Banking & Finance

Linville Witnesses the Transformation of Banking

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CORTLAND, Ohio — Dennis Linville, who began his career in banking when checks were filed by hand, retired two months ago from the Cortland office of the Middlefield Banking Co. after being a witness to, and a participant in, the technology revolution that has transformed financial services.

Because Linville is retired, he could be candid about the how he sees state and federal regulators assuming excessive control in an effort to protect banks and their customers. “I can say that now, what people who have never worked for a bank don’t understand,” he says. “Regulators have pretty much taken over the banking industry. That’s not good for banking. That’s not good for customers.”

The hoops customers have to jump through to obtain credit, Linville says, are not bank policies but requirements imposed by regulators.

His career has taken Linville distances from Cortland but his heart has remained in the town where he grew up, was elected mayor, and still serves on City Council, again as president of council.

A voracious reader, especially of history, “I might have been a teacher,” Linville says, if Roger Platt, the man who’s achieved near legendary status at Cortland Banks, hadn’t hired him in 1976.

Platt served as president and CEO of Cortland Bancorp from 1976 until 2005, expanding its footprint and overseeing its growth.

Linville had just received his master’s degree in public administration at Kent State University after graduating in 1973 from the University of Mount Union where he majored in political science. “A local attorney, John Gessner, suggested I talk to the bank president [Donald Althouse],” Linville recalls. “Roger Platt was about to become president.”

Linville had earned a solid reputation as an athlete and student at Lakeview High School (Class of ’69), where he was the quarterback and defensive back on its first football team. The team was so small its members played on both sides of the line. “Jim Panozzo was the first coach and he kept us focused,” the retired banker remembers, through a losing inaugural season

Linville, whose parents owned a clothing store in Cortland, also played guard on the Bulldogs basketball team and ran sprints and hurdles on the track team.

The world of banking was much different in 1976. It was labor-intensive with clerks performing much of the routine work computers do today. The few ATMs in use were unreliable. Tellers kept books by hand and filed checks to be sent to the Federal Reserve System for routing to the banks on which they were drawn.

“Lending was extremely less complicated,” Linville says. “You could do a loan in four to five minutes. … Character lending was big.” Character remains one of the three C’s of credit but capacity (the ability to repay) and capital or collateral have assumed more importance when lenders score loan applications.

Cortland Banks bought the community bank in Windham, which also had a branch in Hiram, and Platt assigned Linville to run both offices. “They still posted everything by hand,” he says. In the mid ’70s, many small banks still kept “bankers’ hours,” opening at 10 a.m. and closing at 3 p.m. Monday, Tuesday, Thursday and Friday, open from 9 a.m. until noon Wednesdays and Saturdays. The offices in Windham closed an hour and a half Friday afternoons before reopening Friday evenings.

When drive-thru banking was introduced, it became an instant hit. “Cars lined up 10 to 15 deep,” Linville recalls. “Sometimes they lined up in the street.”

He remembers when Burroughs and Unisys machines were installed “to post checking and savings account transactions.” Although these were advances, “They couldn’t provide the detail [or immediacy] you have now.”

The introduction of ATMs, often frustrated customers because they “forgot their passwords [personal identification numbers] and the low limits you could withdraw at any one time.”

Customers everywhere, not just at Cortland Banks, also grew frustrated because “in the early days ATMs were notorious for being inefficient, even when you did everything right. There were a lot of issues,” including not dispensing the instructed amounts and “eating” ATM cards.

“It was an interesting time,” Linville remembers. “It made bankers think,” not only about delivery systems but helping customers understand the new products banks offered, such as certificates of deposit, and how rates were set.

Deregulation – more accurately, less regulation – that took hold about 1982, “certainly made banks more competitive,” Linville says, “which for consumers was a good thing.”

Linville stayed active in Cortland and was elected to village council, serving 12 years before, as president of council, he completed the unexpired term as mayor of his predecessor. He was elected in his own right two years later, serving from 1994 until 2000.

“My interest in politics began in college,” he says, “from reading political science.”

Linville is affiliated with neither major party. “I’m an independent, always have been,” he says, explaining that all candidates for council run for nonpartisan seats at-large.

His success at the branches in Windham and Hiram led Platt to summon him back to Cortland and name him secretary-treasurer of Cortland Banks. “Roger used to joke about having a local politician on the payroll,” Linville says with a smile.

When Linville left Cortland Banks in 2000, he did so with the intent of founding an independent community bank in Howland. By this time, deregulation was well underway with large regional banks and “money center” banks acquiring the smaller regional banks and many community banks and savings and loan associations.

The 14,000 banks in 1982 consolidated into half that number. Some investors saw opportunity by starting new community banks, such as 1st National Community Bank in East Liverpool (since acquired by Farmers National Banc Corp.).

The St. Louis Fed reports the number of commercial banks in this country was 5,260 as of May 10 and that the assets of the five largest U.S. banks are the equivalent of 53% of the economy.

The barriers to entry in commercial banking are high – capital requirements and the regulatory burden – and, Linville says, “after 16 months, we finally decided that without the cooperation of the Ohio Division of Banking,” the de novo bank was not to be.

“We had a good business plan,” he says somewhat ruefully. “We hired a firm to help walk us through. We didn’t get the support I would have hoped for from the Ohio Division of Financial Institutions.”

He became a consultant, helping troubled banks get back on their feet, often to recover to a condition where they could be sold. The Federal Deposit Insurance Corp. “had me managing two banks under cease-and-desist orders,” one in Meigs County, the other in Lodi (Medina County).

“They were interesting. They were challenging,” Linville says. “I did a lot of traveling and I learned a lot. I liked it except for all the time I spent away from home.” He could return home and see his wife, Judy, only on weekends. (They’ll celebrate their 41st anniversary this October.) Whether his political or banking career, “She’s rolled with the punches,” he says. “She’s supported me.”

From 2001 until 2006, he worked for the Andover Bank. “I was good friends with the president and the CFO was about to retire. So I was the operations officer five years.”

The role he assumed was new to him: “I had always been in administration and lending. There was very little customer contact and I missed that.”

He began conversations with “the people from Middlefield Banking Co.,” he says, who were interested in opening an office in Cortland.

“They let me pick the site and design the building,” he says. “We opened in 2007, hit the ground running and were profitable within half a year.”

Linville worked with architect Randy Baker of Baker Bednar Snyder & Associates, Warren, in designing the office. Baker knew Linville from his days at Cortland Banks and time as mayor. “We had a long professional and personal relationship,” he says.

“Middlefield had no prototypical bank office,” Baker says, “but some common design elements.” The site, 3450 Niles-Cortland Road, “presented some challenges, but not many,” the architect says. “It worked out well. It’s not a cookie-cutter building. It conveys a sense of permanency, safety and success.”

Linville chose the site because it was on the southern side of Cortland but close to Howland.

Customer privacy was a concern for Linville and Baker laid out the floor so the offices offer privacy. The walls are sound-insulated.

From this office, Linville continued to travel to provide financing to build 12 hotels and warehouses across northeastern Ohio and Greater Columbus. Middlefield has offices in Dublin and Westerville.

Linville is not alone among bank executives who remark, if not marvel, at how technology has revolutionized banks delivery channels. Drive-thrus were the harbinger of not needing to go inside a bank.

PCs, smartphones and tablets allow both consumers and businesses to visit a branch when and if they choose to.

“My kids never go to a bank,” he says.

Published by The Business Journal, Youngstown, Ohio.