Commercial Loans

Commercial Loans and The Community

December 5, 2023

We’ve all heard them. There is no shortage of cheesy jokes about bankers. By the very nature of their profession, they are easy prey to comedians. It's not often that you hear about the great things that community bankers do. Some success stories have enough "feel good" to supply the Hallmark Channel with a lineup for six months. For the sake of explaining the impact of community banking, let’s take a look at the fictional town of East Park.

East Park was a thriving downtown village in the 1950s, 60s, and the early 70s. Huge buildings with charming storefronts lined the streets. At the heart of the downtown district was the local drug store where people sat on swivel chairs and caught up with each other over a grilled cheese sandwich and a root beer float. People liked that you could get your prescription, buy a birthday card, and have lunch--all in downtown East Park.

The demise of East Park’s downtown took place over an extended period of time, but the most notable migration occurred when suburban malls entered the shopping scene in the late 1970s. The mass exodus from the center of downtown East Park to the suburban shopping mall on the outskirts of the county left East Park’s main street looking like a Lonesome Dove version of an abandoned village. Manufacturing firms that were present there for decades disappeared. The once charming and decorative buildings that showed so much life became dilapidated and uninhabitable.

Fast forward 35 years. A visionary developer in 2019 who lives and works in the community sees the potential of reviving downtown and wants to rebuild and repair it. His friend, the local East Park banker, sees the potential too, and loans the developer $250,000. Now, the developer has the capital needed to start a renovation project. He uses the working capital to repair and restructure one of the old buildings. He rents the bottom level to an architectural firm and builds contemporary apartments for rent on the top two levels.

After more progress occurred on several other buildings, young professional people who left their hometown of East Park several years ago heard about the revitalization project. They decide to move back to East Park because the community is showing signs of life again. These same young professional people like downtown living, so they rent the trendy, modern apartments above the architectural firm. There is lots to do again in downtown East Park because the community bank also loaned money to open a new café down the street. Local business executives meet there each morning to have a cup of coffee and a crescent roll while catching up on the town’s activities. The farmer’s market got wind of all the development and decided to locate in the newly revived downtown area too.

Meanwhile, a few towns over, a different developer wants to renovate some older property because her town is close to a thriving college community where the cost of living has become unaffordable for many. She sees the potential for her community to benefit by providing more affordable living options as an alternative. She needs working capital to renovate the older properties, so she calls her community banker. Once she borrows the money for the construction project, the renovation begins.

Are you getting the bigger picture? The properties in both scenarios are no longer uninhabitable and once again are generating tax revenue for the community. These stories may be fictional, but they are not that far from reality, and it all begins with a community banker who believes in making it happen. So, next time you grab a burger or a cup of coffee at your favorite downtown hangout, take a minute to thank a community banker. First Bank and Trust Company is pretty proud of ours.


Original Publish Date: October 5, 2019
Article Revised: December 5, 2023

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