How 4 community banks came through for customers

West Gate Bank is rehabbing its community

The SoDo neighborhood of Lincoln, Neb., is within blocks of downtown, the state capitol building and the University of Nebraska. Despite its prime location, the housing stock in SoDo (short for South of Downtown) is more than 100 years old, much of it run down. Few properties are owner occupied. Lincoln has a large group of residents who need better housing options.

That’s why Lincoln’s West Gate Bank helped create a program that addresses both problems: It improves the housing in SoDo and opens home ownership opportunities to people who might not otherwise qualify for mortgages.

“This really is about fulfilling our mission,” says Carl Sjulin, the $900 million-asset community bank’s president and CEO.

The program is a collaboration between West Gate Bank, the City of Lincoln and several local nonprofits. The city acquires dilapidated SoDo homes, razes them and builds new single- and multi-family houses on the lots. The single family homes are sold to people who may not be able to afford both a conventional home and the lot, or are ineligible for a traditional mortgage. Instead, the land is held in a trust separate from the house. If the homeowner remains in the home for a certain number of years, ownership of the land vests with the house.

The first such home closed at the end of 2020. “We provided the mortgage financing for a property in SoDo that was 120 years old, had been largely destroyed by fire and had been vacant for more than 10 years,” Sjulin says. “We worked with some nonprofits to create the community land trust that holds the land and partnered to build a new 1,300-square-foot, two-story, four-bedroom home there. Then we provided financing to a first-time homebuyer, a single mom. It was an affordable option for her.”

Now that the first home has been built and sold, West Gate Bank can use the template again and again. “That first one was really a couple of years in the making,” Sjulin says. “There was a long runway in getting all the players huddled together so that we were all on the same page. It took a unique structure, because we had to work out a bifurcated financing structure with the community land trust and the owner. We had to think through title issues, title insurance issues, mortgage issues and other details to make sure we captured those interests appropriately. The runway will be much shorter for subsequent projects.”

There are already four other homes in SoDo being built using the same template, Sjulin says.

“This is an investment in rehabbing housing stock in the neighborhood just adjacent to downtown. We can’t just let it go and expect our downtown to be healthy,” he says. “The reality is, to get a new home built in this neighborhood and get someone from a lower or moderate income into the home takes a completely outside-the-box mortgage. Community banks are well positioned to put together the time, talent and treasure to come up with unique solutions like this.”

Oak Valley Community Bank: Moving mountains for its customers

About 20 years ago, Oak Valley Community Bank got a call from a resort owner in Bridgeport, Calif., asking if the $1.5 billion-asset bank could open a location there. A large national bank had closed its branch in the tourist town, leaving the area without a bank to handle cash services.

Oak Valley Community Bank is located in Oakdale, Calif., which is about 100 miles away from Bridgeport and on the other side of the Sierra Nevada Mountains. But the community bank’s then-CEO recognized the opportunity and opened a branch in Bridgeport.

Two decades on, Bridgeport, a tourist destination, has struggled during the pandemic. Like other communities with tourism-heavy economies, it and nearby towns were slammed particularly hard by COVID-19 and subsequent shutdown orders. They desperately needed financial help. Oak Valley Community Bank, which had since opened two other branches on the eastern side of the Sierras, stepped up and delivered.

“Nobody else was giving PPP [Paycheck Protection Program] loans on that side of the mountain,” says Chris Courtney, the community bank’s current president and CEO. “At first, we talked to just our existing loan customers. Then we realized, ‘You know what, we have the capacity. Let’s do all customers, including deposit customers.’ And, as things went on, we realized we could handle anybody in our footprint who [needed a PPP loan].”

Courtney reports that he and the community bank’s 195 employees worked 45 straight days, often deep into the night, to process PPP loan applications.

“I happened to be the last person to stand up and introduce myself … and when I said I’m the CEO of [the bank], the entire table started clapping.”

—Chris Courtney, Oak Valley Community Bank

“I tell our directors that in the four quarters of 2020, our employees worked the equivalent of five quarters,” Courtney says. “And let me assure you, their bonuses reflected it. We might have moved a few employees to the next tax bracket.”

