small banks gain customers

President E. Hunt Burke, left, Chairman Charles K. Collum Jr. and Vice President C.S. Taylor Burke III outside of the bank they run. (Marvin Joseph/twp - The Washington Post)

Joann Gaskins panicked. After absorbing a steady drumbeat of bad news about bank runs, bank collapses and bankruptcies, she arrived at a Manassas branch of faltering Wachovia Bank minutes before it opened Sept. 17, demanded her savings in cash and walked out the door. For eight days, she toted a metal box stuffed with $19,000 in a five-inch stack of $100 and $50 bills back and forth from work to home, while she tried to figure out what to do with it.

She picked Burke & Herbert, a family-owned Alexandria bank that takes pride not only in how boring its name sounds, but that the boring, conservative way it does business has kept it chugging steadily along since long before the Civil War. A few days later, Gaskins switched $23,000 -- in a cashier's check this time -- from her trucking business account to Burke & Herbert. Now she's just waiting for $200,000 in CDs to mature before she moves the rest.

"I feel a whole lot safer," Gaskins said. Plus, she gets to meet the bank president this week.

She knows, on some level, that her money would have been safe at Wachovia. FDIC insurance covers deposits up to $100,000, and Congress raised the limit to $250,000 because of the crisis. But her instinct was to flee. To seek comfort.

If anything, what the market meltdown has shown in sharp relief is that the global financial system runs as much on trust as on anything else. And now that that trust is shaken, the anxious and the nervous are draining bank and money market accounts by the millions from what they perceive to be unstable institutions and turning to something that feels more familiar.

Although exact numbers tracking the flow of this panic won't be available for a few more weeks, Chris Cole, spokesman and regulatory counsel for the Independent Community Bankers of America, said many of the 7,000 community banks in the country are reporting an influx of deposits. Indeed, Burke & Herbert, with $1.6 billion in assets, has seen a staggering $45 million in new deposits in the past two weeks. The draw of community banks, Cole said, is the relationship. "At times like this, people may feel it's time to shift to a bank that's nearby, where their neighbor may bank, where they may know the loan officer," he said, "a place that they know is safe."

Tellers at the Burke & Herbert main branch on King Street in Old Town Alexandria are poised behind a curving, polished, mahogany-and-green marble counter to greet depositors by name and offer bowls of lollipops for the kids and dog treats for the pets. They've been known to give a quick courtesy call to depositors who are about to overdraw their accounts. And the bank's mascot, a parrot, dates back to the days when a former bank president did business with a cranky one perched on his shoulder.

President E. Hunt Burke sports a bushy moustache, much like men did around the turn of the last century. He has been known to paint walls on weekends and mop up when the floor is wet to show "nobody's too good to do anything." And although they now offer such newfangled services as online banking, Burke runs the bank in much the same way that his great-great-grandfather did when he founded it in 1852. The board of directors meets every Thursday at 4 p.m. sharp, because it always has. Advertising, until recently, meant waiting until people found them. Residential loans require at least a 20 percent down payment. Loan officers sometimes show up at houses to make sure the appraisal isn't overblown. And no one even considered one of the "nutty" subprime loans that have taken Wall Street and global markets down.

"We do what we understand, and no one understood those," Burke explained. "We look dull and plodding."

"Because we are dull and plodding," said his brother, C.S. Taylor Burke III, senior executive vice president.

At times like these, dull and plodding looks pretty good.

Nervous investors also have been flocking to McLean-based Cardinal Bank, another community bank.