Community banks offer relationships that last, opportunities to grow

Community banks are more than lenders for small businesses. They benefit the entire community, making deep connections that help bring unity to the towns they serve.

Relationships matter to lenders and their clients.

Daniel Duncan, vice president and business banking team leader at Peoples Bank, often runs into clients while at the grocery or hardware store, at church, sporting events, the gym and elsewhere. Other lenders make the same observation.

“I think we’re approachable,” Duncan said. “We all live and work in the community.”

At a community bank, Centier Bank President Chris Campbell said, the loan officers look at more than the numbers.

“They know the individual. They know their history,” he said. “There’s a personalized service to it.”

John Freyek, Horizon Bank’s market president for Lake County, has been in the banking business 28 years, but his business roots go back even longer. Freyek’s father was also a banker.

“I grew up in this business — raised to be a small business guy,” Freyek said.

Northwest Indiana Forum President and CEO Heather Ennis said community banks are fabulous partners.

“It’s so exciting to have lending happening on the local level where people are engaged in the community and know the business that they’re dealing with as well as take part in making them successful,” Ennis said.

According to the Banking Strategist, community banks have firm footing, representing 97% of the banking industry. Community banks serve 1,400 U.S. counties with less than 50,000 people. Indiana has 89 of the 4,512 community banks nationwide, according to data from the first quarter of 2023 FDIC Call Reports.

Community banks benefit the entire community by providing jobs, economic development with loans, sponsoring local events, volunteering and donating to nonprofits, among other community-building tasks.

“I think we have an understanding of our local communities,” Duncan said. “We understand Main Street in our communities.”

Success story

Robert Acevez is a small business owner who found his current lender approachable. Acevez was trying to buy a 75-year-old funeral home in East Chicago in 2015 and was getting “just a lot of red tape” from the financial institution he was dealing with at the time.

Acevez tried a large national bank, looked online “and just didn’t get that warm, fuzzy feeling,” he said.

After doing a lot of homework online, he went to Peoples Bank for the loan.

“Being a family-owned bank, we gravitated toward them because that’s what we are,” Acevez said.

His son, Robert Jr., a senior at Munster High School, will take over the Acevez Funeral Home when Dad retires, the elder Acevez said.

After the experience with his new lender, Acevez switched all his personal accounts — including his mortgage and car loans — to Peoples Bank.

Anytime he enters the bank, he gets a warm reception. His questions are quickly answered, too.

“We’re on a first-name basis. That’s something you expect for the big CEOs” but not small business owners, Acevez said. “I feel like I’m important to Peoples.”

Success stories like these are good to hear.

“It’s an emotional conversation,” Freyek said, to hear from clients who have succeeded because of the bank’s assistance. “Sometimes it turns into a $1 million line of credit.”

Freyek enjoys consulting with people from the birth of their company to the time they hit the big time and sell it, he said.

“It’s easy to be a community banker when things are great,” he said.

Good deeds matter

Community bank employees also can serve as financial and entrepreneurial advisers and board members, providing leadership in the communities they serve.

Ennis said community bank leaders often serve on the Northwest Indiana Forum’s board.

“(We) are excited to have them participate and be a part of our organization,” she said. “They help drive the economy of Northwest Indiana forward from the strategic level as well as from the level of boots on the ground, helping to move projects forward on a project-by-project basis.”

It is a familiar story.

“A community bank is integrated into the community,” said Freyek, who serves on four boards of directors.

That kind of involvement leads to business development.

“What’s good for the soul is usually good for business,” Freyek said.

If you’re out in the public and people see you doing good deeds for the community, they notice, he said.

Campbell said volunteerism “is really a part of who we are.” Employees are encouraged to volunteer both during and after work.

“We love when our associates are involved in communities and just lifting people up,” he said.

Bank associates help Centier determine where to donate money for high-impact projects.

Freyek agrees that serving the community beyond its banking needs is beneficial to all.

“If you’re committed to being on the board of directors, I think that’s incredibly important,” Freyek said. “I want to use my time and my treasure and certainly Horizon’s treasure in the best possible way for our community.”

