Lisa Oliver and the case for a local bank

But how much can ‘local’ help with the crucial issue, affordable housing?

Lisa Oliver’s banking career has a Joni Mitchell “Both Sides Now” aspect.

As president and CEO of the Cooperative Bank of Cape Cod for five years, one of only four remaining banks on the Cape and Islands locally owned, she champions the idea that independent, rooted banks are more accountable:

“From bank employees to the credit committee, the philanthropic foundation to public relations, these people all live and work in this community. We can’t hide – and I don’t say that like it’s a threat or something. For a much larger bank, when things get rough, we’ve seen that they can foreclose and walk away. That’s the right decision for the bank. But we have to make the decision that’s right for the community.”

The other side is a career in that large banking world, much of it in commercial lending. Raised in the Hudson Valley, family in the car business, she moved to Manhattan after college to pursue a banking career. After four years she migrated back to upstate New York, joining KeyBank which had an unusual national footprint, Northeast and Northwest. When an acquisition added an in-between headquarters in Cleveland, she moved there as one of nine regional executives.

She’d been coming to the Cape on vacation since she was little, and when her husband was ready to retire they hoped to live the year-round dream here.

“Let’s just say I’d had my day with large banks,” she smiles.

Then serendipity:

Joel Crowell, longtime president of the Coop, announced he was stepping down. The search was on, and Oliver emerged as a standout choice. She never could “outlocal” Crowell, who had been with the bank more than three decades, with family Cape roots as deep as any of European descent. So one of her first priorities was “to confirm that the culture of the bank won’t change. We are a community bank.”

When Oliver arrived the Coop was managing about $930 million in assets; that’s now $1.3 billion, well below powerhouse Cape Cod Five ($6-7 billion), but bigger than the other surviving locals, Seamen’s and Martha’s Vineyard. Her arrival meant that the three Cape-based banks all had women CEOs, Oliver joining Dorothy Savarese at the Five, Lori Meads at Seamens.

Beyond feel-good, there are tangible benefits to locality:

Holding assets in a community, keeping them circulating by lending in a small radius, paying good salaries that fuel the home economy, using local merchants, creating a philanthropic arm to support grassroots non-profits -- all to the very good. But if there is one more issue crying out for creative and flexible impact, it’s the affordable housing crisis.

With Shanika Rogowski, senior vice president and chief residential lending officer at the table, Oliver plays out ways the bank has tried to respond:

Because the Coop holds many of its mortgages rather than putting them into the secondary market, the bank sometimes lends as much as 95 percent of a property’s value; not having 20 percent down doesn’t kill the deal. There are programs to reduce interest rates, create incentives for Accessory Dwelling Units through the Housing Assistance Corporation, use projected rent as cash flow to qualify, pre-approvals for affordable units.

The bank also is considering 40-year mortgages that lower monthly payments, allowing people to get a foot in the door and build equity – although terms extended that long don’t reduce much principal for years.

“In an environment where property is appreciating, that still works out,” says Oliver; you don’t take much of a bite on debt for awhile, but you’re realizing increased value when time comes to sell. That beats sending a similar amount of rent down a one-way street to a landlord every month.

A bank with a sense of place and special circumstances, even with regulators looking over their shoulders, also can exercise what might be called corporate compassion.

“We have what we call ‘hope loans,’” says Oliver, “meaning we hope it gets paid off. There might be a case where a child comes to help a parent, then the parent dies and there’s no cash flow. We have to write off that loan and show it to the regulators, but we’ll hold on. We don’t need to be quick pulling that switch,” meaning foreclose.

These strategies help. But the ominous truth is that market forces have pushed the real estate market so hard and high that such tactics often aren’t muscular enough to create balance and affordability. Oliver knows that, and while she jokes that at this point her crystal ball “is not cloudy, it’s smashed!”, she does not see property values rolling back:

“Appreciation here was overdue, when you look at comparable properties elsewhere,” she says. Barring some kind of catastrophe, “We’re not going to give it all back, it’s going to be very sticky. So the question becomes, Will it go even farther?”

The answer, she predicts, “depends on your idea of timing.” Longer haul, the answer likely will be the same as for decades, when people over and over couldn’t believe free market real estate values could possibly balloon higher:

They can, and will.

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