this bank wouldn't be here if it weren't for farming. My conscience won't allow me [to stop lending to farmers]", he says. Girard says most of First National's loans are so small--generally less than $100,000--that exposure to any one customer's problems is limited.

We step out of Young's office into the main area of the bank, where customers stand at two of the teller windows. "Hi, Mark," says one, holding a toddler up to the window. Young stops and chats, waving at the child, then ushers me outside for a spin. It is immediately clear that Young's devotion to small-town banking is in part a way of helping a community he loves. Passing what looks like abandoned farmland, Young says that development rights have been bought by a state trust aimed in part at limiting development and "keeping Orwell looking like Orwell"--a favorite phrase. Young is a state representative for Rutland and Addison counties, a part-time job in Vermont, and as we travel dirt roads past fields and orchards, he points to road-safety improvements and state-park developments he has promoted.

It's hard for me to believe that Young can just soldier on as he does, what with the consolidation wave sweeping the industry. Oh, he has been approached by private investors interested in the bank. But Young and his family control 42% of the stock of First National, with the remainder held mostly by local people, and Young is not interested in selling. He's happy just doing his work in Montpelier and tending to his bank. A wonderful life, indeed.

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