Only locally owned bank to open despite struggling economy
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CornerStone Bank's current home is in the parking lot at Don Tequila's restaurant, but its founders hope eventually to move to a more permanent location. |
CornerStone Bank, poised to become Rockbridge County's only locally owned and operated bank, will open for business later this month.
In the current economic downturn, the bank, which had planned to open last fall, took longer than expected to raise the $9 million required to open.
“We’ve done a yeoman’s job trying to raise capital during a recession,” said president and CEO T. David Grist. He said the bank’s 13-member board was instrumental in raising the money, 80 percent of which, he said, was generated locally.
The bank finished its capital campaign in late December, and will open temporary headquarters in Lexington Jan. 26. The temporary office will be in a double-wide trailer next to the Don Tequila restaurant in Rockbridge Square on East Nelson Street.
The irony that a bank called CornerStone was opening in a trailer is not lost on Grist.
"Actually it does have a foundation,” he said. “We took the wheels off."
CornerStone hopes eventually to open its headquarters at Main and Nelson streets in the middle of town. Meanwhile, it is in temporary quarters.
Ongoing difficulties with the city of Lexington regarding an easement the city holds on the lot have been the subject of much public debate in recent months.
That debate is something the bank would like to put behind it. Grist said that the landowner, George Neofotis, has taken over discussions with the city, while he and his colleagues are focusing on the business of opening for business.
According to Grist, CornerStone was conceived in October 2007, when local businessmen Keith Holland, Jay Melvin and Rick Mast approached him about starting a local banking operation.
"They were concerned about the poor service that they were getting from their banks," Grist said. He said the primary advantage of local banking is its ability to provide a level of customer service that he said is possible only at the local level.
Grist, a long-time resident of Rockbridge County, brings previous experience managing local banking operations to his new post. He was executive vice president and a board member of the former Bank of Rockbridge. More recently he served as the area executive for BB&T in Rockbridge.
Even in the current economic climate, Grist said, it is a great time to open a local bank. While many national banks have been tarnished by the sub-prime lending crisis, he said, CornerStone is coming onto the scene with a clean slate.
"I think we have a real advantage coming into the market right now,” he said. “People are looking for a good, safe place to keep their money, and with us they're dealing with people they know. You don't have to call Charlotte when you're talking to CornerStone Bank. You're talking to someone in Rockbridge County who probably knows you."
Linda Hooks, professor of economics at Washington and Lee University, agreed that local banks could have advantages over their national counterparts.
"Economic theory says that banks work by gathering information and monitoring what’s going on with, say, a business they've lent money,” said Hooks. “The best way they can gather information and do that monitoring is by being right there on the scene. So a local bank probably knows more about a local business."
Hooks said the difference between local and national banks is primarily in who actually approves the loan.
“For a national bank, the loan approval may go all the way up to an office in Charlotte,” she said. “For a local bank, the decision would get made locally.”
Duaine Fitzgerald, senior vice president of Bank of Botetourt at Rockbridge, said his deposit growth had been good lately. But he said couldn’t specifically attribute that growth to a flight from larger institutions, although he did know of “a couple” of such cases. Bank of Botetourt is one of the only regionally operated banks in the area.
Fitzgerald said he was not especially concerned about the prospect of a new bank opening locally.
“It’s just going to split the pie a little smaller,” he said.
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