Thomas Hales has taken an old-fashioned approach to banking, brought it into the 21st century, and made it pay off for both his institution and his customers.

You’ve no doubt seen the commercials where a giant national or international banking corporation seeks to demonstrate that despite its size, it’s really just a community bank at heart, dedicated to folks like you and the community you live in. Thomas Hales isn’t buying it.

Hales is CEO and chairman of Union State Bank in Orangeburg, NY, and he takes the label of community bank seriously. “These days, everyone wants to be a community bank, but you can’t be a community bank unless you service a specific region or community as we do.” For Union State, that region is New York’s Hudson Valley, particularly Orange, Westchester, and Rockland counties.

You might be saying, one is big and the other is small, but apart from that, they both take in money and issue loans, so the effect on the customer is the same, right?

That’s not the way Hales sees it. Servicing a community means more than simply taking that community’s money, he contends. “By servicing a community, you become involved in it. You use your financial know-how and strength, which includes our USB Foundation, to encourage initiatives that will benefit the community and make it stronger. This means promoting economic growth, supporting charitable organizations, and helping improve the community’s infrastructure, including schools and hospitals,” he explained.

Thomas Hales

Getting involved
Similarly, Hales said, supporting charitable organizations and groups like the local Boy Scouts and Girl Scouts improves the area’s quality of life, making it more attractive to new businesses and thus boosting real estate values.

“We don’t take your money and fund loans in Bangladesh,” said Hales. “Instead, we fund loans within your community, keeping the economic growth right here.” This model is so attractive that larger institutions are jumping on the bandwagon. “But their funds are distributed strictly in accordance with profitability. We distribute our funds in accordance with profitability as well, but right here within the community.”

Sounds like a socially responsible approach to business, but is it profitable? In Union State’s case, the answer is yes. In 1982, when Hales assumed the chairmanship of the bank, it had two branches and $27 million in assets. Today, it has 31 branches, $2.91 billion in assets, and is one of the fastest growing independent banks in New York.

Union State’s community involvement isn’t strictly a nine-to-five affair. Employees are encouraged to get involved in community organizations, and many of them help direct them. “There isn’t a night of the week when we don’t have five board meetings going on for five different charities, with five to 10 of our people involved as directors,” said Hales, noting that he sees this type of pro bono work as a solid business proposition.

“We get to see how other organizations operate, there is a certain amount of managerial training that occurs, and there is some new business development taking place. By supporting charities, we help them provide services that, again, enhance the infrastructure of the community, helping all of us.”

With all this talk of service, it’s not surprising that Union State makes customer service, and the skills needed to provide it, a priority. “We view banking as an important profession,” said Hales. “We are protecting people’s assets, something that is vital to them, and they expect a high level of professionalism from us.”

The bank ensures that level through an extensive training program: Union State Bank University. “At our university, we take youngsters right out of college and familiarize them with every phase of the bank’s operations. As a result, we’ve got a lot of very bright and very skilled people.”

There is also a secret shopper program that quietly scrutinizes all areas of bank-customer interaction. “This guarantees that we are treating the customer professionally and conducting ourselves the same way,” said Hales. “It has definitely paid off for us—the public recognizes professionalism.”

Staying current
Today, serving customers also requires technology, and Union State is committed to providing its customers with the best, especially since it competes for their deposits with the large, technology-savvy banks in nearby New York City. “We’re aided by the fact that we employ an advanced core banking system used by 700 banks throughout the US. This gives us the capability to offer new products very quickly.”

Sometimes, Union State can offer a new product more quickly than larger banks, many of which are burdened with legacy systems that make the adoption of new technology cumbersome. “We can give a customer in Texas a scanning machine, and they can scan in the checks they need to deposit with us. This allows us to service places where we don’t have a branch and saves the customer time.”

The technology also eliminates the need to physically transfer checks between Union State branches, resulting in more cost savings. “It’s is a win-win proposition for both our customers and ourselves,” said Hales, an observation that can be applied to Union State’s entire approach to banking.

Greg Farnum is a Detroit-based journalist specializing in business and technology. He can be reached at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .