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Still lending a hand in old neighborhoods

Banking: The dwindling ranks of small lending institutions, forgoing bigger profits, choose to focus on helping their neighbors buy homes and pay the mortgages.

April 18, 1999|By Charles Cohen | Charles Cohen,SPECIAL TO THE SUN

Platek said Golden Prague is more willing to make the small loans that larger institutions pass over, since larger banks consider them not cost-effective. And if a customer is having financial trouble, Golden Prague has more leeway to avoid a foreclosure, such as allowing the borrower to make interest-only payments, since the bank owns the mortgage.

Delving into gray areas

"[Larger banks are] strictly going by black and white, where we can delve into a gray area," Platek said.

Founded in 1912 on $200,000 in assets, Golden Prague has $33 million in assets that produce $4 million to $5 million in annual mortgages. Platek, whose father and grandfather were bank presidents, acknowledges his bank, overall, can't compete with the range of services offered by corporate banks -- nor can it offer the low rates.

So rather than worrying that Golden Prague doesn't have an automated teller machine or a marketing department, Platek says small banks still believe that some people want to talk personally to the bank president about their mortgage.

"This has always been a hallmark of the savings and loans," Platek said. "You can reach a warm body instead of a menu."

But by not selling mortgages, some banks are missing out on good loan packages and a chance to replenish their reserves.

Gilbert Marsiglia of the Gilbert D. Marsiglia Real Estate Co. and past president of the Greater Baltimore Board of Realtors said smaller banks may thrive on the neighborhood customer, but they have the risk of carrying the mortgage.

Marsiglia said small banks are gambling if they keep traditional 30-year mortgages, betting that interest rates don't go up.

Banks that sell the 7 percent mortgages on the secondary market are protecting themselves if the economy has a downward turn and interest rates climb well above what is standard for today.

At the same time, however, Marsiglia says, "I tell my customer to pay a little bit extra to go to a bank that doesn't sell their loans, because it's a hassle to deal with out-of-state mortgage companies."

30-year mortgages sold

Wyman Park Federal, established in the neighborhood in 1914, moved to Lutherville in 1952. It retains its 15-year, balloon and adjustable-rate mortgages. But it sells its 30-year mortgages because it ties up too much cash, said bank President Ernest Moretti.

He said many banks can continue to service the loan after it's sold, which should appease the customer.

Community banks have survived by having the ability to identify trends and to adjust to an economic climate that their 19th-century counterparts would hardly recognize. Yet, as the century concludes, the role remains unchanged.

One of the more unique evolutions has been that of Homestead Mortgage, which recently bought the Reisterstown Road mortgage office location from Columbo Bank.

Unfolding in this Pikesville office is the classic Russian emigration story that's nurtured by newcomers who can't speak English, but are on the cusp of becoming homeowners.

This is where Irina Kantorovich, a Russian-born loan officer/branch manager, comes in.

"They would rather deal with us," she said. "We understand what kind of visa they have. We know this. We went through all this system."

It's estimated that 7,000 to 8,000 Russian Jews have emigrated to the Baltimore area since 1989, taking advantage of the strong Jewish community that has long been in place here.

Last year, the office processed 468 loans -- not bad for a branch that Kantorovich started by herself four years ago.

She said the branch's success is due to trust that has taken root in the community, after publishing articles in Russian-language newspapers and conducting seminars.

"Regular investors don't understand how people from different countries survive and buy houses," she said. "We understand everybody's story."

Although Emma Lebedev came to this country as an accountant seven years ago from Ukraine, she was thankful she met someone like Kantorovich when buying her first home in 1995.

Growing up in Ukraine, Lebedev said, she had no knowledge of mortgages. But for Lebedev it wasn't the concept of buying a home that was hard. The number of finance packages being offered was overwhelming.

Customers move away

One secret to an neighborhood bank's survival is its ability to adapt to customers moving away.

Kopernik is still in Highlandtown and proudly touts its ties to the neighborhood.

"There's a lot of good things developing in the area, but we have our problems," said Gary Amereihn, president of Kopernik. "For the time being, I feel very comfortable here."

Then there's the future of Golden Prague. The bank is seeking opportunities beyond its customer base. It originally served a Czech and Bohemian community that has long been dispersed.

Platek said the pressure is on to open a branch in the Belair and Harford roads corridor. Some former residents, Platek said, are afraid to come back into the city. But for the faithful customers who choose city living, the old-time banks are a throwback.

When Mary Koch needs to reach Hull's bank, the Locust Point resident just does what she's been doing for decades. She leaves her house and walks around the block to Hull's bank, barely distinguishable among the Formstone rowhouses.

Koch, 87, is living in the house her father bought through Hull. Her sons and grandsons have also done business with the bank. In the early part of the century her neighborhood of Locust Point also served as an immigration center. Thousands of new Americans have gone through what was known as the "other Ellis Island." Some of them stayed.

For these newcomers, Irish, Germans, Poles and Russians, Koch says, small banks like Hull gave them their financial start.

"The whole neighborhood used it, because those [bank] people were honest," she said.

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