Deron Lichte, owner of Food Warming Equipment, Crystal Lake, interviewed 15 banks before selecting locally-owned Home State Bank. (Dustin Waller photo)

Community Banks: Small but Mighty

Think George Baley and his Building & Loan, if you like. Locally-owned community banks offer the same services as their larger competitors, but they one-up the Goliaths by offering consistently familiar faces and by engaging with their communities. Meet five local bank presidents and discover how they view you, the customer.

Deron Lichte, owner of Food Warming Equipment, Crystal Lake, interviewed 15 banks before selecting locally-owned Home State Bank. (Dustin Waller photo)

Deron Lichte wasn’t happy with his bank in 2002. His personal and business accounts were growing, and he wanted a closer connection to his large, corporate bank.

“It became about the paperwork, not the service,” he says. “They were not there to accommodate our growth as a business.”

About a year before, he had bought Food Warming Equipment. The Crystal Lake business manufactures food service equipment for global clients that include Disney, the Beijing Olympics and Microsoft. Lichte needed occasional business loans, and guidance managing his growing personal accounts.

“I interviewed about 15 different banks, trying to find the right fit,” says Lichte. “I thought we were too large for Home State Bank [in Crystal Lake], but they proved me wrong. They really helped me out, and it was all from a local bank.”

Today, Lichte gladly tells people why he switched to a community bank: It’s because of the hands-on, personal attention he receives from familiar faces. It’s also because he works with bankers who make their own decisions, rather than running every loan application through a corporate structure.

Nearly 91 percent of all American banks are small, with less than $1 billion in assets. In fact, almost 36 percent of all U.S. banks have fewer than $100 million in assets, according to the Independent Community Bankers of America (ICBA), a lobby group. By comparison, bigger banks like Chase or Bank of America typically hold between $1 billion and $100 billion or more in assets.

Friendly, familiar, reliable and engaged with their community and customers – that’s how America’s 7,000-plus locally-owned and operated banks differentiate themselves from large, nationally-owned chain banks. They offer perks for their best customers but convey an attitude that suggests every client is their best client.

Home State Bank has been an integral part of the Crystal Lake area for more than 95 years and employs 200 local residents.

“I think there’s an obvious distinction between a large bank and a community bank,” says Steve Slack, president of Home State Bank, 40 Grant St., Crystal Lake. “We have 200 employees from within this community, and most of them grew up here. So we’re banking and providing services to our neighbors and our friends and our relatives. By definition or nature, you’re going to provide the very best services for those types of people.”

A Name, Not a Number

Slack serves familiar faces all day long. He grew up in Crystal Lake and has spent much of his professional career with Home State. He’s familiar with local business leaders and clients like Lichte. It’s not uncommon, says Slack, to receive a weekend phone call from a client in need.

“Every bank’s money is green,” says Slack. “It’s an old saying, but it’s true. You only distinguish yourself through your service. We have all the products that the big boys have.”

Along with checking and savings accounts, Home State offers trust and investment services. A key distinction between Home State and its larger competitors is that every decision on loans and rates is made in-house. Many times, the banker a client deals with first is the same one who makes the final decision.

“We don’t outsource any services,” says Slack. “We do everything in-house, and that’s a big distinction. For people who use Chase or any big bank, the decision making is not at that branch. If any of our customers need something, our bankers don’t have to go any farther than two or three desks over to get it.”

The feeling is similar at Barrington Bank & Trust, 201 S. Hough St., Barrington, says Chairman/CEO Brad Stetson. Clients work with bankers who are personally invested in the community and will establish long-term relationships.

“Some of these bankers and lenders are from families that have been part of Barrington for 20 years or longer,” says Stetson. “That supports who we are and what we are, and how we reinvest in the community, whether it’s through investments or other services.” Unlike larger banks, says Stetson, there’s no revolving door of talent, where bankers constantly hop from job to job. Some of the same staff members who joined the bank during its 1996 founding are still helping customers today.

As bank president, Stetson isn’t cloistered away in a remote office. His desk is separated from a large room of bankers only by windows and transparent French doors. Because he lives in Barrington, and because his kids grew up here, it’s a rare day when he doesn’t see familiar faces around town.