Kacie Ensign, chief development and communications officer at Opportunity Enterprises, said community banks have been kind to OE. Freyek is board chair for the Valparaiso nonprofit. Ensign said banks offer not only board leadership but also lending for projects.

Among them is Lakeside Respite Center, a 16,000-square-foot facility with 21 beds for overnight stays at OE’s Lake Eliza campus. There are separate wings for children and adults. A large kitchen, at the center of the home, includes wheelchair-accessible countertops for guests to cook together.

OE is grateful for the involvement of community banks in helping OE serve its clients and their families, Ensign said.

The Boys & Girls Clubs is another organization that benefits from community banks.

Centier helped with financing as well as board leadership when new clubs were built in the area.

“It was a lot of time and a lot of energy with a great organization,” he said.

Sometimes a project is too large for one bank to comfortably handle. That’s where participation loans come into play. Community banks can work together to provide the financing needed for a major project, Duncan said.

But being involved with nonprofits doesn’t begin and end with seats on the board and financing projects.

Centier has been offering financial literacy classes “as long as I can remember,” Campbell said, including at the Boys & Girls Clubs.

“We’ve got a lot of great partnerships with a lot of nonprofits,” Campbell said.

Personal touch

Banks obviously have a lot of financial savvy to share with their community.

Community banks understand their market well, Freyek said.

When big banks come to the Northwest Indiana market, they want to bring Chicago prices and manage their operations in the market out of Chicago, Freyek said.

“This market doesn’t like that and never has,” he said.

Unlike phoning a large bank, community banks offer a personal touch, Freyek said.

“A client gets a meeting. A client gets my cell phone number,” he said. “They know where my office is. They know where to find me. I’m here. I’m not going anywhere.”

A client also gets local decision-making, “which is just huge,” Freyek said. “The people that make the decisions live here. We have a vested interest in using our capital for the good of the markets we serve.”

“I don’t build anything. I wasn’t gifted like that,” Freyek said. But he can drive down the street and tell his kids he helped the builder who developed it.

During the Great Recession, Campbell said, “the largest banks just kind of stopped providing liquidity to the system.” Community banks kept reinvesting in their communities.

Another example of what sets community banks apart was the Payroll Protection Program scramble in 2021. “The big banks just kind of weren’t able to help their clients,” Campbell said.

Duncan remembers that time well. “My colleagues and I worked ridiculous hours on that,” he said.

“Several nights, I did loan applications from 9 a.m. to midnight,” he said, then after a few hours of sleep got up and started processing more until the big banks got online and started jamming up the system.

“It earned a lot of trust and respect” for the community banks to handle loan applications from businesses that hadn’t even been clients, Campbell said. Community banks often got new clients based on that extreme level of service.

Community banks gain their strength from a conservative approach to finances.

“It’s being ingrained in the community but also in being smart,” Freyek said.

Community banks typically don’t invest in fields that are riskier, he added.

“We’ve been rock solid despite all the upheaval in banking,” Freyek said. “Clients know us. Clients trust us.”

Centier is very long-term and forward-looking, Campbell said.

“We’re not looking for quarterly profits,” he said.

Community banks also look for consistency in relationships between loan officers and clients, Freyek said. One of his clients admitted to working with 13 lenders in nine years.

It’s like going out of your way to visit your favorite bank branch because of how the employees there treated you, he said.

Freyek enjoys visiting clients at their place of business.

“I like seeing how things are made,” he said. “Man, is it fun to walk into a machine shop and smell those metal shavings or those wood shavings.”

His advice for loan officers at community banks is simple: “The best thing I could be is curious,” he said. “You walk in and say, ‘Tell me about your business.’”

One of the services a community bank can offer is helping people make connections. Sometimes he scans a list of accounts receivable and sees his client does business with someone the banker knows but the business owner has never met. The lender can introduce them.

Sometimes he will hear the clients say to each other, “I don’t know how this is possible, but I’ve known your name for 30 years, but we’ve never met.”

“We’re all in this together,” he said. “We’re all at the same events.”

“I think it’s all down to relationships and just being there for your clients,” Freyek said. “Pick up the phone when people call.”

What sets community banks apart, Campbell said, is “understanding their communities and valuing relationships.”

Read more stories from the current issue of Northwest Indiana Business Magazine.