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'Move Your Money' helps community banks

By: Kevin Olsen

Nearly 64 years after George Bailey's friends and neighbors helped save his community bank in Frank Capra's classic 1946 film "It's a Wonderful Life," the same idea is sweeping the country.

Move Your Money urges depositors to switch their deposits from national banking chains to community banks owned locally.

Arianna Huffington, founder of The Huffington Post, first came up with the idea of Move Your Money. Similar to The 3/50 Project, which encourages shoppers to spend at least $50 a month at locally-owned businesses in their hometowns, Move Your Money urges people to take their money out of "too-big-to-fail" banks and move them to smaller, community banks that do the majority of lending to small businesses in the country.

The philosophy is simple: Help yourself and your own hometown by banking locally at your community bank.

"Once you deposit money in a community bank, it stays in the community and goes to lending in small businesses," said Jeff MacDonald, director of marketing and communication at Marquette Bank. "It helps drive the local economy." Marquette is based in the Southwest Suburbs and Chicago's Southwest Side.

Move Your Money is a new idea, conceived at the end of 2009. In reality, customers have already begun to move their money into local banks since the federal government has provided billions of bailout dollars to the major banks such as JP Morgan/Chase, Citibank, Bank of America and Wells Fargo, among others. Suburban Bank and Trust Executive Vice President Joe Kirkeeng said he has seen more people moving their money into community banks like his the past six to eight months. He thinks the uncertainty of the banking industry made people shy away from moving their money initially.

The idea has its own website,, providing links and facts on the benefits of moving money away from the largest banking institutions. People can search for community banks in their area through a database on the website. The only banks listed are ones that were graded "B" or better by a group called Institutional Risk Analytics (IRA).

The largest 20 banks in the country had 57 percent of the share of bank assets in the third quarter of 2009, according to the FDIC. Small banks, which consist of banks with less than $1 billion in assets, had only an 11 percent share, yet contributed 34 percent of small business lending, which constitutes a commercial or industrial loan of $1 million or less. The 20 largest banks only make up 28 percent of small business lending.

"We are here to serve the local individual and the local business," said Steve Rosenbaum, CEO of Worth-based Prospect Federal Savings Bank. "Community banking is imperative to the economy." Rosenbaum, an Oak Lawn village trustee, is active in his community and St. Germaine Parish.

Move Your Money also promotes moving money into credit unions, something many people may not be aware they can do. Central Credit Union of Illinois President Joan Jensen said credit unions have always had a local focus, and since it is member-owned, the members of the credit union receive better deposit rates and loans. While Jensen said many people are not aware they can join credit unions, each union has a charter where people can join if they live in a specific area. She said credit unions give more "face to face service" and look at the whole picture and ways to do business with a customer.

"People don't realize they can join a credit union," Jensen said. "They don't realize we're in their own backyard."

According to the Move Your Money website, the aforementioned four major banks, which took billions in taxpayer money, have cut lending to businesses by $100 billion. At the same time, many Main Street community banks have failed in the last year, struggling to compete in the financial marketplace.

Kirkeeng said big banks rely on having ATM machines at every corner, faster services and convenient features such as sending a text message to receive bank information. Yet, almost all community banks belong to an ATM network that refunds surcharges to customers that use one of the thousands of ATMs in the network. Kirkeeng added that technology is fairly easy to emulate, but the difference is the marketing dollars put into promoting smaller banks. MacDonald said some people don't fully understand the differences between small and large banks, and that often smaller banks will have less fees.

"The basic services are all the same and the fees are probably lower," said Palos Bank and Trust President Greg Paetow, son of George Paetow, who with his brother, Harry, founded Palos Bank more than 50 years ago.

MacDonald said Marquette Bank offers all the products and services of big banks. He said a bank of Marquette's size does not generally lend to national companies, but rather all the lending is made to businesses in the Chicago area. Marquette has four branches in Orland Park.

"We offer the best world of banking, convenience and personal attention," MacDonald said.

When people move their money to community banks, the money almost always stays in the community, MacDonald said. Lending is almost always to small businesses, which in turn drive the economy and provide more money for municipalities, some of which are struggling mightily in this economy. Paetow said if his bank is lending, chances are it is a reinvestment into the community.

"Community banks tend to be competitive on rates to help the consumer," Rosenbaum said. "It puts more money in the people's pocket to spend locally."

Community banks, besides lending to the community, often support many organizations and civic events in the community.

Palos Bank and Trust sponsors almost every major event in the Palos area, including the half marathon and Classic Car Event. The Marquette Neighborhood Commitment sees the bank contributing each quarter to four areas in the community shelter, hunger, education and health and well being, MacDonald said. Prospect Bank supports local churches, Scout groups and sports teams.

Community banks can also be easier to work with in a mortgage or foreclosure crisis. Rosenbaum said community banks are more likely to work with mortgages because they recognize the real estate situation and work with customers to keep them in their home. Community bankers are there to serve the local individual and the local businesses and give more personal attention, Rosenbaum said.

"Customers like the ability to talk to the people making decisions," Kirkeeng said. "To some people, that makes a world of difference. The biggest challenge is getting the message out."