by Alan Feuer
published in the New York Times, December 23, 2011
Cattaraugus, N.Y.
AS winter approached, a retired secretary here named Carol Bonner was putting snow tires on her car when she noticed that her back-right rim was bent. Ms. Bonner took the car to Otto’s Auto Body Shop and got bad news: the work was going to run her $244 — more than half of her $417 monthly pension check.
Without a credit card or enough saved up to replace the rim herself, Ms. Bonner, who is 61 and cares for her sister Jane, who is disabled, did the only thing she could do: she went down to the Bank of Cattaraugus and took out a $300 loan. The bank, in a reversal of the usual process, had bailed her out before. A few years ago, when Ms. Bonner fell behind on her property taxes and was forced to sell her home, the bank’s president, Patrick J. Cullen, who held the mortgage on the house, had his son Thomas buy it. Thomas Cullen, who lives in Chicago, never intended to live there. Ms. Bonner and her sister were able to stay as renters.
“The whole thing was incredible,” Ms. Bonner said the other day, a single pine branch hanging in her living room in lieu of a full Christmas tree, which she could not afford. “I just didn’t realize there were people like that in the world, people who would help you.
“Especially,” she said, “a banker.”
This has not exactly been a time of great love for bankers. Amid the continuing foreclosure crisis and Occupy Wall Street’s campaign against “the 1 percent,” it is easy to forget that not all banks are complicated giants, trading in derivatives and re-hypothecating valueless collateral. The Bank of Cattaraugus, for example, is by asset size the state’s smallest bank (one branch, eight employees, no credit default swaps) and yet it plays an outsize role in this hilly village an hour south of Buffalo: housing its deposits, lending to its neediest inhabitants and recently granting forbearance on a mortgage when the borrower, a bus mechanic, temporarily lost his job after shooting off his finger while holstering his gun.
If it sounds old-fashioned, it is. It’s not the kind of bank you’ll find anymore in New York City, where multiple branches and capitalizations counted in 10 figures are the norm. With $12 million in total assets, the Bank of Cattaraugus is a microbank, well below the $10 billion ceiling that defines small banks. It exists in a seemingly different universe from the mammoth banks-turned-financial-services-conglomerates, like Citigroup ($1.9 trillion in assets) or JPMorgan Chase ($2.25 trillion).
With obvious exceptions, business at the Bank of Cattaraugus hasn’t changed much since 1882, when 20 prominent residents — among them a Civil War surgeon and a cousin of Davy Crockett — established the bank to safeguard townsfolk’s money and to finance local commerce.
In its 130-year history, the bank has rarely booked a profit for itself in excess of $50,000. Last year, Mr. Cullen said, it made $5,000. He and his officers are industry anomalies: bankers who avoid high-risk and high-growth tactics in order to reinvest in their community’s economy.
“My examiners always ask me, ‘When are you going to grow?’ ” said Mr. Cullen, a Cattaraugus native who is 64 and has the prosperous stoutness of a storybook banker. “But where is it written I have to grow? We take care of our customers. The truth is we probably couldn’t grow too much in a town like this.”
While it faces many of the same regulations that govern larger banks, it operates according to an antiquated theory of the business: that a bank should be a utility, like the power company, and serve as a broker between savers and borrowers in its community.
Cattaraugus, nestled in the woods of the misleadingly named Rich Valley, is a town of limited prospects. (“We’re not on the way to anywhere,” Mr. Cullen said.) Manufacturing, which once thrived here, has more or less died — except for the Setterstix factory on South Main Street, which produces paper lollipop handles. The largest employer in the village is the school district, and many village residents survive, like Ms. Bonner, on pensions or government subsidies, in homes that have an average mortgage of $30,000.
Mr. Cullen’s bank is the only one in town — the next-closest is in Little Valley, seven miles away.
In this difficult environment, Mr. Cullen — like the bank’s former president, his father, L. E. Cullen — occupies a paternal, if not quite paternalistic, position: a well-to-do man who is sufficiently familiar with the local economy that he does not use credit scores when handing out a loan.
