Real Estate News | Residential Real Estate
National Capital Bank of Washington - A Real Survivor with No Subprime Mortgages on Its Books in 120 Years
By Alex Finkelstein | February 23, 2009 12:29 PM ET
(WASHINGTON, DC) -- How does a family-founded and family-run bank grow to be 120 years old and still survive into today's volatile economic climate?
No subprime mortgages, for one thing. No bad-risk loans to individuals or companies, for another. That's the mantra of National Capital Bank of Washington.
The result: 120 straight years of profitability and shareholder dividends.
"Ten years ago, conservative banking practices were not a big story," says NCB President James Didden. "But now, it is what makes our bank unique."
Didden says the bank's no-risk-taking practices "helped position us apart from the rest during these tumultuous economic times. Philosophies that our family established 100 years ago shepherded us through a multitude of economic hard times over the last century.
"It is interesting to note that those fiscally conservative philosophies still work today." NCB's assets total $257 million.
Didden says NCB weathered the economic crisis of 1893, the stock market crash of 1929 and the Great Depression that followed, the recession of the 1970s, the savings and loan crisis of the 1980s and the bank merger and acquisition frenzy of the 1990s.
"Not only did the bank survive, but it continued to remain profitable and provide dividends to its shareholders," says Didden.
What makes NCB different from the array of financial institutions lining the DC banking landscape?
"Foremost are the bank's underwriting policies, the principles of which have been consistent over time," says Didden. He points out four of several guidelines the bank continues to follow:
---"NCB has resisted the risky lending practices of the past decade.
---"Consumer real estate loans still require 20 percent down and the bank's management meticulously reviews every loan application.
---"In addition, all account documentation and decision making authority rests locally in the main office on Capitol Hill--not farmed out to headquarters located in another city.
---"Also, all NCB money held in deposit from their customers is infused back into the community through local loans, not redirected to other areas of the region."
National Capital Bank also offers a preferred rate to a preferred customer.
"Spending money to run people down for collections takes away from our bottom line," explains Didden. "So we lend to those who are a good credit risk and we reward them with competitive rates, as they keep our costs lower."
The bank also credits its personal relationships with clients as a key to its success.
"We have little staff turnover, and in fact, some are second generation employees--they know most of our customers by name,"says. Didden. "Because those personal relationships and access to top management are so important, my desk sits on the floor of our Main Office where customers don't hesitate to approach me."
NCB management policies are firmly established, but its array of products offers the latest in banking technology. "We try and stay away from some of the strictly trendy stuff, but useful new technologies that benefit our customers are important to us," says Didden.
The bank also makes giving back to the community a priority. Two years ago the bank established The National Capital Bank Fund of the Community Foundation for the National Capital Region Foundation, a vehicle to funnel money to local community charities.
Among the accolades it has received over the years are a five-star rating from Bankrate.com and Bauer Financial Inc.; an A+ rating for excellent financial security by Weiss Ratings on TheStreet.com; and a "Best bank in DC for small business loans" rating by Entrepreneur Magazine.