“That’s what’s fun about community banks – we can’t hide,” says Stetson. “When we turn off the lights at night, we don’t go home and hide. We might be going to the store. Someone’s kids might be playing football. You can’t hide from your job.”

Scott Reining, market president for THE National Bank, 3151 US Highway 20, Elgin, isn’t hiding either. He’s worked in community banks around Elgin for 22 years during his 34-year banking career. The advantage of a locally-owned bank, he says, lies in personality and autonomy.

The owners and staff of Barrington Bank & Trust, in the heart of downtown Barrington, are personally invested in the local community.

“We’ve had customers call us from an auction and need immediate funds for the purchase of a piece of equipment,” says Reining. “Community banks have the flexibility to react that way to their clients’ needs, because we have the decision-making ability here.”

Like Stetson, Reining takes pride in maintaining consistent relationships with clients, by employing a consistent staff. He’s not the only leader at THE National Bank who’s spent more than 20 years in Elgin-area banks. Smaller banks are more likely to retain staff, and that’s important to customers, he says.

“People often tell us that they had a banker for six months, and then they were given a young guy and he changed over – there was constant officer turnover,” says Reining. “The client never developed a relationship. They like the idea that bankers who are more mature have a high level of experience that brings value to the banking relationship. That’s one of the biggest reasons we pick up new business.”

Steve Slack, Home State Bank Brad Stetson, Barrington Bank & Trust Scott Reining, THE National Bank

Out in the Open

Even at smaller banks, developing a friendly culture requires some thoughtful effort. Chris Woelffer, president of STC Capital Bank, 460 S. 1st St., St. Charles, recounts one example.

“When we were building this new office and were putting the new phones in, the installer asked, ‘OK, how do we set up the phone tree? Who gets voicemail, and all that?’” he recalls. “We said we wanted the phone to ring at everyone’s desk when customers call the main number. He said, ‘Why would you do that? No one does that these days.’ We said, ‘That’s the point.’”

When establishing STC Capital in the mid-2000s, Woelffer and Chairman/CEO Tony Sisto drew upon their experiences with big banks to return to the basics. Sisto had spent years establishing new branches for national chains and Woelffer had worked in commercial lending. As the pair researched business models and strategies, they focused on personal service, easy access and customizable solutions. Those were the same goals of their 14 business-savvy investors, who helped to launch STC after their own sour experiences with large banks.

“They were having discussions about ‘how’s it going with your bank,’ and a lot of them started complaining about their banks,” says Sisto. “They’d say things like, ‘I can’t get this. I can’t get that. They won’t return my calls. I get a different banker every week.’ A couple of the guys had started a community bank in another town, so they said, ‘If you’re that upset about your banks, then maybe there’s a business opportunity here.’”

Customers at STC Capital Bank, St. Charles, can find personal, customized services at two branches: a stand-alone location in a shopping center (above) and a storefront space downtown.

Five years after opening, STC Capital still focuses on the community, with 30 employees serving customers from two locations. The lobby is pamphlet-free and customers can meet with bankers in private suites, rather than at open-air desks. The longer the staff and bank leaders work in the community, the more they’re recognized.

“We put our roots down here pretty strong,” says Woelffer. “Our employees and directors live in the area. My three kids give me a hard time because we can’t go anywhere without seeing someone we know at church, a restaurant or the grocery store. I turn and see another person I know, and they just roll their eyes.”

For Ed Niemiec, that familiarity was a key reason he joined the bank as it opened. The owner of a heating and air conditioning mechanical contractor, Niemiec joined the bank for the local connection. He’s also received guidance from Woelffer and Sisto in developing his business.

“It’s a huge difference – it’s the little things,” says Niemiec. “You get someone who knows you and everything about you and your company. I like that I can go in and talk to Chris or to Tony directly and they’re able to help me out.”

David Ward, president of Algonquin Bank & Trust, 4049 W. Algonquin Road, believes that working with familiar faces is a real advantage in the banking industry. He recounts incidences in which his tellers have stopped fraudulent activity because they recognized improper signatures or unusual vehicles. And at the other end of the spectrum, they’ve used relationships to accommodate customer needs. He recalls a recent example when a customer was on vacation and lost his luggage. Needing cash, he called the bank, whom he had earlier told about his vacation before leaving.

