The Small Bank, the Small Business and the Benefits of Thinking Local
A Q&A with Vince Siciliano, President and CEO of New Resource Bank (San Francisco, CA)
NerdWallet: What makes small banks different from big banks and credit unions?
Vince Siciliano: Compared to big banks, we’re way more personal. You won’t call an 800 number and be put in touch with a random employee. At a small bank, you’ll have a relationship with specific people. Credit unions tend to focus primarily on consumers, while small banks focus more on small businesses. About 95% of New Resource Bank’s loan clients are local, Bay Area businesses. We also work with many local consumers who support our mission.
What unique services can small banks offer small businesses?
Small banks are generally more appreciative of small business clients, because they’re our main business clients. We actively seek them out, and we can provide better loan services for them. At New Resource Bank, we underwrite each business loan ourselves, and it doesn’t depend on a simple credit score. We get to know the entire business model, all the positive and negative aspects, and take that into account as well.
How does your work with small businesses impact economic growth?
Most new jobs are created by small businesses. In spite of this, large companies are pulling out of the recession faster, simply because they have more resources to do so. By contrast, smaller businesses are having a harder time with recovery. They’re still dealing with compressed margins and slow growth, if any, so they’re anxious, and reluctant to invest or hire new workers. New Resource Bank supports small business growth through small business lending, so we impact economic growth in that way. The lending environment is challenging right now, but we’ve been doing pretty well. We grew 11% in outstanding loans in 2010, and we hope to grow 12-14% by the end of this year and next year.
How do you feel about all the recent backlash against big banks like Bank of America?
The Dodd-Frank regulations have really cut into most big banks’ profit margin by forcing them to unbundle their consumer financial products. Overdraft products used to be very profitable for big banks, and that’s what allowed them to subsidize consumer checking accounts and make them free. Once those were re-priced and regulated, banks were inspired to make up for their lost profit margin in other ways, hence the new fees. However, what most people don’t realize is community banks have benefited quite a bit from the Dodd-Frank regulations. New Resource Bank never had overdraft accounts, so we’ve never had that subsidy. We’ve always had to price our accounts the same way we’re still pricing them. The small bank pricing structure has a much more competitive edge now.
Will the Bank of America backlash affect the way you treat your customers or structure your accounts?
Well, we’ve never had debit fees, and we’ve never had plans to add them. We try to minimize fees in general. This is especially important because we don’t have an ATM network. We rebate at least five ATM fees a month, depending on what type of account you have with us.
New Resource Bank is unique for its work with non-profits. Do they have any role in generating economic growth?
Non-profits don’t usually take out loans unless they’re working on a large project, like renovating a building. We offer them discounted financial packages, and we have accounts geared toward them. They don’t help grow the economy in the traditional sense, but they have an important role in growing the “new economy”. I say that because I believe we, as a country, should be moving toward a more holistic view of the financial system. Instead of focusing just on capital, we should be balancing financial returns with social and environmental returns. In that sense, non-profits play an essential role by facilitating those things in ways that businesses can’t.
Occupy Wall Street is also advocating social change alongside economic growth. How do you feel about the movement?
I recently had a chance to meet with some of the organizers in Philadelphia. I’m inspired by the fact that people are willing to put their lives on the line to create change. We can take that to heart and make changes on an individual level. We should all occupy our own personal Wall Street. Think about where you shop, where you bank, where you invest, whom you employ and what you eat. All those things represent votes for a certain type of economic community. We can build the type of economy we want with our personal choices. All it takes is a little extra effort.