DealBook: Amid Wall Street Protests, Smaller Banks Gain Favor

Peter DaSilva for The New York TimesVince Siciliano, the head of New Resource Bank in San Francisco, says his business is growing.

Vince Siciliano — a Birkenstock-wearing, organic food-eating, public transportation-riding sympathizer of Occupy Wall Street who earns $240,000 a year — is far from a banking baron.

But as the chief executive of New Resource Bank in San Francisco, Mr. Siciliano has managed to pull off what his bigger rivals have not: turn a profit and stay out of the line of fire.

“Our business has tripled this month,” said Mr. Siciliano, 61, referring to October. “We have had nonstop, all day long, people moving their money.”

New Resource, a small community bank that focuses on sustainable and “planet-smart” small businesses and nonprofits, is one of the many community-based lenders benefiting from the criticism of Wall Street.

In recent weeks, big banks, already barraged by flagging profits and widespread layoffs, have been a focus of global protests and disparagement over new fees. A $5 monthly debit card fee introduced by Bank of America provoked enough outrage that the company retracted its decision. An online campaign, called Bank Transfer Day, that encourages clients of the nation’s largest banks to park their money elsewhere, has attracted more than 75,000 Facebook commitments from angry customers of big banks.

On the margins, customers are seeking out alternatives like community banks and credit unions. Without the obligations to generate huge returns for public shareholders, these smaller banks often can charge lower fees and pay higher interest rates than their bigger competitors. More than 650,000 people have joined credit unions since Sept. 29 — the day Bank of America announced its debit card fee — and have brought in an estimated $4.5 billion in new deposits, according to a survey conducted by the Credit Union National Association.

“I think it’s a last-straw thing,” said Bill Cheney, the association’s chief executive. “Even though banks are backing up on some of their fees, there’s a sense that if it’s not this fee, its going to be something else.”

In October, New Resource added 150 new accounts and $1.5 million in deposits. GreenChoice Bank, a company based in Chicago that describes itself as a “green community bank,” has opened at least 100 new accounts since Occupy Wall Street began, including one for a couple who drove from Darien, Ill., 25 miles away, to move their money.

“People vote with their deposits,” said Steve Sherman, GreenChoice’s chief operating officer. “It all points to a broader cultural shift in what people expect from their bank, and from the companies they’re doing business with.”

Many bankers at these smaller companies come from traditional finance backgrounds. Mr. Siciliano spent 10 years at Bank of America, where he worked in Asia on corporate finance projects, before decamping to community banking. His switch to New Resource in 2009 required a major attitude shift.

“I tell people, there’s slow banking and fast banking,” Mr. Siciliano said. “In fast banking, you say, how fast can I grow? How high are my prices? How high an internal rate of return can I generate? Whereas slow banking says, it’s not about an exit strategy. It’s about building a long-term franchise around the mission.”

When Mr. Siciliano arrived at New Resource, during the financial crisis, it was in a state of disrepair. Deposits had shrunk, and federal regulators had ordered the bank to clean up its balance sheet. But after the bank began marketing itself as a green alternative to mainstream bank, and it became certified as a B-corporation — a type of corporation that encourages businesses to focus on creating environmental and social benefits as well as profits — business began to thrive. Last quarter, New Resource made a profit of $196,000, compared with a loss of $433,000 a year ago.

“It’s a good time for us,” Mr. Siciliano said. “Midsized foundations and nonprofits and companies are being asked by their boards, ‘Why do we bank at Wells Fargo or Bank of America?’ And we’re able to step in and offer an alternative.”

Part of the appeal of smaller banks has always been their focus on local investments. New Resource’s clientele is West Coast-centric, and includes Bay Area small businesses like San Francisco’s Haight Street Market in addition to people in the area.

“It’s a way to put your money in an institution that is investing in your community, and holds that as one of its core values,” said Jeannine Jacokes, chief executive of the Community Development Bankers Association, a trade group.

There are drawbacks, too. Many smaller banks lack the expansive ATM networks and online banking services of larger companies. And it can take weeks to move an account and set up auto-pay bill systems and direct deposits and have checks clear.

Michael Radparvar, the co-founder of Holstee, a lifestyle goods company in New York, does the company’s banking at Bank of America. He and his colleagues were contemplating switching to a smaller bank but had not decided whether the hassle would be worth it.

“The whole purpose is beautiful, and it jibes really well with our personal values,” he said. “It’s a matter of us finding a way to switch systems that’s seamless and doesn’t mess with the flow of what we’re working on.”

For some customers, though, feeling connected to a local bank is all that matters. David Becker, president of PhilippeBecker, a design firm in San Francisco, and a Bank of America refugee, said he had found shelter in a small local credit union, which charged him fewer fees, even though it lacked some of the conveniences of a larger bank.

“What’s a pretty Web interface worth?” he said. “What are you really getting?”

Mr. Becker, who has been keeping his business accounts at the Bank of San Francisco, a small local bank, for years, said it would be difficult to go back to his impersonal, fee-laden life as a big-bank customer.

“I called my credit union up the other day, and someone answered the phone,” he said. “I was like, holy smokes! I’m on a different planet!”

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