Publisher's Note: Panic globally, bank locally
By Jody Reese
It’s logical to think that the ongoing global financial crisis is affecting everyone negatively, from Wall Street to Main Street. But it’s also wrong. Many banks are sound, and there are opportunities out there, especially if you’re in the market to borrow money from your local bank.
Here in New Hampshire, despite the entry of the big financial conglomerates two decades ago, we’re still home to many smaller financial institutions that aren’t teetering on the edge. In fact, many of them are right now flush with cash.
Why? Talk with local bankers, and you’ll hear that the recent Wall Street sell-off led to a lot of excess money that had to go somewhere. Around here, a lot of it is being parked in short-term vehicles such as CDs at local banks and credit unions.
As these deposits pile up, banks are coming under increasing pressure to make loans at competitive rates. That doesn’t mean they’re going to give money to anyone who walks through the door. But they’re going to be highly motivated to do business, despite the headlines that the financial system is suffering a credit crisis.
So the good news is, yes, your local banker is still ready to finance worthy projects and business plans.
This goes against the stereotype that’s arisen in the past couple of decades — that the friendly local bank has just plain disappeared from the business landscape.
It’s true that in the late 1980s, when the federal government allowed interstate banking, things started changing fast in the once-staid New Hampshire banking business.
New names cropped up (such as Numerica) to compete with the old stalwarts such as Amoskeag. And smaller Granite State banks began to be acquired by larger out-of-state financial conglomerates.
Things changed further in 1991 when the Granite State real estate market took a spectacular swan dive and local banks took a bath on home loans and mortgages. That October, nearly 100 bank offices were closed in one day when federal regulators stepped in, cleaning up their balance sheets and selling them to new owners.
And it’s also true that most of New Hampshire’s remaining hometown banks have been absorbed into large global parent companies such as Citizens Bank or Bank of America. Bank of New Hampshire is part of TD Bank North, a Canadian company. Amoskeag is buried somewhere in the vaults of Citizens Bank, which is controlled by a Scottish holding company. (At least they kept the tradition of a big lit sign on the company’s 875 Elm St. building.)
But the rise of the big banks created opportunities for smaller financial players to find a niche. Not all have prospered, but the Granite State is now home to new local institutions such as Hampshire Bank, which serves Manchester and Nashua. And our credit unions continue to march along, managing assets carefully and doing financial business day in and day out.
So don’t put your money in a mattress just yet. Local banks remain open and eager to do business, and that includes making loans to qualified applicants. Ask nicely, and times being what they are, you might even find them willing to give a little on the rate.