by John Stratton
Community banks, the locally owned and operated banks here in eastern Connecticut, are valuable for many reasons: They are the institutions that last year contributed 27,750 hours of volunteer time, originated $928 million in loans, and directly contributed $1.488 million to our local communities. And they may have made your mortgage, or placed their faith in your business plans and helped you grow
Seven presidents of regional small banks gathered to discuss mutual goals and concerns at the first Community Bank President’s Round Table held at Dime Bank in Norwich February 5. Most of the banks are many years old and derive their investment incomes from home-town mortgage and business loans, not from the exotic financial investments and funds that characterize “mega-banks.”
“It’s a tribute to community banking to see us all in this room together,” said Kevin C. Merchant of Jewett City Savings Bank. “We are theoretically in competition, but the bottom line is community service.”
The presidents also pointed out that all their employees—1000 between them—live locally, and are involved in their towns and in their economic strength as homeowners and purchasers of goods and services.
“Forty-five percent of loans are made by community banks,” said Rheo A. Brouillard of Savings Institute Bank and Trust. “We are the ones lending to the local body shop down the street.”
Yet the complex regulations aimed at suppressing excesses on the part of “mega-banks” that helped cause the financial crisis apply equally to small banks. Compliance is expensive, even though small banks typically have none of the risk-intensive investments that entangle large banks.
Dime Bank’s Nicholas Caplanson noted that he seeks realistic goals for his borrowers. “We don’t get into subprime mortgages, or with people who should not be borrowing.”
Early is important, the presidents agree; none of their banks likes to foreclose. Gregory R. Shook of Essex Savings Bank, critiquing the inappropriate and complex small-bank regulations, said that regulators “have made this giant fog—that’s the kind of dynamic that they have created.”
Concurring, Gerald D. Coia of Eastern Savings Bank called out for Washington to “stop the chaos. People have to feel good about their future; if you feel good about your future then you will borrow. You’ll put that addition on the house, or buy that machine for your business.”
The presidents agreed that small banks will adapt. “We can help your cash flow, your business,” said Shook.