The Treasury secretary speaks and the markets fall. Another jobs report shows unemployment lurching upward. The holiday season ends and even the iconic Macy’s announces 7,000 layoffs and other restructuring measures.
But executives with several banks in Queens, from small community lenders to international giants, say they’re still making loans, still growing their businesses and, in some cases, even increasing their market share as their weakened competitors slide.
What they have in common are not the scale of their assets, the number of branches or a focus on any particular segment of the banking business. What they share is little or no exposure to the toxic mortgage securities that have driven the financial crisis.
Maspeth Federal Savings, for one, may not play in the same league as Bank of America or Citigroup, but it took no bailout money from the government and isn’t looking for any, according to Assistant Vice President David Daraio. And mortgages and home equity loans remain Maspeth’s bread and butter on the lending side.
“We still are making loans,” Daraio said. “We’re making them with the same conservative lending practices that have kept us a strong bank: strict credit criteria and solid housing backing. Last I checked we had one foreclosure all last year.”
It’s a similar story at Ridgewood Savings Bank, the largest mutual savings bank in the state and second largest in the nation.
“Ridgewood is still a very active lender,” said Anthony Simeone, the bank’s chief lending officer. “What our philosophy has always been is to be a very conservative lender, and we didn’t get caught up in the hype years ago when money was freer. We stuck to our guns, stuck to our lending procedure and stayed the course.”
Ridgewood’s delinquency rate on mortgages is only .14 percent, according to Walter Reese, the senior vice president for retail banking, compared to a national average of 7 percent.
Meanwhile, deposits to Ridgewood grew by more than 7 percent last year, instead of the 2 percent that was expected, because people are looking for safer places to keep their money, Reese reported.
“We experienced a little bit of a strong deposit inflow at the end of the year,” he said. “I think they really started to look at the strong community bank, and we capitalized on that.”
Ridgewood did not take any of the taxpayer money made available to banks through the Troubled Asset Relief Program either. One regional bank that did, Sterling National, has already loaned out more than the $42 million it accepted, according to bank President John Millman.
Sterling did not take the money because it needed it to stay viable, Millman emphasized.
“The bank was in a very strong spot,” he said. “The financing was provided primarily to sound, healthy banks. We reported an increase in earnings year-to-year, and we believe that we will grow this business substantially in 2009. For every dollar you bring in in capital, you can leverage two, three, four or five times that.”
Sterling intends to do just that as it continues to lend to those who meet its credit criteria, described as strict and conservative as Maspeth’s and Ridgewood’s. And that just may bring a larger market share as other competitors remain stalled.
“It’s clear there is an unwillingness on the part of many banks to lend to small and medium-sized businesses,” Millman said. “We think that’s an opportunity.”
He added that seeing such a chance is one of the reasons Sterling accepted the TARP funding.
“We felt there was going to be a unique window of opportunity to make new loans and develop new customer relationships,” the bank president explained.
Another bank that expects to expand in the fairly near future is TD Bank, the new entity resulting from the recent merger of TD Banknorth and Commerce Bank. As with the smaller regionals, TD’s predecessors simply avoided the market in weak mortgage resales, according to Gregory Bracca, the bank’s president for the New York City area.
“Commerce had no subprime, TD had no subprime, so we had two entities coming together that had the right model,” Bracca said. “I think in this day and age everybody wants to be cautious with the state of the economy. I think what’s very refreshing is we’re still lending, we’re still hiring people, we’re still growing the business.”
In the United States, TD Bank has assets totaling somewhere from $110 to $120 billion, according to Bracca. That makes it a much larger entity than a regional bank like Ridgewood, which controls about $4.2 billion, but it’s still far smaller than the giants that do business in Queens.
One of those, JPMorgan Chase, has about $2.2 trillion in assets, according to corporate spokesman Michael Fusco. In just the last quarter, Chase loaned more than $100 billion to individuals, businesses and governments, Fusco said. Among that total were more than five million new consumer loans and lines of credit — everything from mortgages and home equity loans to auto and education finance loans.
Like Sterling, Chase took federal money and has used it to do more business.
“JPMorgan Chase is using the TARP funding for the purpose the government intended,” Fusco said. “We’re lending to consumers, small businesses, corporations, municipalities and other institutions in a disciplined and responsible manner.”
With banks like these continuing to do so much business, when might the greater economy turn around? Not too soon, Millman said, but maybe not too long from now either.
“I live in Manhattan, I work in Manhattan, and in Manhattan I see less traffic in the retail stores,” the Sterling National president said. “I’m sure when you get to Queens and Brooklyn you see the same thing. There is a normal business cycle. This is a little deeper than we’ve seen, but I believe by early 2010, I’m hopeful, we’ll begin to see the stabilization and energizing of the markets.”