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Filling a need

Small community banks are serving Maryland business owners disenchanted with megabanks

Friday, July 28, 2006

Click here to enlarge this photo Barbara L. Salisbury⁄The Gazette ‘‘The market is underserved by community banks. Businesses want to be served by community banks,” says James W. Cornelsen, president and CEO of Old Line Bank, which recently moved its headquarters from Waldorf to Bowie.

Just ask Steve DeChello, part owner of Marlow Auto Body in Marlow Heights, who said he was denied financing from Sun Trust Bank when trying to expand his business. While the megabank helped DeChello start his business, he went to Old Line Bank, where they loaned him $1.8 million to open his Waldorf location.

‘‘Instead of us giving up, we decided to search for a bank to do business with, and that’s how we wound up at Old Line Bank,” DeChello said. ‘‘They stepped up and gave us the shout we were looking for.”

Smaller community banks — like Old Line, Monument, and Fidelity and Trust, both based in Bethesda, for example — typically have fewer clients and employees than larger banks.

But through customer service and focusing on a niche where they can succeed, small banks do well in the state’s hyper-competitive banking climate.

Usually, small-bank management is more accessible than at larger chains, said Barry Watkins, president of Fidelity and Trust Bank in Bethesda. And even with the competition between smaller banks, there is still a sense of teamwork, he said.

‘‘There isn’t a larger bank with a local decision-making group,” Watkins said. ‘‘There’s a real sense of camaraderie and communication among community banks. We see ourselves as one, under the community bank flag.”

A thing for numbers

Old Line Bank, which provides financing for small- and mid-sized businesses, moved its headquarters from Waldorf to Bowie this month to fill a void in Prince George’s County, said James W. Cornelsen, its president and CEO.

‘‘When we looked, there was not a community bank in the county,” said Cornelsen, 52. ‘‘The market is underserved by community banks. Businesses want to be served by community banks.”

John Holtaway, managing director of Danielson Associates Inc., a bank consulting company in Vienna, Va., said Old Line is definitely needed in Prince George’s, a county chock-full of small and mid-sized businesses.

‘‘There is no clear-cut community leader in that market, so they’re moving into wide open territory,” Holtaway said.

Old Line Bancshares, the Waldorf parent company of Old Line Bank, reported a 69 percent increase in net income to $383,453 for its second quarter this year. Total assets rose by 11.6 percent to $188.6 million. Old Line Bank has five branches in Waldorf, Clinton and Accokeek, with plans to build offices in Crofton and College Park. The bank, with some 54 employees, has about 5,500 customers, Cornelsen said.

While growing up, Cornelsen said, his father accurately predicted his career path.

‘‘I think my dad knew I probably wanted to be in business,” Cornelsen said. ‘‘I didn’t really see that, but I was always very good with numbers, math and money.”

As a child, Cornelsen delivered newspapers to earn money. Then, as a teenager, he was a greenskeeper at a country club golf course near his Bethesda home. He still enjoys caring for lawns and in his spare time works on his yard at his La Plata home, where he lives with his wife and daughter.

Cornelsen began his banking career in 1978 at Citizens Bank of Maryland. He took over a struggling Old Line Bank in 1994, when it had one in office — in Waldorf — and $20 million in assets. The bank reported $169 million in assets last year, a 49 percent increase from $113.6 million the previous year, according to the Securities and Exchange Commission. Net income last year was $1.1 million, a 39 percent increase from $816,641 in 2004.

‘‘It was quite a challenge, but I don’t regret the decision at all,” Cornelsen said. ‘‘It took quite a while to get the bank to where we could start making progress.”

It took a lot of ‘‘hands on” work to do it.

Wendi M. Williams left her position as interim president and CEO of the Prince George’s Chamber of Commerce in Lanham to become vice president and business development director at Old Line. ‘‘Jim was a very big part of my decision,” she said.

‘‘It was his vision and leadership,” said Williams, who began work last week at Old Line. ‘‘He has an impressive and distinguished career. Old Line’s approach is very hands-on.”

Attracting customers

A bank’s success ultimately depends on the consumer, said Sarah M. Lifshin, a spokeswoman with the Maryland Bankers Association in Annapolis.

Banks cater their services to what customers what, Lifshin said. ‘‘Community banks are smaller, while larger banks have more locations. It’s really the customer’s choice, and it depends on what their preference is.”

Maryland banks are seeing slightly higher returns on assets than last year. Total bank assets in Maryland and the District grew about 11 percent in the previous year to $52.8 billion, according to the FDIC.

Institutions headquartered in Maryland and the District reported steady loan growth led by construction loans, which rose 32 percent during the year that ended in March, according to the FDIC.

The region’s banking industry is experiencing a boom. Among banks planning to expand into other regions are:

*Commerce Bancorp of Cherry Hill, N.J., which bills itself as ‘‘America’s most convenient bank,” is looking to open branches in New Carrollton, Gaithersburg and Clinton, said Rebecca Acevedo, a Commerce spokeswoman.

*CommerceFirst Bancorp Inc. in Annapolis, the parent company of CommerceFirst Bank, reported $301,982 in net earnings during its second quarter, up from $207,146 reported the same time last year.

*Congressional Bank, which opened a branch last year in Reston, Va., has seen its assets grow by about 70 percent in the past year to $107.7 million, according to the Federal Deposit Insurance Corp.

One smaller-bank success story is HarVest Bank of Maryland, based in Rockville, winner of the Maryland Chamber of Commerce 2006 Small Business of the Year award.

‘‘Our issue is not surviving, it’s managing our growth in an orderly way,” HarVest Bank CEO Jack Hollerbach said. ‘‘I haven’t been competing with other community banks ... we’re clearly looking for business with those who are disenchanted with the big out-of-state banks.”

Other bank CEOs say they are not fighting the Wachovias, Providents and BB&Ts of the world.

H.L. Ward, president and CEO of Monument Bank in Bethesda, is most worried about other community banks.

‘‘I wouldn’t say the larger banks are our prime competitors,” Ward said. ‘‘The people we’re competing with are other community banks.”

Staff Writer Kevin J. Shay contributed to this report.