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Turner

Writ 102

2/27/12

The Benefits of Community Banking

River Hills Bank is a family owned financial institution located in Port Gibson and

Vicksburg, Mississippi. Founded in 1840, the Port Gibson Bank -- as it was originally called --

began as a response to local demands. Its rich background includes surviving the Civil War,

operating as a military hospital, and enduring the Great Depression. The bank has been in the

Gage family for four generations, dating back to before the Civil War. Its small town roots have

helped form a reputation of reliability and friendliness. Local institutions like River Hills offer an

experience unlike that of larger, more commercial competitors. They offer history, superb

customer service, and a well-educated staff of employees who care about the community.

In 1916, Judge R. D. Gage returned to Mississippi from Texas and purchased the

controlling interest in the bank. Members of the Gage family have run the bank ever since,

bringing consistency and loyalty to their customers. The current CEO, Robert D. Gage IV, took

over the family business immediately after graduating Law School at the University of

Mississippi. After his father became ill, Gage found himself running the business at the young

age of 28. The bank’s named changed from Port Gibson Bank to River Hills Bank in 1999, when

two branches were built in Vicksburg, Mississippi. The expansion of the bank helped the

business grow from a $65 million to $155 million. Gage said of the growth: “We felt people

there needed a local, regional bank and we sold stock locally.”(Lofton 29)

Gage, 2

To be able to compete with large banks, River Hills Bank uses four business strategies:

professional costumer service, hiring local people from the community, flexibility in their

services and products, and local people making local decisions. Together, these strategies

produce a well-rounded, successful bank that larger competitors have trouble keeping up with.

The major advantage of smaller banking is its professional customer service. Walking

into a welcoming atmosphere provides customers with a sense of security and comfort.

Employees are more than willing to sit down one-on-one with the customer and work out a plan

that fits him or her. River Hills Bank knows its customers on a friendly level unlike large banks

where account holders are just names in the computer. Most engage with community banks for

this very reason: they make the customer feel as if his business is wanted.

Gage said, “It’s harder for smaller banks to keep up with the constant changes, but River

Hills Bank will remain a community bank. A lot of people want to bank with community banks

that are not big and all over the place. We aren’t the bank for everyone, but some still want the

kind of service we provide”(Lofton 29,31). However some people aren’t aroused or interested in

banking with smaller banks for many different personal reasons. The narrow-minded one might

think that because the bank is small and non-commercial the business might go under or struggle

during tough economic times. The reality is most community banks usually stay strong during

tough times; in fact the community bank has a significantly less chance of suffering a major loss

or bankruptcy in hard times. Reason being the community banks depends on it’s self and its self

only, in contrast to the commercial banks which are dependent every branch including corporate

headquarters. In a situation were one branch of a commercial bank is loosing business it affects

the company as a whole, or vice versa the headquarters is in trouble which affects every single

branch and the whole corporation. In fact River Hills Bank even survived the Great Depression,

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only shutting down once in it’s history when General Grant with his forces marched through Port

Gibson in 1864. This tale is just one example how River Hills Bank strong backbone has endured

through the thick and thin of time’s wear and tear perpetually thriving for more generations to

come.

The employees at River Hills Bank are active members in the community. Having local

people from the surrounding community working in one’s business is a key method to attract

local, loyal customers. The sense of community provided at banks like River Hills allows for a

more personal form of business. Allowing the employees the ability to personally know and

understand their clients from opening a new account or requesting a mortgage loan. Larger

competitors typically hire people that just look good on paper knowing nothing of their personal

background or work ethics. Thus, customers don’t know whose hands their money is being

trusted in. This makes it more difficult for people to have accountability and trust in the company

its self. For example you wouldn’t walk downtown and just find the best-dressed person and ask

them to babysit your children, you get recommendations for reliable and respected individuals

right for the job. Additionally, local establishments have a reputation for less turnover, meaning

employees usually stay for long periods of time. Respectable people like Gage, who began

working their career as young adult, offer a friendly face and the assurance of recognition which

people should look for in a bank.

Small banks with rich history provide a break from the one-size-fits-all approach that the

rest employ. River Hills Bank and other smaller banks are more flexible in the services and

products they present. Suppose a farmer needs a loan for new equipment and goes to a

commercial bank first. Not all of those banks offer agricultural loans so he then goes to a

Gage, 4

community bank. There, they see those types of loans every day because farming is a major

business in the community.

The community bank is more flexible on many levels including making a loan payment

plan that fits one’s economical status, mortgage loans, car loans. This is evidence of the bank’s

ability to adapt to change quickly. What if there is a sudden death in the family and a customer

fell behind on his or her loan payment? Being that River Hills Bank is as flexible as it is, that

customer could sit down with a loan officer and work out a plan that would keep payments from

falling behind. It’s hard for other banks to keep up with competition when they use general

theories that in fact fail to meet everyone’s needs.

One more advantage that community banks have over commercial banks is that the

decisions the bank makes are done to adapt to the changing local community and are made by

the local people running the business. In commercial banks, if one branch wants to make a

change they have to send off the request to the headquarters, where a final decision is eventually

made. It’s easy for the concern of the customers to get lost in this process. When local people are

making the changes, they are doing it not for power or more money but to ensure customer

satisfaction and meet local demands. Being able to make changes quickly gives the community

banks the edge they need to stay a step ahead of the rest.

Gage has often said that the banking business is about relationships. River Hills holds this

principle close to its heart, and is it is likely the secret to its success. Banking is more than a

transaction of money. It’s a transaction of trust and hope. A small town bank cannot survive

without its community. For this reason, such institutions hold a strong appreciation for their

customers. Simple banking with solid goals often yields spectacular results. River Hills Bank is a

testament to this and an example of the benefits of local business.

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Without the availability of community banks and the services they provide, the banking

business would turn into a monopoly in a sense. Big corporations focusing on constant expansion

would run all the banks and the only concerns would be for million dollar investors. This style of

business leaves customers with little to no say in the relationship. Local banks care about the

community. They minimize the distance between customer and provider, and for this reason,

priorities intersect more often. Through a focus on service, history, community, and

relationships, locally operated financial institutions are able to satisfy the maximum amount of

needs and ease the lives of customers.

Gage, 6

Works Cited

Lofton, Lynn. “Gage carries on four-generation tradition of banking.”

Mississippi Business Journal. May 16, 2005. 29.

n.p. Riverhillsbank.com. River Hills Bank. 2007. March 25,2011