AUBURN – Most banks measure their strength by the size of their deposits. At Northeast Bank, it’s measured by the loyalty of their clients.

That’s the operating philosophy of the 132-year-old bank, which broke ground on a new $2.3 million headquarters in Lewiston’s gateway earlier this month. The new building, which will consolidate corporate and back-office operations into one setting, is a reflection of that loyalty, said President Jim Delamater. It means Northeast Bank will remain an independent, Maine-based bank for the long haul.

“We are deeply committed to Maine and to remaining independent,” said Delamater. “We’re not selling this franchise, instead we are intent on building it.”

Delamater’s remarks take on an added poignancy, coming less than a week after Banknorth announced its acquisition by Canada’s TD Bank and a year after North Carolina-based Bank of America purchased FleetBank.

In an era of mergers and megabanks, Northeast is pursuing a different route: steady growth based on bringing more of its products and services to existing clients.

It’s a strategy that works on two levels, says Delamater: Maine’s stagnant population means there are fewer new people who need banking services, and by investing in customer relations, the bank expects to cultivate long-term relationships that span generations.

“It’s a needs-based approach to banking,” said Delamater. “We’d rather sit with a customer and get to know what they need and go find the right product, even if it’s not ours.”

As an example, he cited a young client who needs an aggressive, highly secured business loan. He might not find the right product at Northeast, but the bank will help him find it elsewhere.

“It’s a matter of delivering advice versus selling a product,” said Delamater. That client might go elsewhere for the business loan, but the hope is that he’ll come back to Northeast for a mortgage, investment advice, insurance coverage and other financial services. Currently the bank’s clients use about two products or services per household; the goal is to raise that to three-to-five products per household.

“It’s all based on trust,” said Delamater.

It’s obvious Delamater puts a lot of emphasis on trust. After graduating high school and serving in the Air Force, he landed a job as a stock broker. He said it was apparent that he was expected to sell his company’s products regardless of whether they were good investment options for the clients.

It rubbed Delamater the wrong way.

Delamater attributes that sense of ethics to his dad, who worked for years at Bates Mill. It was instilled from a young age that you treat people with respect and offer to help them, not exploit them, he said.

“He said, Don’t let me ever catch you giving someone advice that isn’t good for them,'” he recalled.

His dad’s philosophy reflected the mindset of the community, said Delamater. It was part of what drew Northeast to L-A back in 1997 when it left Portland. Originally founded as Bethel Savings Bank in 1872, the bank grew through the 1990s when it acquired Brunswick Federal Savings and four Key Bank branches. In 1996, it brought all the branches together under the name Northeast Bank and picked Auburn for its headquarters.

The city was selected because of its central location, as well as proximity to the turnpike, business diversity and general work ethic of its population. Delamater said it was clear that the ripple effect of growing southern communities would continue its trend north and west and Northeast wanted to be in a position to capture that growth.

So far, it has. In 1981 when Delamater came to Northeast, the bank had assets of $18 million; today it stands at $538 million. Dividends paid to its more than 600 shareholders continue to rise. In 1999, shareholders earned 21 cents per share; in 2003, it was 32 cents.

The right mix

Delamater said he loved growing up in Lewiston, a time he referred to as “the glory days” of the city, where the son of a millworker was welcome in every home. His fondness for his hometown helped nudge the decision to invest in the gateway building.

The bank was already looking for a way to centralize its administrative operations when Delamater spoke with Rick Anstey, CEO of Oxford Networks, on whose board Delamater sits. Together they talked of how exciting it would be to be part of downtown Lewiston’s resurgence. Last week Anstey cut the ribbon on Oxford Networks’ new $1.7 million headquarters in the gateway; Delamater expects to do the same on Northeast’s neighboring building next fall.

Once the new building opens they’ll hire 10 new employees – not an easy process necessarily. Over the last three months they’ve interviewed 30 people for some current openings and haven’t hired a soul. The problem, said Delamater, is finding people who ascribe to the bank’s philosophy of service rather than profits.

“I argue you can earn more money as a planner than a peddler,” said Delamater, acknowledging it’s an unconventional theme in financial circles these days.

Finding the right employees is key for another reason. A few years ago the bank embraced a corporate value system that emphasizes communication based on truth and trust without fear of retribution. The system, called Shared Values, has revolutionized the way Northeast employees interact, said Delamater.

Before Shared Values became the norm, Delamater said he would never hear from tellers or other employees who interact with the public. Their feedback about new products or services, as well as problems, often never made it up the chain.

“If an issue came to my attention, it usually had developed to the point where it was a crisis,” he said.

Since adopting Shared Values, the hierarchy has disappeared and communication is freer. Now Delamater routinely gets e-mails from tellers and other front-line personnel.

“It makes everyone part of the management team,” said Delamater, who learned of the program through Anstey, who brought it to Oxford Networks.

The right people will guide the bank through its next phase, said Delamater. The last few years have been spent on stabilizing the bank’s infrastructure. It has invested in new technology, establishing new divisions and products and opening branches.

“Now the focus is on marketing, telling people our story,” said Delamater.

He looks forward to that phase. The bank is already on the right course, he said, by reaching out to its customers to develop those long-term relationships.

Delamater has firsthand proof. He likes to keep a hand in things by doing a few financial plans for customers himself. Just recently he worked on financial plans for the grown children of existing clients.

“The whole essence of the company is built on trust; the byproduct is profits,” he said.