By Jim Rosapepe

As US Treasury Secretary Tim Geithner wrestles with how to restart lending and stress tests banking giants, it's easy to worry about every bank in America. Is any place safe? Does anyone in the industry know what they're doing?

In my world, there is a banking bright spot, one of the thousands of banks that aren't getting much attention these days — the small, community banks with strong balance sheets and money to lend.

Revere Bank is a start up, launched in late 2007 in Prince George's, Maryland. Today it has $33 million in loans — and no defaulted mortgages, no credit swaps, no toxic assets. Its default rate is negligible and it's looking for borrowers, not government aid.  Launched just over a year ago, it hasn't broken even yet, but its losses come from investing the future of our community, not writing off catastrophic mistakes of Wall Street buccaneers.

As the Obama administration looks at how to relaunch the economy without planting the seeds of another crisis, it needs to look at the 8,500 community banks like Revere across the country. Overall, their profitability is greater and their bad debts fewer than for megabanks. Their business model is one that could bring America back to a future of sound banking and economic growth.

The secrets of Revere's success are part luck -- missing the debt bubble of mid-decade — and part old fashioned common sense — offering real financial products to real businesses.

When "synthetic" collateralized debt obligations came to dominate international credit markets, anybody over 50 years old should have seen the bubble for what it was. If it's "synthetic," it isn't real. And reality always wins in the end.

Start up community banks are the direct descendants of the growth of interstate banking in the United States. Until 1980, US banks could only operate in one state each. That meant America had more than 14,000 banks, most of them closely tied to their local communities. The bankers knew their customers and customers knew their bankers.

All that started to change almost 30 years ago, as “deregulation” became the secular religion on Wall Street and in Washington. From Ronald Reagan to George W Bush, bigger was supposed to be better. Local banks were called an anachronism. “Interstate banking” and “financial supermarkets” were to be the future.

In some ways they were — at least for a while. Citicorp, Bank of America, JP Morgan — these became multi-hundred billion dollar financial institutions — too big to fail, but in many cases too big to succeed either. So far, American taxpayers have had to fork over hundreds of billions of dollar to try to keep them afloat.

But one other, little noticed impact of the great banking consolidation was the opportunity it created for entrepreneurs to recreate local community banks in the spirit of George Bailey in Frank Capra’s movie classic “It’s a Wonderful Life.”

As giant, national banks gobbled up their smaller competitors, credit decisions moved from small towns like Laurel, Maryland (where Revere is based) to Chicago, Philadelphia, New York, and London. Shopkeepers and entrepreneurs, accustomed to knowing their lenders by name and face, were told to call 800 numbers and embrace voice mail trees. They were not pleased.

The result? Former branch managers of acquired banks and local business people saw an opportunity. Why not recreate the old local bank, locally owned and locally run? In 2007 alone, 181 new community banks were launched. Today, 92% of the banks in the US have less than $1 billion in assets.

Revere, founded by Andrew “Drew” Flott, a banker with 24 years experience in the Maryland market, and seventy local business people, is just the latest and most local of these new — or is it "old" at least in culture? — small banks.

Today, Revere has 1,500 customers, 85% within ten miles of its head office.  Almost half are in Laurel itself. It has made loans to Jill Mooty, a local CPA, to buy a new office condo and lawyers Rob Cecil and Mike McGowan to build out their new offices on Main Street. (That really is the name of their street.)  Revere's top loan officers, Steve Zelenak, Ralph Ebbenhouse, and Mark Gordon, are not MBA's from Harvard or "masters of the universe." Rather, they are local bankers, with more than 75 years combined experience in hometown banking, who know how to make loans to businesses and individuals who have the capacity to pay them back.

In this decade, when subprime loans and credit default swaps to people who didn't understand them and couldn't afford them, became the hot products, that’s a “man bites dog” skill. But making loans to credit worthy customers is now, has been and will be, the core of successful banking. Citicorp and the others, despite their write offs, may reform and survive. I certainly hope they do. But for now, my money's on, and in, Revere, our hometown bank in Laurel, Maryland.

Jim Rosapepe, Chair and CEO of Patuxent Capital Group, has invested in banks in the United States and Europe since the 1980’s. He was a founding board member of the American Bank of Albania and currently is a member of the Advisory Board of Revere Bank in Laurel, Maryland