By Lauren Otis / Staff Writer
PRINCETON — Last month, The Bank of Princeton held a grand opening celebration for its newly completed headquarters building on Bayard Lane in Princeton Township.
Also last month, Lawrence-based First Choice Bank held a groundbreaking ceremony for a new branch on Route 33 in Robbinsville. First Choice Bank also intends to begin construction soon on another branch, located at the Shoppes at Hamilton retail center on Route 130.
In this economy? What’s wrong with this picture?
Nothing, say the chief executives of area community banks, who note that unexpected opportunity has come their way as regional and national banking giants have teetered, been rescued and acquired in the financial crisis brought on by the sub-prime mortgage debacle.
”I won’t tell you we are high on the economy, but I’m high on the business opportunities right now,” said James Hyman, president and CEO of Pennington-based Hopewell Valley Community Bank.
Mr. Hyman said HVCB had seen a particularly large influx of business from small businesses that were defecting from, or pushed off by larger banks. “There are more small businesses looking for a return to a banking relationship they can count on,” he said.
Community banks’ selling points — personalized service, flexibility and access to senior decision makers — are now particularly evident to commercial and consumer banking customers who must contend with the uncertainty of financial restructurings and new ownership among larger banks, say community bank executives.
”For The Bank of Princeton we have just been extremely fortunate to be at the right place at the right time,” said Stephen Distler, chairman and CEO of The Bank of Princeton, which has branches in Pennington and Hamilton as well as on Chambers Street in downtown Princeton in addition to its Bayard Lane headquarters.
Having been in operation only 18 months, The Bank of Princeton had no exposure to loans which turned bad with the economic downturn, so its balance sheet is strong, Mr. Distler said. And as banks with a large presence in Mercer County have been acquired in the current financial markets shakeup — including Wachovia Bank by Wells Fargo Bank, Commerce Bank by Toronto-Dominion (TD) Bank, and Sovereign Bank by Banco Santander — The Bank of Princeton has benefited from a flight of customers from these institutions.
”A lot of people are taking comfort keeping their money closer,” Mr. Distler said, taking it out of the stock market, even money market accounts, and placing it with a local bank in government insured certificates of deposit.
”We’ve had some fairly extraordinary deposit growth in 18 months,” Mr. Distler said. He said The Bank of Princeton has taken in $150 million in deposits over 18 months, a figure he called “almost unimaginable.” The bank had originally projected deposits of $100 million for this point in its development, he said.
”We’ve actually seen a bit of a flight of customers, both commercial and consumer, from the larger banks to us,” said Randy Hanks, president and CEO of First Choice Bank. “We’re feeling pretty good despite the news out there,” Mr. Hanks said.
Mr. Hanks said economic woes and upheaval in the stock and other financial markets had given customers more confidence in putting their money in, and doing business with, locally owned institutions. Community banks gave customers the ability to sit down with senior executives and talk about their plans, a level of communication and comfort the financial crisis has served to underscore, he said.
Mr. Hanks said he was pleased with First Choice’s expansion plans, noting Robbinsville is a “deposit-rich area” filled with other banks that are currently, or will be, going through transformations that will present opportunities for his bank.
Hopewell Valley Community Bank is 10 years old, with two branches in Hopewell Township in addition to its headquarters branch and branches in Hamilton, Ewing, Cranbury and Ringoes, and has avoided the portfolio problems of the big banks, such as investments in subprime loans, Mr. Hyman said. “Because the contrast between a community bank and a large bank is so big now … it’s given us a chance to really show what we can do,” he said.
