The local banks can tell you, it's not just about the money

- Marianne Love

Popular trends always come back in style. It's true with fashion, and definitely a fact with financial dealings in Sandpoint. Hometown banking is booming.

During this century's first decade, local leaders like L.D. Farmin and Will Whitaker formed and ran Sandpoint's banks. According to Bonner County Historical Museum records, Citizen's National Bank opened in 1903 on First Avenue in what's now Larson's. That same year the Bank of Sandpoint received its charter, opening at Second and Cedar in the present-day site of GTE Phone Mart. And in 1909, the Bonner County National Bank started transactions in the Farmin Building, now home of Cabin Fever.

For the next four decades, prominent hometown bankers like W.W. VonCannon helped folks with their savings ­ and sometimes saved their shirts, too.

In the late 1940s, however, about when Idaho First National Bank bought out the Bonner County National Bank, a new era of banking began. State and federal conglomerates also known as "chain banks" swept through small towns nationwide. Locally owned banks, with their local governing boards, disappeared in many towns, including Sandpoint.

As community leaders like developer L.G. "Bud" Moon, store owner Terry Merwin and auto dealer Jack Parker became aware that securing loans for legitimate local business concerns seemed increasingly difficult, frustration set in.

"We felt like we were putting our money in our banks here, and it went to southern Idaho," Parker said. During the late '70s Moon and businessman Bill Lewis came up with the idea of forming a local bank. Several discussions ensued, including one at the former Donkey Jaw ­ now Eichardt's ­, where 17 individuals each threw in a dollar to represent $100 apiece for a new bank ­ only to scrap the plan later. A persistent Lewis took the new bank concept a step further by securing information from state regulatory officials and contacting a retired Spokane banker with experience at starting independent banks in Eastern Washington. Eventually, Moon and Lewis won others over.

On July 10, 1980, a proposed Panhandle State Bank initiated the sale of 162,500 shares of common stock at $10 per share. With president and CEO James Berry, 10 local directors and a mission to maintain its local focus, the bank opened its doors at Third and Oak on May 17, 1981. Since then, it's only grown.

According to David Smith, senior vice president and cashier, the bank has consistently ranked among the top 5 percent of banks its size in the country during the mid-1990s.

"We're structurally sound," Smith said. Deposits at the Sandpoint branch alone average $90 million per month. "We now control the largest number of deposits in town."

The banks has also undergone a building spurt, adding a new branch in Bonners Ferry and, in just the past year, two branch banks in Priest River and on the Kootenai Cut-Off Road in Ponderay. Altogether, The bank employs 54 people.

Why such success?

"Customers are tired of banks changing their names. They want to see people they recognize working in the banks," Smith said. "We have total autonomy in making our decisions. The main interest is serving the community, and we make all the decisions here."

Parker concurs, stressing that a local bank can do business the old-fashioned way. Sometimes a borrower may not look good on paper, he said, "but you can say I know that guy; I know he'll come through."

Another regional bank opened its doors here just last year. Similar in philosophy to Panhandle State Bank, Pend Oreille Bank of Newport, Wash., opened a branch in Ponderay. Cashier and vice president Gail Berendt said establishing the branch has been a sound move.

"We had lots of Idaho customers and felt the time was right to establish a branch here," she said. "We've done very well; it's at $5 million plus in assets, and it's still growing."

As the big chain banks continue to merge and their names keep changing, the folks who helped launch the local banks keep on smiling. Smith said Panhandle State Bank has no immediate plans for further expansion. Instead, the corporation will continue striving for the personal touch of a hometown bank.

"We'll go down kicking and screaming before we go to 800 numbers," Smith said. "We'll dig in our heels and make those few offices better."

Marianne Love taught at Sandpoint High for years, but recently embarked on the ne'er-do-well life of the freelance writer. She's author of two books, Pocket Girdles and Postcards From Potato(e) Land. Check out her web site to learn more.

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