Harford Bank has remained locally owned and operated since it was founded in 1964, and its staying power during the past 50 years, when many other local banks have failed or been purchased by larger institutions, is the result of what its top managers describe as conservative business and lending practices.
"You have to discipline yourself," John S. Karas, the chairman of the board of directors, explained. "You can't make every loan; you have to be conservative."
Karas, who has been chairman since 2000, and President and CEO Charles H. Jacobs Jr., who has worked for the bank since 1976, spoke to The Aegis recently in the third-floor boardroom in Harford Bank's headquarters on West Bel Air Avenue in Aberdeen.
"Basically, our culture is, 'We're not for sale,'" Jacobs said regarding how Harford Bank has remained locally controlled. "We're stubbornly independent."
Harford Bank has been on West Bel Air Avenue in downtown Aberdeen since it opened for business in May 1964. The current 22,500-square-foot, three-story headquarters opened in 2004, and its former facilities were where the parking lot is.
It was chartered as Aberdeen National Bank, and the name was changed to Harford National Bank in 1980 as its operations expanded around Harford County, according to a history posted on the Harford Bank website.
The first branch outside Aberdeen opened in Joppatowne in 1974, and Harford Bank has seven branches outside the city today, including Abingdon, South Main Street in Bel Air, Marketplace Drive just outside Bel Air, plus Joppa, Hickory, Havre de Grace and Elkton.
The Hickory branch was the most recent to open in 2011, according to the website.
The bank's name was shortened to Harford Bank in 2001, and its charter was changed from a national to a state charter.
The state charter prevents Harford Bank from having any branches outside Maryland, but Jacobs explained that there is a "significant difference" in the regulations for nationally-chartered banks and state-chartered banks.
Another advantage is that "we just felt that the state got our community bank image," Jacobs said.
A local flavor
Jacobs and Karas gave several examples of how Harford Bank retains its local feel, including the fact that all 12 members of the board live in Harford County, and they own and operate a business in Harford.
Karas, who grew up in the Aberdeen area, is a partner in the Bel Air office of the law firm of Karas & Bradford, which was founded in Aberdeen, according to the firm's website. Karas and his family live in Havre de Grace.
Jacobs' first job at the bank was as a note teller posting the payments made on a note, or the promise to repay a loan.
The net income was $1.64 million for 2009, and it rose to $1.96 million in 2010, according to the annual report.
Harford Bank has come through the major crises that shook the national banking world, such as the 2008 crash and subsequent credit crunch, and the savings and loan scandal of the 1980s.
The bank has had to deal with tighter federal regulations on banking during the past decade, which means officials must shoulder higher costs of compliance, such as hiring additional employees or outside firms to assist.
"We are highly-regulated industry, and unfortunately, whenever you have new regulations, it's one size fits all," Jacobs said, noting the nationwide banks with billions of dollars in assets are a different model than the $300 million community-based Harford Bank.
Karas succeeded the late Frederick J. Viele as chairman. Mr. Viele, who died in early 2001, was the bank's first president, and he was one of the 10 founding directors.
He served as the board chairman from the founding until 1999, Karas said.
Mr. Viele grew up in Aberdeen, and he was president of the local Viele & Co. Inc. hardware store and lumberyard. His father founded the company in 1919, according to Mr. Viele's obituary in The Baltimore Sun.
A wooden gavel sits on the boardroom table, worn from 50 years of use. A metal plate around the head of the gavel bears the name Aberdeen National Bank.
"This is Mr. Viele's gavel," Karas, who still uses the gavel, said as he held and examined it.
Mr. Viele was one of 10 Harford County business leaders who founded Aberdeen National Bank. Their aim was to create a locally-owned and operated bank after the independent First National Bank of Aberdeen was acquired by the Equitable Trust Co. of Baltimore.
"The general consensus of the community was a desire to maintain an independent bank in Aberdeen which was owned and operated by members of the local community that demonstrated an understanding of the area's specific financial needs," according to the history on the Harford Bank website.
Charlie Irwin of Bel air, who is 97 years old, is the only living member of that group.
He was sales manager and vice president of Chesapeake Broadcasting of Havre de Grace when his future fellow board member Clark D. Connellee approached him on the street and asked if he was interested in helping to form a bank in Aberdeen.
"I said, 'Yeah, sure,' " Irwin recalled. "That was about all there was to it."
The other members of the first board were George B. Adams, Earl B. Crabtree, W. Lester Davis, N. Joseph Lee, Frank G. Novak, Charles T. Oliver and Richard R. Samuels, according to a plaque posted in the bank headquarters.
Irwin, an Army veteran of World War II who took part in the D-Day invasion of France in 1944, still lives in Bel Air. He spent 30 years with Chesapeake Broadcasting, where he started as a radio announcer, and then he founded Charlie Irwin Advertising and Public Relations, a company he ran for 20 years.
"When you're involved in a bank, it gives you an insight into what's going on in the community," he said of why he was interested in banking. "I think that has a lot to do with it."
Irwin said he remained on the Harford Bank board until he was 90 years old, and he still attends annual meetings.
He described it as "a great bank, and it's unusual it started in Harford County and it's still there."
"I think because it's a bank that sincerely has the interests of the people of Harford and Cecil counties [in mind], because they were born there," he said of Harford Bank's longevity. "Also, they want to do a good job for their general community in Harford and Cecil."