The Accidental Banker

This is no “podunk country bank”

by Mark Pendergrast

bankAs president and CEO of the National Bank of Middlebury, G. Kenneth Perine (he prefers Ken) makes sure the 182-year-old institution keeps up with the times.

In its 182-year history, the National Bank of Middlebury has had only 10 presidents, a testament to its stability and appeal. But Ken Perine, who currently stands at the helm, didn’t plan on a career in finance. “I thought bankers were stuffy and boring,” he recalls.

After growing up in Middlebury, where his father worked at Middlebury College and his mother taught his senior high school English class, Perine attended Dartmouth, skiing on the cross-country team and majoring in geography. He loved the outdoors, so he obtained a grant to study the population of the snowshoe hares in Mount Holly. He had to trap, measure, band, release, and re-trap the hares, then apply a statistical method to estimate the total number in the area. It was, in fact, pretty good preparation for banking, though he didn’t think about that at the time.

After graduating in 1973, he moved back to Middlebury and married Carolyn Leggett, his best friend from high school, who worked in admissions at Middlebury College. Perine couldn’t find a teaching job, so he worked as a bike mechanic, picked apples, and taught skiing. He enrolled in grad school at the University of Vermont, but before he could finish his thesis, his son, Chandler, was born in 1976. He left UVM to take a job at the Middlebury Snow Bowl golf course, living in the small caretaker’s cabin for a couple of years.

In 1978, the growing family moved into town when Carolyn was pregnant with their second child. Perine took a job as a salesman for a ski company but hated it, so that same year he signed on as assistant manager at the Middlebury Cooperative Savings and Loan Association.

There were six employees and the bank had $10 million in assets, which wasn’t much, even in 1978. “I figured I would give it three years,” Perine recalls. “I needed to support my family.” Yet he soon came to love his new job. “I was a jack-of-all-trades: I was a teller; bookkeeper; did some lending and appraising. It was a wonderful education in how the pieces of a bank fit together.” And his boss, he says, “loved getting people into homes — that’s what it was all about.” He had yet to see It’s a Wonderful Life, but he was beginning a career similar to George Bailey’s in that Frank Capra classic.

Perine arrived at the bank during a period of high inflation. Money market certificates of deposit had just come on the market, yielding higher rates than the bank’s fixed mortgage rates. “We were losing money,” Perine says. “It emblazoned on my psyche how important it was to manage interest rate risk.”

After the troubled S&L merged with Vermont Federal Savings and Loan in 1981, Perine became branch manager and eventually oversaw all the branches in southern Vermont. He took part in banking innovations, selling mortgages into the secondary market for the first time to Freddie Mac (Federal Home Loan Mortgage Corporation) so that the loans didn’t go on the bank’s balance sheet.

In May 1987, Perine was offered a job as vice president in charge of mortgage loans at the National Bank of Middlebury, a venerable independent community institution founded in 1831. By this time, he and Carolyn had four children — Chandler, Jennifer, and twins Kristen and Kathryn — and he was traveling too much. He took the job, although it meant losing the chance to get a vested pension after 10 years at the S&L.

“At the National Bank of Middlebury, we had a nice team, about 35 employees, and $50 million in assets,” he says. “It was a great place to be. I could walk downtown, see a lot of people I knew, and it felt good to be part of a well-respected bank.”

Again, however, he arrived at a troubled time. The stock market crash of late 1987 didn’t impact the bank much because of its solid capitalization, but the demand for loans exceeded the ability to gather deposits. “We had a little crunch early on.” To manage interest rate risk, the bank was offering lower rates with two-year balloons, but that meant people then had to refinance to pay off the loan. Perine instituted the bank’s first variable-rate mortgages with 30-year terms that set parameters as to how much and how often the interest rate could be adjusted. That worked well, and the bank’s portfolio of loans grew steadily.

In the early 1990s, Perine got the bank to sell mortgages to Freddie Mac and Fannie Mae (Federal National Mortgage Association). That way, the bank avoided the risk inherent in a 30-year fixed-rate mortgage, while pushing the debt off the balance sheet. For a while, the bank sold the entire loan, but then it modified the sales to retain local servicing of the loans. “We call that the Home Town Advantage loan, getting the best of both worlds,” Perine says. Now most people prefer fixed-rate loans, especially in the current low–interest rate environment.

