(Host) Officials say Vermont banks are in generally good shape and have enjoyed a boost in business in recent weeks.
As VPR’s Ross Sneyd reports, deposits have grown and the demand for loans has strengthened.
(Sneyd) News about banks over the past year has been anything but good.
First the subprime mortgage crisis shook confidence in the industry. Delinquencies rose, followed by a rash of foreclosures across the country.
And then some of the giants of Wall Street collapsed, and credit all but dried up.
In Vermont, banks have largely been able to weather the crisis. They had fewer of the risky mortgages and their balance sheets were in pretty good shape.
Mike Tuttle of Merchants Bank says national mortgage companies that aren’t affiliated with banks have been tarnished. According to Tuttle, this actually helps Vermont banks.
(Tuttle) “Frankly, some of the other sources of mortgage financing out there evaporated and went away. And as a result more and more people I think turned to their local banks and we were certainly part of that mix.”
(Sneyd) Tuttle says demand is great enough for refinancing and for new mortgages that Merchants could have record activity when it totals the books for 2008.
According to the state, Merchants Bank isn’t alone. Tom Candon is the state’s deputy commissioner for banking.
(Candon) “We are hearing from the licensees and banks that mortgage lending has really increased significantly with the refinancing. Business has popped up in that regard.”
(Sneyd) The federal government has tried to stimulate the economy by dropping interest rates.
That has led banks to drop their loan rates and enticed many consumers to consider refinancing existing mortgages.
Tom Candon says that may be beneficial for some people. They’ll have to analyze how much they’d save with a lower rate and then factor how much it will cost before deciding.
Candon says those costs could include points that might have to be paid, appraisals, a credit check and closing costs.
Some banks also are more cautious right now. A homeowner who doesn’t have enough equity in his or her house might not get a loan.
Local banks also have benefited from Vermonters’ lack of confidence in Wall Street. Candon says consumers have turned away from national firms.
(Candon) “I think that is going to happen. We did see and have seen where the deposits have increased where Vermonters are putting their money locally rather than having it outside of Vermont.”
(Host) The bankers say they’re not immune to the downturn in the economy. There have been hundreds of layoffs across the state. Commercial and business customers are borrowing less. But the bankers say they’re confident that they’ll be able to weather the recession.
For VPR News, I’m Ross Sneyd.