Their efforts led the community bank to service $244 million in PPP loans. Among the recipients was Bob Peters, owner of the Bridgeport Inn, who wrote a note of gratitude: “Our business, the Bridgeport Inn, and many other small businesses in our rural county are the fabric of our communities and source of our financial stability. Almost everyone is in serious financial need. Your attention to our use of the PPP loan program and Oak Valley Community Bank’s quick support of the program for their customers has been remarkable.”

The effect of the loans really hit home when Courtney attended a business executive’s club event in the fall. The 45 attendees went around the table and introduced themselves, and several mentioned that they had received PPP money from Oak Valley Community Bank.

“I happened to be the last person to stand up and introduce myself [from the bank], and when I said I’m the CEO of Oak Valley Community Bank, the entire table started clapping,” he says. “At that point, I realized what we had done.”

Hyperion Bank: Believing in its customers

Community banks distinguish themselves from big banks by looking beyond simple numbers and getting to know borrowers, even when they may have less-than-stellar applications.

That’s exactly what Hyperion Bank did when Natan Shvarts and Igor “Yosef” Giterman, both Ukrainian immigrants, walked into a branch in Philadelphia in 2016.

“This was just one of those situations where someone comes in and you realize they’re at a crossroads,” says Frank Sullivan, executive vice president at the $244 million-asset community bank. “Natan had graduated from rabbinical school, but he was renovating homes to augment his pay.”

Giterman worked for the same home rehabber, and he and Shvarts clicked. The two soon realized that if they could raise some capital, they could work for themselves. That’s what brought them into Hyperion Bank.

“They said they had eyeballed this property that was a teardown,” Sullivan says. “Their credit was good, but they were young guys, just starting out. They weren’t sitting on a million dollars. But I worked through the numbers and finally told them I would take a run at it. Ultimately, we got the loan approved.”

That first loan helped the duo launch Yona Construction, now a thriving business that renovates and builds homes and acts as a general contractor for other clients. The relationship has flourished in the years following that loan. Hyperion Bank has made five or six more loans to the company since then, and Giterman and Shvarts have referred a number of other customers to the community bank.

“When people come to me, I let them tell their stories, and that’s what I did with Natan and Yosef,” Sullivan says. “They were just really likeable guys, and they’ve done a great job. I’m proud of them.”

Texas Bank: A two-day turnaround

When the owner of a manufacturing company in San Angelo, Texas, worked out a deal to sell his business to three members of the company’s management last November, he asked his primary bank to finance the transaction. The buyers needed a loan of $1.5 million and wanted to close the deal by the end of the year.

What should have been a quick approval evidently stymied the bank, a large regional institution. With just two days left in 2020, they admitted they couldn’t get the loan done on time.

“The bank basically back-burnered the deal and didn’t give it the attention they needed,” says Casey W. Barrett, president and CEO of $341 million-asset Texas Bank. “So, [the buyers] were panicked and called us on Tuesday, Dec. 29.”

Barrett and his colleagues leapt into action.

“We don’t have the long chains of command and all the different committees and different people the regional banks have to go through. All they do is muddy the water.”

—Casey W. Barrett, Texas Bank

“It was all hands on deck to get the deal underwritten,” he says. “We spent most of Tuesday on the phone talking to the buyers and understanding their position, and then the loan officer and I underwrote the deal. Then we called a special meeting of the executive committee on Wednesday.”

The deal was approved just under the year-end deadline. “We don’t have so many hoops to jump through,” Barrett says. “We don’t have the long chains of command and all the different committees and different people the regional banks have to go through. All they do is muddy the water. It was actually kind of a no-brainer on our side.”

Texas Bank’s success at closing the deal quickly has led to a growing relationship with the manufacturing firm. The company is switching all of its checking accounts from the regional bank to Texas Bank. Barrett says the business plans to use the bank’s remote deposit capture and cash management services, two features that helped further cement its decision to switch banks.

“Even though there’s not a Texas Bank location in the other towns they do business in, because of technology, we’re able to offer what the big banks offer at a competitive price,” he says. “And on top of that, we give the kind of service you’re not going to get from a bigger bank.”

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