We just returned from our summer break and had a BOA meeting on August 24, 2010.  The only topic on the regular agenda was our discussion and vote on the selection of the bank that the Town will use for the next few years.  For the past several years the Town has used Bank of America, but the two finalists that the BOA was discussing for the upcoming period were BB&T and Harrington Bank.  For the first time since I have been on the board, the vote was split.  Since Joal Hall Broun recused herself because of financial interests, we had a 3-3 tie.  Mark Chilton, Jacquie Gist and Sammy Slade voted in favor of Harrington Bank, and Randee Haven-O’Donnell, Dan Coleman and I voted in favor of BB&T.   We tabled the discussion and/or decision until our September 7 BOA meeting, which will follow the dedication of the new Carrboro Fire Station on Homestead Road.

There are pros and cons to using each of the banks.  The biggest pro, in my view, for using Harrington Bank is that they are a “local” bank, and certainly, their four banks are local, with their headquarters in Durham, one in Raleigh and two in Chapel Hill.  This brings much of the attendant good will that comes with a local business, i.e., the Harrington Bank owner lives in Chapel Hill, and the president and decision makers are rubbing elbows with local residents and business owners at local events – more accessible than the higher ups at BB&T.  A largely regional bank, a statement that BB&T recently released says that “[w]ith $143.4 billion in assets, Winston-Salem, N.C.-based BB&T Corporation is the nation’s 10th largest financial holding company. Founded in 1872, it operates more than 1,500 financial centers in 11 states and Washington, D.C.”  As one of the “big banks,” BB&T accepted TARP monies in November 2008 that were paid back in June 2009. 

[As an aside … there is some argument as to whether a “local bank” is ever truly “local.”  Because of the way the world of banking operates, the reinvestment in the local community is different than what the typical local business can do, thus affecting the “multiplier effect” that we seek in promoting local businesses.  Of course, banks can choose to hire local professionals and contract services and thus be “more local” in this way.]

Cons to selecting Harrington Bank, in my view, are that they are currently operating under an agreement with the Office of Thrift Supervision (OTS), a bureau of the United States Department of the Treasury.  The agreement was necessary because the OTS found that “the Association [Harrington Bank] has failed to comply with the requirements of laws and regulations to which the Association is subject, failed to adopt and implement appropriate and comprehensive operational and risk management practices and strategies, and failed to identify and correct other deficiencies and weaknesses in its operations[.]”  As a result of these failures, Harrington Bank was placed under a number of restrictions.  Harrington Bank officials will not identify any of the restrictions that have been lifted due to privacy concerns, and they do not know when they might be released from any remaining restrictions under the agreement, although they are of the opinion that they are doing what they need to do under the terms of the agreement.

Additionally, Harrington Bank has never been a federal depository for a municipal corporation.  There are rules and regulations specific to municipalities that would have to be considered and implemented for the first time at the bank.  Impacting this is the fact that we (the town of Carrboro) have a highly qualified but brand-new finance director who is just getting settled in the position.  He will already be challenged as the leader of a department that has been in a state of flux for several months.

BB&T, while not a local bank, has been involved at the local level with several volunteer and financial initiatives.  It has received an “excellent” CRA rating with regard to use of its Community Reinvestment Funds. It has experience as a depository for municipal corporations.   Additionally, it has a corporate ranking of 73 with the Human Rights Campaign, an organization that reviews companies with regard to their LGBT policies, benefits and initiatives.   HRC noted BB&T’s non-discrimination policy which includes sexual orientation and gender identity, their offering of domestic partner benefits, their diversity training program, their marketing to or sponsorship of LBGT events, and that they have internal diversity support.  All of this is available on the BB&T and/or HRC websites (Harrington Bank representatives stated that they do not discriminate because of “sexual preference” and that they also offered domestic partner benefits.  I suggested that they make this information available on their website.)

For these reasons, I believe at this time it would be more prudent for us to choose BB&T as the keeper of the Town’s funds.  [Update:  On September 7,2010,  the BOA voted 4-2 to select Harrington Bank as the town bank, as long as the bank is out from under the agreement with OTS by December 31, 2010.  Dan Coleman and I voted against this.][Further update:  Harrington Bank withdrew from consideration as the Town’s bank after it became apparent that they would still be under OTS oversight at the end of 2010.  Arrangements arenow  being made to have BB&T become the Town’s new depository.]

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