In 1991, the bank board asked Perine to succeed the retiring Robert Duclos, who had begun as a teller in 1951 and worked his way up to the presidency. “It was a surprise. I was only 39.” The board sent Perine off to banking school at the University of Colorado in Boulder, and he became president in January 1992.

Since then, Perine has overseen the bank’s expansion; it now has 95 employees and nearly $300 million in assets. In 1996, NBM opened its first out-of-town branch, in Bristol. It was an immediate success. That same year, the bank purchased the three-story former Lazarus Department Store building next door to the 1911 bank building, renovated it beautifully, and moved the bank operations center there. It has since been renamed the Duclos Building.

For the next decade, bank management looked north for potential sites, finally settling on Hinesburg, which was growing fast as a bedroom community for Burlington. But would residents bank at home or near work? “We knew that it might be an uphill battle,” Perine says, “but it was worth the risk.” The Hinesburg branch opened in August 2008.

The previous year, two bank mergers opened other opportunities. In Brandon, the Lake Sunapee Bank of New Hampshire bought out the First Brandon National Bank, so Brandon no longer had a local institution. Perine seized the opportunity to open a branch there in late 2007. When the Community National Bank, based in Derby, took over Lyndon Bank, it sold its Vergennes branch to the National Bank of Middlebury in January 2008.

The timing was challenging, as the country entered a prolonged economic recession later in 2008, but all the branches have done well. “We bring a hometown flavor — a personal touch — to banking,” Perine says. “We call customers by name, and our tellers suggest products that might be beneficial. If your account is overdrawn, we call immediately and don’t charge good customers an overdraft fee.”

Ken Perine also led NBM into a consortium with two other banks to form the Community Financial Services Group (CFSG), a trust company, to offer investment management to individuals, nonprofits, and corporations. Perine had feared that some people perceived NBM as a “podunk country bank.” Now it has “real savvy,” he says, and CFSG manages nearly $400 million in assets in Middlebury and six other locations.

Since 1990, the bank has encouraged customers over age 50 to join the New Horizons Club, which sponsors special trips and merchant discounts. With baby boomers maturing, the club has over 5,000 members, and some 400 a year take a trip, either within Vermont or to exotic locales such as Alaska, Ireland, Italy, the Grand Canyon, Costa Rica, or Kenya — just a few of the destinations already visited.

The New Horizons Club is emblematic of the bank’s close ties to the Middlebury community. The NBM contributes to more than 100 organizations, including the United Way of Addison County, Sheldon Museum, Town Hall Theatre, and Porter Medical Center, and bank employees volunteer for many area nonprofits.

Like his father, Perine could be called “Mr. Middlebury,” serving on various boards as well as the finance committee of the Sheldon Museum and St. Mary’s Catholic Church, where he is a parishioner. “Ken has shown steady leadership; he’s been marvelous in every way,” says Father William Beaudin of St. Mary’s. “He is kind, thoughtful, and sensitive and doesn’t seek recognition for himself.”

The Perines have a large extended family in the area that includes Carolyn’s 100-year-old grandmother. Their ninth grandchild, Chandler (after his father), was born Jan. 14.

Perine’s friend John Tenny, the CEO of Mill Bridge Construction, calls him “a constant asset to the town.”

Mike Schoenfeld, the chief philanthropic adviser at Middlebury College and a member of the bank’s board, praises Perine’s “strength of character, dedication, and loyalty to the town” and calls him an extraordinary leader who has managed to combine “an accountant’s discipline with a humanist’s face.” Thus far, only two homes have been forced into foreclosure during this recession. The two of them have skied, hiked, canoed, hunted, and snowshoed up mountains.

Perine praises his board of directors for being “tremendously supportive, astute, engaged, and committed to our organization and its mission.” He also praises his managerial team, including Laura Adams, the senior vice president in charge of operations, who co-leads the weekly quality leadership team meetings, in which staff and managers make sure that excellent bank service is maintained. On the team are executive vide president Caroline Carpenter, who heads the finance and technology departments, and senior lender Sarah Cowan, who Perine says has created a strong credit culture with common-sense lending practices.

Perhaps the most impressive evidence that the National Bank of Middlebury is a great place to work is the career of Madeline Gardner, who began as a high school work-study student in 1961 and never left. After 50 years, she retired in 2011 as the highest-producing loan officer. But she couldn’t stay away: She’s back at work part time. •