“Numbers don’t tell the story here,” he said one day, relating the tale of an Amish customer who wanted $85,000 to consolidate his debts. Even though the man earned only $2,300 a year — from selling greenhouse starter kits — Mr. Cullen gave him the loan.
“If you know Amish culture, you know his sons work and that everything they earn goes to him until they’re 21 or married,” Mr. Cullen said, observing that the man had eight sons, each earning at least $10 an hour. “So he was fine, but none of that shows up on a credit score.”
Mr. Cullen’s first job at the bank was wrapping pennies for his father at age 5. When he was 9, he helped repossess a car. After two years at the Marine-Midland Bank in Buffalo, he joined the family bank as an assistant cashier — he was 24 — and he has been there ever since, commuting each morning to his office on Main Street from his house around the corner: a 20-second drive.
The bank remains a family business. His daughter, Colleen C. Young, is the chief financial officer, and his wife, Joan A. Cullen, is the corporate secretary (she used to keep the books, but it was thought to be improper that the bank auditor slept in the same bed as the president).
The Cullens — there are three more children, all sons and all in finance in Chicago — are that oddest of commodities: a beloved banking family.
“They saved our lives,” said Duane Kelley, a retired Setterstix worker who, a few years ago, lost the house he lived in with his wife to a $15,000 tax lien. Mr. Cullen bought the house at a county land auction with the bank’s money and returned it to the Kelleys. They are paying him back through a 15-year loan.
SMALL banks have been dying for 20 years. In 1990, there were 12,000 banks nationwide with assets of less than $10 billion; now, there are 7,350. The country’s top five banks have, meanwhile, grown relentlessly: In 1995, they held 11 percent of all deposits; last year it was 34 percent.
For several years, the small-banking sector has been pinched on one side by the rising costs of compliance and technology, and on the other by historically low interest rates (which cut into lending margins). In the last year, though, anger over big banks’ fees and mortgage lending practices has turned consumers against the mega-banks, and smaller institutions have been the beneficiaries.
The publisher Arianna Huffington has been behind the Move Your Money Project, which encourages people to take their money out of big banks and deposit it in local financial institutions. (Slogan: Invest in Main Street, Not Wall Street.) Ms. Huffington produced a video based on the Christmas banking classic “It’s a Wonderful Life” to support the campaign. BankTransferDay.org similarly claims to have persuaded 400,000 people to switch their funds from big banks to not-for-profit credit unions. Occupy Wall Street, which has pretty much turned “bank” into a four-letter word, has deposited nearly $500,000 into Amalgamated Bank, a big small bank in New York City owned by the labor union Unite Here.
Edward Grebow, Amalgamated’s president, posted signs in his branches supporting the movement and marched with its members in October. Perhaps as a result, the number of new checking accounts at Amalgamated has doubled in the months since it took on Occupy Wall Street as a customer. But the increased business came at a delicate moment for the bank: under new rules passed in the wake of the subprime lending meltdown, Amalgamated was forced to raise fresh capital. In September, the bank sold a 40 percent stake in its business to two giants of the private-equities markets: Wilbur L. Ross Jr., a billionaire investor, and Ronald W. Burkle, a California supermarket magnate.
According to Camden R. Fine, the president of the Independent Community Bankers of America, an advocacy group for small banks, nearly every bank regulation of the last 20 years was put in place in response to real or perceived malfeasance by the country’s largest banks.
“Community banks are paying for the greed and overreach of the biggest players in the market,” he said. “For a small bank in Ashland, Mo., say, it’s absurd to apply the body of regulation that a Citicorp has to deal with.”
The question facing community banks today is whether their current vogue can offset the abiding trend toward consolidation. Even in Cattaraugus — population 950 — Mr. Cullen says he receives at least two offers a week from larger institutions that want to buy him out. He claims to be unsurprised by these overtures, though his business is exceptionally simple: 80 percent of the loans in his portfolio are mortgages, a third of them arising from marital separation. (“Two people are living together; they split,” he said. “Now, instead of one house, you need two.”) Still, his answer to potential buyers is always the same: no thanks. “There’s nothing they can offer us,” he said, “that we can’t do ourselves.”