“The customer was excited and told our staff about the trip, just like he would tell a good friend,” says Ward. “When the call came, it was an easy thing for us to do. I’dd like to think our relationship turned a potential problem into a non-issue.

Lasting relationships are a big part of Ward’s philosophy. A little tough love is important, too.

“Sometimes, the best thing we can do for a customer is to tell them no,” says Ward. “At the time, the answer was difficult and unpopular, but it’s not uncommon for the customer to come back and thank us. At a community bank, we have a greater understanding of what’s going on in our town and it’s important for us to use this knowledge to assist customers, regardless of the answer.”

All Customers are Best Customers

In the world of community banking, “private banking” is a dirty phrase. At bigger banks, the term suggests wealth management and premium attention for high net-worth customers.

“Honestly, we don’t call it private banking, because private banking has a distinction that it’s for a certain group of people,” says Stetson, Barrington Bank. “We don’t look at it that way. Our best customer is the two-year-old who comes in here with his parents to open up a junior saver’s account. We invite him, and everyone else.”

Of course, high-value customers do find perks, such as special accounts, along with trust and business continuation planning services. But white-glove treatment is available to all, whether they’re worth $100 or $1 million.

“It’s not like we have a special room upstairs for anybody who has deposits over a certain number,” says Stetson. “All customers who come in here are special, and we want them to feel comfortable when they walk in, and we want them to feel comfortable and happy when they walk out.”

The staff inside this LEED-certified building with open-air lobby welcomes customers of THE National Bank in Elgin.

Smaller banks are less likely to set particular thresholds for high net-worth clients. It’s more likely that bankers will steer a client to whatever services fit his or her particular needs.

“We don’t say, ‘If you don’t have at least $250,000, you’re not part of our private banking group,’” says Slack, Home State Bank. “It’s a combination of a number of services you have from the bank, along with a level of deposit and a loan relationship. It’s what I would say is a soft threshold. It’s not a hard, fast number.”

In part, there’s no line in the sand because, in a smaller market, so few customers fit the private-banking profile. Slack estimates nearly 95 percent of his customers are average depositors who don’t need privileged services.

“We’re taking care of our neighbors,” he adds. “We’re not taking care of a few. We’re taking care of our community.”

Sisto points out that community banks are more flexible than larger banks when considering the bigger picture. Inevitably, a customer’s circumstances and income change over time.

“We don’t look at you as you are today,” says Sisto. “We look at how you’re going to grow with us from being a young person, to becoming Chris [Woelffer’s] age, and then my age, and then retired …. It’s important that we treat you very well today. In 15 years, you may be that client who has a net worth of $15 million.”

Reining, too, is careful not to pigeonhole customers. Each customer has a different set of needs, he says. The trick is to find the right combination of products for each person.

“I’ve always thought never to judge anybody when they come in the door,” says Reining. “Because that guy wearing the work boots and the overalls may have a bigger net worth than the guy wearing the Brooks Brothers suit and the Gucci shoes. You try to treat everyone well, and you try to determine which banker within the organization would be best for that person. We can provide a very customized product for our clients.”

Chris Woelffer, STC Capital Bank Tony Sisto, STC Capital Bank David Ward, Algonquin Bank & Trust

Judging a Bank

In this age of “too big to fail,” even community banks have their challenges. Bad loans and build-to-sell business tactics have put some on the brink of failure.

The Federal Deposit Insurance Corporation (FDIC), the nation’s top banking regulator, seized 158 banking institutions in 2010. These ranged in size from smaller organizations with a few hundred million dollars in assets to larger-scale, chain institutions with assets of more than $1 billion.

The FDIC guarantees all deposits up to $250,000, so there’s no need to stash money under the mattress. Online sources, such as or, may offer an inside look at a given bank’s strengths and weaknesses. And, there are simple markers to look for in a reliable bank.

Slack says Home State Bank’s longevity signals its continued commitment. The bank has stood strong for 95 years, weathering the Great Depression and this recession. It has plenty of company. Of the ICBA lobbying group’s 5,000 members, 35 percent have been in business for a century or longer.

Though still relatively new, Algonquin Bank & Trust is heavily engaged with its city.

“If you’ve got a bank that’s been around a while, I would certainly think it’ll be around longer,” says Slack. “People don’t come to Home State and say, ‘I’m concerned you’ll sell next year.’ We’re on our third generation of ownership, and the chairman is still young. He loves Home State Bank and this community.”

