Bank of Bird-in-Hand thrives in Amish Country with novel outreach efforts

In the wake of the 2008 financial crisis, Bank of Bird-in-Hand's organizers saw a glaring void in the landscape of Lancaster County, Pennsylvania — the heart of Amish Country.

The region lacked a bank focused on serving Amish farmers and small-business owners. The small lenders in the area had been acquired by regional banks.

Amish residents, unique because of a culture that eschews modern technology and transportation, found themselves in search of a bank that could meet their financial needs while navigating their way of life.

“What residents needed was a bank as unique as them,” Lori Maley, president and CEO of Bank of Bird-in-Hand, said in an interview.

The bank, which is named after the village in which it is based, officially launched in late 2013 and it has thrived in the years since. Now in its 10th year, the $800 million-asset bank is nearly 50 times its start-up size (it began with $17 million of capital). All of its growth has come organically.

The bank posted banner results in 2021, including more than 30% year-over-year loan growth, Maley said.

Bank of Bird-in-Hand is not strictly an Amish bank; it works with other Pennsylvanians as well. But Maley estimates that about half of the bank’s customers are Amish, and many more have connections to the religious sect via family. The bank has about 780 shareholders, she estimated, and most of them are from the Amish community.

“There’s really a very strong following in the community,” said Maley, who joined the bank as finance chief shortly after its founding and has been CEO since 2017.

Outsize need is vital for de novo banks to attract capital, observers say. In an era of digital banking that spans borders, this explains why there are so few de novos, said Charles Wendel, president of Financial Institutions Consulting Inc.

“A lot of places, people can’t even remember the last de novo,” Wendel said.

Indeed, startup banks have been rare across the country over the past decade. Regulators ramped up scrutiny of new banks following the crisis, making the process of opening a new bank more difficult and expensive. In the decade since Bank of Bird-in-Hand launched, fewer than 50 de novo banks opened in the U.S., far below the average of 100 per year before the crisis, according to a Federal Reserve presentation.

When Scottsdale Community Bank started up this year, for example, it marked the first de novo in Arizona in 14 years. Across the state, there were more than 50 community banks in 2008 but only 10 as of the start of this year.

George Weisz, the founding chairman of Scottsdale Community Bank, said Arizona is “drastically” underbanked. “We exist,” he added in an interview, “because there was an enormous need.”

For its part, Bank of Bird-in-Hand saw similar scarcity and carved out novel ways to meet Amish Country’s needs.

Serving that community is straightforward, with a focus on routine deposit gathering and loans to farmers and small business owners, from woodworkers to carpenters. But in a culture that limits its use of electricity and automobiles, bankers must get to know clients personally to assess credit needs and apply appropriate underwriting methods.

“Defaulting on a loan is not acceptable in the Amish culture,” Maley said. “They work with us on a plan to repay, and they stick to it.”

Bank of Bird-in-Hand posted total loans and leases of nearly $709 million in 2021 but no nonaccrual loans, according to S&P Global data.

Bank of Bird-in-Hand has four branches, which are complemented by a small fleet of so-called Gelt buses (gelt, which means money, has roots in German, Dutch and Yiddish). These are recreational vehicles equipped as mobile branches that travel to the largely rural reaches of the bank’s footprint. The buses carry ATMs and staff, providing access to routine banking transactions as well as financial advice and help with loans.

The bank’s four Gelt buses travel to 18 locations across Lancaster and neighboring counties. Residents applaud the service, because it could take many of them hours to otherwise travel by horse and buggy to and from a branch, Maley said.

“We get to them when they can’t always get to us,” she said.

According to the World Population Review, there are more than 340,000 Amish people in the U.S., and the largest segment of this population is in Pennsylvania. The state is home to an estimated 81,500 people who identify as Amish.

There is plenty of room for more growth in the state — via new branches and Gelt buses — but down the road, Bank of Bird-in-Hand may consider expanding into other states, Maley said. A likely first step could be neighboring Ohio, where more than 78,000 Amish people live.

“We will focus on where we truly can fill a need,” Maley said.