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Centra puts a local face on banking

July 15, 2007|By TAMELA BAKER

WASHINGTON COUNTY-Since the first official announcement of a new bank forming in Hagerstown, officials at Centra Bank say response has surpassed what they imagined.

For evidence, they cite the fact that more than 270 people attended the recent opening of the new bank's first branch on Frederick Street.

"I probably didn't understand the depth of interest in what we're doing here," said Timothy G. Henry, Centra's chief executive officer. "I think the grand opening was an indicator of the interest."

From the start, Centra emphasized its local management and local board. It's a message that board Chairman Michael D. Murray says resonates with the community.

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"What I've heard, our initial message - a local bank, a community bank - that has been what people have latched onto," Murray said.

One competing bank already has adjusted its advertising to reflect its history in the community. Henry says he considers that a compliment.

Centra has attracted some heavy hitters in the local business community to its board, including Richard Phoebus, retired banker and CEO of the Hagerstown-Washington County Industrial Foundation Inc., Howard "Blackie" Bowen, CEO of Ewing Oil Co. and Del. LeRoy Myers, R-Washington/Allegany, and president of Myers Building Systems, among others.

Centra made its appearance at a time when a number of Hagerstown banks had been acquired by larger banks - sometimes more than once. Such mergers have been frequent, not just here, but nationally, according to David Barr, spokesman for the Federal Deposit Insurance Corporation.

"There's been tremendous consolidation in the banking industry over the past 10 years," Barr said.

Such changes can prove a little disconcerting for bank customers. "With banks, it kinda hits people where it hurts - their money," said Matt Weaver, vice president and marketing manager for Susquehanna Bank-Maryland, formerly Farmers and Merchants Bank in Hagerstown. "That kind of change can be difficult for people."

For that reason, officials at M&T Bank tried to make the disruption "as minimal as possible" when Allfirst Bank merged with M&T, said M&T Vice President Bradley Pingrey. The result, he said, was a 97 percent retention rate of its customers.

Centra Bank was formed in Morgantown, W.Va., then spread to Martinsburg, W.Va., and Fayette County, Pa. The Hagerstown bank is the fourth in what bank officials call a "network" of sister banks.

Although some financial reporters have referred to the Hagerstown bank as a Centra "branch," Henry and Murray say that's a misnomer.

"They are wrong," Henry said.

"To me, a 'branch' means decisions are made elsewhere," Murray said. "The people who've come on board had no reason to come on board at a 'branch' somewhere."

Starting from scratch

While Centra is chartered separately from other Centra banks, and management decisions are made in Hagerstown, the bank did get seed money and technical support from Centra Financial in Morgantown, they said.

That support in getting started allowed the bank "to be a player right away," Henry said.

The costs of getting started are high, he added.

The support from Centra Financial underlines what board member SuZanne Glocker suggests could be a change in the definition of what a "local" bank is.

"As time progresses, what used to be a 'local bank' couldn't exist today," she said, because it would be too difficult to compete right away.

Pingrey echoed those sentiments. In Hagerstown, he observed, "there is not a bank that is a truly 'local' bank" in the traditional sense.

Murray said he looked at starting a bank from scratch before he saw Centra's model - but found a number of barriers to getting started.

"Some of the smaller community banks do have unique challenges," Barr said. "Their margins are squeezed; they rely more heavily on deposits."

Barr said Centra is an example of an emerging trend resulting from all the bank consolidations of the past decade.

"There's a lot of anecdotal evidence that's happening new banks are being chartered because people want decisions made in the community. There's quite a bit of that happening."

Other people, he said, like the resources and availability of large banks. "That's what's so good about U.S. banking," he said - you can have it either way.

Getting local

Even larger banks are seeing the importance of localizing services. First United Bank and Trust - also known as "My Bank" - recently created six regional market areas with market managers for each, said Patricia Young, market president in Hagerstown.

My Bank has its headquarters in Oakland, Md., and while it has spread all the way to Frederick, Md., and into West Virginia, it hasn't been merged with or acquired by anyone, Young said. The corporate office is still in Oakland, she said, but "the whole purpose of (the regional management) is being able to know your community. Every market's different; we needed somebody to manage that."

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