Not Every Bank Is in the Dumps

Not every bank is a Plaxico Burress.

There is a misconception that “all banks are in trouble.” Dozens of banks have certainly taken TARP funds, and there have been plenty of layoffs to go around in the banking sector.

But it is a mistake to a label the entire industry as broken. There is a whole category of banks that are anything but — they are called community banks.

Yesterday, I attended a small gathering of New Jersey bankers not far from where Burress was playing football, until recently. The bankers there work at institutions far from the headlines of the Wall Street Journal: Rumson-Fair Haven Bank & Trust, Investors Savings Bank, etc. By and large, they see “opportunities,” not the barrell of a financial gun.

Kevin Cummings, the president and CEO of Investors, even said the bank has rolled out an unsecured business lending program in 2008. He granted that “it makes our board nervous because it gets us away from collateral,” but he sees this product — and others at the bank — as a) comporting with the bank’s community-first mission; and b) a way to take advantage of the stumbles of the “big banks.”

The “big banks” were a frequent topic yesterday, and they were by and large lambasted as too reliant on financial models and too detached from Main Street communities. There’s something to this. When a bank is removed from its locality, it is removed from a full (that would be non-quantitative) understanding of local risks. Can a bank be “big” and “small” from a risk standpoint? I am not sure, but the guys at the Investors Savings Banks are not waiting to find out.