Not everyone has a century of experience, but the leadership team at THE National Bank boasts a combined 100 years of experience in serving their community. Reining alone has nearly 22 years, just in Elgin.

“I’m proud of the people that I work with,” he says. “Our bankers are well-known, not only to our customers, but to the community. We’re on many local not-for-profit boards around town. We give back to the community and we’re tied in here.”

Similarly, his colleagues around the region serve community organizations and encourage their employees to do the same. Reining has been involved in non-profit boards and the local chamber of commerce. Slack is involved in the local schools and the park district, while STC Capital and its employees sponsor the Geneva Bridge Walk. Stetson has served the Barrington Area Chamber of Commerce. Ward has worked with the local chamber, and the bank sponsors the Algonquin Founders Day festival.

A reputation for community service is a key factor in building public trust, says Stetson. He and the 17 leaders who launched Barrington Bank took a reputation risk in starting the institution. One large mistake, says Stetson, can shatter a community’s faith in bank leadership and the institution.

“It’s very hard to get that reputation back, so you have to systematically build it in,” he says. “The reputation of the people you hire, the reputation of what you provide to the community, the reputation of what you give back to the community, and the fact that you do what you say you’re going to do – matter more than anything. Once you lose that, it’s all over.”

Woelffer, Sisto, and their investors risked their reputations when launching STC Capital. The risk is paying off, as they establish customer relationships. Sisto believes in sticking to core values, something he says community banks are better equipped to do. Community banks, he says, hold the big boys accountable.

“Community banking is the barometer to see whether those other guys are doing the right thing,” says Sisto. “If you sit there and look at community banks and see that this is what community banks are doing, but this is what other banks are doing, then you need to be smart enough to think about whether those other things are right. They’re not always part of those good, traditional banking values.”

Ward enjoys the camaraderie he shares with other community bank leaders. Most, he says, articulate similar reasons why they’d rather work with a locally-owned institution. He, too, has worked in banks big and small, and he knows what’s missing.

“There is nothing wrong with the big bank, but I know it is not the fit for me and my customers,” says Ward. “Big banks say they deliver one-on-one service, but saying and doing is always the difference. At the end of the day, customers know that my life is here in Algonquin, and so are theirs.”

The Intangibles

It’s a Friday morning, and Sheila Meyer, branch manager at THE National Bank, is pressing grilled-cheese sandwiches on a Panini maker. She offers a warm sandwich and a cold glass of lemonade to every visitor.

“Which type of cheese would you like?” Meyer asks. “We’ve got cheddar, provolone and plain old American.”

It’s the personal touches that often separate a locally-owned bank from its competition. Hands-on service from familiar and consistent faces, a reputation for local leadership and a full menu of services entice new customers and retain long-time clients.

But the competition can’t always see such intangibles.

“I was at a national conference years ago with the chairman of a major national bank,” says Sisto. “He stood in front of a group of bank leaders representing all sizes of banks, and told us, ‘You know, with the way things are going, my expectation is there will someday probably be no less than four or five banks in the whole United States.’

“He’s talking to a room of thousands of bankers, telling them none of them are going to be here someday. Well, guess what? That isn’t what happened.” ❚

What is the FDIC?

The Federal Deposit Insurance Corporation (FDIC) is a government regulator that insures deposits in banks and thrift institutions for at least $250,000 per depositor, per insured bank, per account ownership category. It’s also responsible for monitoring the health of banks and limiting the economic impact of failed banks.

The agency started in 1934, as one of President Franklin Roosevelt’s programs to minimize the impact of bank failures during the Great Depression. Almost 80 years later, the FDIC insures more than $7 trillion in deposits at nearly every bank and thrift in America, directly examining and supervising more than 4,900 institutions – about half of the nation’s banks.

When an institution fails, the FDIC is responsible for insuring depositors and settling the bank’s remaining debts. Banks sometimes close, but in most instances are absorbed by someone else.

Products such as checking and saving accounts, CDs and money market deposits are typically insured. Items such as mutual funds, annuities, insurance policies, stocks and bonds are not insured. Safe deposit boxes are not insured, either, but the FDIC says it takes steps to ensure that contents are returned to owners, in the event of a bank’s failure.