The nation seems to be mostly jeering and throwing rotten fruit at its bankers these days: Banking CEOs got lambasted by Congress on Wednesday, bad headlines continue apace – a major movie released this weekend even featured a bank as a maniacal villain out to kill Clive Owen.
It’s led to a kind of mass chagrin among bankers of all stripes, including community bankers. While many financial institutions have had losses and massive drops in profitability, and some executives’ salaries and perks have drawn widespread disgust, most community banks jump at the chance to talk about their own fiscal conservatism, relative health and willingness to lend to solid borrowers.
“Everyone you talk to, because they read the headlines … is curious about how you’re doing,” said Timothy Telman, president and CEO of the Bank of Cape Cod. Reassuring them that not all banks are on the brink has been “an educational process,” he said.
John Heerwagen of Middlesex Savings Bank said bankers are an easy target for public frustration.
“It seems like the word ‘bank’ is the one term to sort of coalesce all the ills of the financial system,” he said, adding that investment banks and Wall Street firms are often lumped under the same broad “bank” category.
ABA: The Public’s Confused
The need for public relations damage control prompted the American Bankers Association to release a fact sheet last week about the Troubled Asset Relief Program’s Capital Purchase Program, emphasizing that the program was for healthy banks to improve their capital positions – not for crumbling banks on the verge of disaster.
“The public’s confusion undermines confidence in the efforts to turn around the economy,” the statement said.
Some banks in Massachusetts and Connecticut did apply for TARP funds, but many caution they’re taking the money to increase lending capacity – as the government requested – not because they’re on the verge of meltdown.
Indeed, some banks that initially applied have since said no thanks, both because they didn’t like the government’s conditions on the money and because they preferred not to take a hit on their reputation. Taking any government money might easily be construed as a “bailout.”
William Attridge, president and CEO of Connecticut River Community Bank, said his bank was one of those that initially applied, but turned the money down. Besides, he said, it’s not so much about having the money to lend – these days, the bigger struggle is finding borrowers who meet underwriting standards.
Said Telman: “You don’t need more credit; you need more creditworthy borrowers.”
But other bankers aren’t sweating the furor over big banks’ public troubles. Not only do customers tend to understand that the community banks are a world away from Bank of America or Citigroup, they’re also fleeing the big banks and putting their money with banks whose executives don’t own corporate jets, said Richard J. Gavegnano, chairman of CEO of East Boston Savings Bank.
“That negative publicity associated with the large banks, it’s driving some of their customers to us for safety, service and opportunities to borrow money,” he said.
