Rumblings that Chevy Chase Bank was in danger reached me more than a month ago, but I was rocked by the news that B.F. “Frank” Saul II was forced to sell the bank he started and loved.
“I guarantee you having to sell Chevy Chase was as painful to Frank Saul as it was for Joe Allbritton to sell Riggs,” says Bill Regardie, publisher of magazines that covered D.C. business when local moguls controlled the city’s the real estate and finance.
More painful, I respond.
“Probably right,” Regardie says. “Frank built Chevy Chase with his own hands.”
Frank Saul can trace the story of Chevy Chase Bank back to 1851, when John Saul, his great-grandfather, emigrated from Ireland and came to Washington, D.C., to take over planning and development of the Mall. His grandfather, B. Francis Saul, opened the doors of the Saul Company in downtown D.C. in 1892. The business grew into banking and mortgage lending under the name B.F. Saul.
B.F. Saul Company, according to its Web site, weathered the Great Depression. B.F. “Frank” Saul II started Chevy Chase Bank in 1969.
“Today,” the Web site says, “Chevy Chase has assets of $14 billion and is the area’s largest bank.”
The “history” might require some editing by early next year, when Capital One is supposed to complete the purchase that became public this week. Chevy Chase lost its identity to a credit card company based in McLean.
At what cost to the local community?
Two decades ago, local banks run by local bankers and businessmen ran the region’s largest banks. There was Riggs, known as the bank of presidents because it was close to the White House. There were American Security, and National Bank of Washington and First American and D.C. National.
Over time — because of poor management or board squabbles or greed or competition or all of the above — these banks have been merged or bought by larger banks based in other cities. Chevy Chase was the last, big locally-owned bank. It succumbed to bad decisions to make shaky loans known as “option adjustable-rate mortgages,” which allowed borrowers to pay, or to put off paying. Many never paid.
Is there any chance the first B.F. Saul, Frank’s grandfather, would have allowed such “pay-if-you-want” loans?
My pal and former publisher Regardie argues that local ownership of banks no longer counts. I beg to differ. If you are a small businessman who needs a loan to expand, and you know the banker, and you have built up trust by paying past loans, that relationship could bear fruit — and the businessman and banker can grow together.
Thankfully, small, local banks are growing and thriving. Bank of Georgetown has just opened two more branches in Penn Quarter and Franklin Square. Eagle Bank, where I own some stock, is growing and hosting D.C.’s first college bowl. There’s City First Bank and Industrial Bank of Washington.
At the Chevy Chase Bank branch just below Chevy Chase Circle today, all seemed normal. But a long line of local banking had died.
