Monday, December 01, 2008

Small Bank Says NO!

I first reported on Evergreen Federal Bank in Grants Pass, OR on September 13, 2005 after a tour and talk there (you can see the pictures and article in our archive) after a visit. The bank was making a huge difference in the community with its reinvestment into the town’s art programs and downtown redevelopment.

Brady Adams, president of the $300 million bank, has spoken out against the bailout of banks saying, “We don’t have people coming to us and saying we got them into trouble. We kept them out of trouble.”

Evergreen made loans to people that it thought would pay them back, the typical risk/return calculation that bankers have been making for centuries. It didn’t get involved in the euphoria of Wall Street securitization of loans like many other banks in OR and other places, not making exotic negative amortization mortgages with no money down that today can’t be repaid. Instead, Brady made loans that, “required people to put real equity into a home purchase and to have the amount of income to pay it off”.

Today, Evergreen, which owns no foreclosed properties, has only foreclosed on one home in the past 10 years and has only four delinquent loans out of 2,000 on its books. Its capital continues to grow, it is making money and its liquidity is good because its borrowers are making their loan payments like clockwork.

Brady and Evergreen are not an anomaly. I see it in virtually every small town I visit in America today. Rural American banks are,5 for the most part, doing just fine today just like they’ve been doing for the past decades.

1 comment:

Zane Safrit said...

Great post. Great reminder. Solid business practices, based on solid data, always win the day. I live in a small town and our banks are in much the same, good, condition. We just had a town meeting where the banks discussed their status along w/ other small businesses.