The core problem at banks like his is that the comparative advantages they offer — customer service, access to managers, an intimate knowledge of borrowers — do not always translate to the bottom line, even if they do yield dividends in public relations.
“They do things that big banks won’t do,” said Paul Macakanja, the owner of the Jenny Lee diner, which sits on Main Street facing Mr. Cullen’s bank. The diner has no photocopier, and tellers at the bank, he said, will run off copies of his menu, free of charge. “They support you personally,” he added, “because your success is their success.”
It is for these and other reasons that Mr. Fine argued poignantly on behalf of small banks. They hold 20 percent of the country’s assets, he said, and yet write more than half of its small-business loans. “Customers can say, ‘I know where my money is — it’s down there eight blocks away,’ ” he said. “They can walk in and talk to the president and know he isn’t sucking in their money and betting against them on proprietary securities.”
Nonetheless, 400 community banks have disappeared in the last three years.
IN 1982, Mr. Cullen published a chapbook to celebrate his bank’s centennial. The book contained a photograph of the bank’s first president, the elaborately bearded Oscar F. Beach, and another of himself, from childhood, which bore the caption: “Ms. Berger’s kindergarten class 1953.”
“Banking, as one might imagine, is a very interesting business,” he wrote. “In a rural area, it is also a very important business. When customers entrust their life savings to us, we treat it as if it were our own.”
Beyond a business, Mr. Cullen sees banking as an instrument — one that can shape and preserve the history of his village, which he cites with an archivist’s fluidity. His office is cluttered with local artifacts: a mug from the Third Annual Amish Relief Auction; an old sign reading, “Cattaraugus Chowder & Marching Society.” One of his most treasured possessions is a leather map bag that belonged to Theodore Roosevelt, who passed through town during his New York gubernatorial campaign.
For the last six years, Mr. Cullen has owned and operated the American Museum of Cutlery across the street from his bank, which honors Cattaraugus’s onetime pre-eminence in the knife-making trade.
Between his day job and his other hobbies — antique firearms, an Irish band — Mr. Cullen runs the Historic Cattaraugus Corporation, a nonprofit business that has purchased several buildings in town (the 1909 theater, the 1915 Ford dealership) and refurbished them and rented them out, or simply stopped them from deteriorating. The idea came to him in 1990, he said, when a schoolteacher left town and simply abandoned his house. Not long after, the garage collapsed.
The property was dangerous enough that the school district would not let students walk by. It was an eyesore; it was dragging property values down. “I went and camped out at his new place, and when he went to work, I said, ‘Listen, you can’t do this to our community,’ ” Mr. Cullen recalled. He persuaded the man to deed the house back to the bank. The bank paid for a renovation and eventually resold it — at a loss of only $500, Mr. Cullen said.
From 1990 to 2003, when the historical corporation was formed, Mr. Cullen invested nearly $1 million of the bank’s money in properties in the village, often getting it back, but not always. “Banks tend not to do that sort of thing,” he stated dryly. (His wife, more succinctly, said, “Growth isn’t Patrick’s thing.”) Now, however, with grants from the state, Mr. Cullen has bought, among other things, the glorious old moldering hotel in town, and he is patiently waiting for an opportunity to put it to use.
The corporation recently acquired Mr. Cullen’s most cherished local property: the 4.5-acre plot where Cattaraugus was founded (the same spot where, not coincidentally, the campaigning Teddy Roosevelt addressed townsfolk from the back of a train). Dreaming as only a small-town banker dreams, Mr. Cullen plans to rebuild the original buildings — from the shingle maker’s shop to the stagecoach station — and open them to the public as a Colonial Williamsburg-style theme park.
“If you look at Williamsburg’s Web site, they claim the park employs 3,800 people,” he said. “Give us 5 percent of that, I’ll claim success.”
Mr. Cullen hints that there is interest in his project among certain personages in Washington — he is a banker, after all, who knows other bankers, who know politicians — but it would contradict the very purpose of the project, he said, to finance it with federal money. Cattaraugans know Cattaraugus. The venture will be locally grown.
“Everyone will be involved,” he said. “The bank, the church, local government, the people — everyone will have a stake. Creating that experience is what it means to be American, in a sense. It’s what it means to be from a place.”
