Community Banks

I read with interest Peter Yarrow's recent opinion piece in The Sun ("Tell the banks 'no thanks,'" Nov. 4).Though I certainly get his point about providing the public sound options in support of their banking needs, he threw smaller community banks under the bus by stating that "it might make sense for you to take your money and run - directly to the nearest credit union. " Community banks across this country do, in fact, have tight ties to the communities they serve, provide tremendous charitable support for things like Habitat for Humanity, Little League, and local Main Street businesses.

It's the billion-dollar question for Maryland banks: Do they need at least that much in assets to survive? "Who knows what the magic number is? A billion, $1.5 billion, $750 million?" said Ronald Paul, chairman of Eagle Bancorp, parent of the second-largest Maryland-based bank, with $2.96 billion in assets. "I can tell you it is getting harder and harder for the smaller bank. " Banks of all sizes are feeling more pressure. Profits are squeezed by historically low interest rates meant to spur borrowing, yet loan demand still remains soft.

With the economy sinking into recession, leaders from a dozen community banks in the mid-Atlantic region gathered in Baltimore over the past two days to give the investment industry a glimpse into their companies and laud their financial health. "It's a very successful conference," said William J. Reuter, president of Susquehanna Bancshares Inc. of Lititz, Pa. "I attended on Monday a Wall Street analyst conference that was well done, but the crowd here is twice as big." Several bank leaders spoke of the Baltimore-Washington corridor's economic allure, with its strong base of government jobs.

CFG Community Bank laid off six employees last week in its operations and branch network, the Baltimore-based bank said. President and CEO A. Gary Rever said the layoffs were the result of a shift in strategy and nothing to do with the financial health of the bank. CFG has $428 million in assets and earned $7.1 million for the first nine months of this year. The privately held bank employs 103 workers and has three branches in Baltimore, Lutherville and Annapolis. Text BUSINESS to 70701 to get Baltimore Sun Business text alerts

Two Maryland community banks reported second-quarter earnings results yesterday, with Columbia Bancorp posting a 9.7 percent increase in net income and Olney-based Sandy Spring Bancorp recording a 27 percent decrease as low interest rates and a suffering securities portfolio sapped profits. Sandy Spring had net income of $6.4 million, or 43 cents per share, in the quarter that ended June 30, down from $8.7 million, or 60 cents per share, posted for second-quarter 2003. Year over year, deposits were up 6 percent to $1.7 billion and total assets climbed 2 percent to $2.4 billion.

Small businesses needing loans should think small — bankwise, that is. That's the finding of a new Internet tool that grades banks on their small-business lending. Banking Grades, which measures loans in relation to deposits, gives As and Bs to many community banks but Ds or worse to some banking behemoths. In Maryland, for instance, M&T Bank received a C — one of the best grades for a larger bank — while SunTrust and PNC received Ds. Bank of America got an F. Ouch!

It's the billion-dollar question for Maryland banks: Do they need at least that much in assets to survive? "Who knows what the magic number is? A billion, $1.5 billion, $750 million?" said Ronald Paul, chairman of Eagle Bancorp, parent of the second-largest Maryland-based bank, with $2.96 billion in assets. "I can tell you it is getting harder and harder for the smaller bank. " Banks of all sizes are feeling more pressure. Profits are squeezed by historically low interest rates meant to spur borrowing, yet loan demand still remains soft.

If our largest banks are the "one-percenters" of American capitalism, small business is our 99. And, just as our largest corporations are ruling the roost in Washington, so too do they rule in Annapolis. In fact, Maryland's politics have become so lopsided over the last decade that support for Maryland's small businesses has degenerated into a mere talking point - "backbone of our economy," "the engine of economic growth," etc. Here's Exhibit A. In spite of all the talk from big business groups about taxes and regulation in Maryland, the top issue for small businesses is lending.

Delmar Bancorp has no regrets about taking a $9 million investment from the federal Troubled Asset Relief Program, even though some banks have rushed for the exit. "We did it as an abundance of caution," said Ed Thomas, president of the parent of Bank of Delmarva, which serves the still-struggling Eastern Shore. "I'm glad we did it because we didn't know how deep the financial downturn was going to be. " TARP provided capital at an attractive price, he said. Created four years ago as the country's financial system teetered on the verge of collapse, TARP provided more than 700 banks with a combined $205 billion of capital by buying dividend-paying preferred shares.

In coming years your community bank may be merging with a rival, closing branches and redesigning the interiors of branches that remain, says Columbia-based banking consultant Anita G. Newcomb. With nearly three decades of experience running banks, handling bank mergers and advising banks on strategy, Newcomb sees smaller lending institutions combining in a manner similar to what happened to the industry after the financial collapse of the late 1980s. All banks are pressured by new red tape, fee limits and interest rate squeezes.

Delmar Bancorp has no regrets about taking a $9 million investment from the federal Troubled Asset Relief Program, even though some banks have rushed for the exit. "We did it as an abundance of caution," said Ed Thomas, president of the parent of Bank of Delmarva, which serves the still-struggling Eastern Shore. "I'm glad we did it because we didn't know how deep the financial downturn was going to be. " TARP provided capital at an attractive price, he said. Created four years ago as the country's financial system teetered on the verge of collapse, TARP provided more than 700 banks with a combined $205 billion of capital by buying dividend-paying preferred shares.

Maryland State Police are searching for two of three men they say robbed an Eldersburg bank Saturday morning. Employees of the Carroll Community Bank, 1321 Liberty Road, told police that three men entered the bank shortly after 11:30 a.m., displayed a gun and demanded money, police said. One robber fled in a red Dodge Durango on Barnett Avenue, while the others left in a blue four-door sedan, police said. Police apprehended a suspect in the red Dodge Durango after a brief pursuit.

Small businesses needing loans should think small — bankwise, that is. That's the finding of a new Internet tool that grades banks on their small-business lending. Banking Grades, which measures loans in relation to deposits, gives As and Bs to many community banks but Ds or worse to some banking behemoths. In Maryland, for instance, M&T Bank received a C — one of the best grades for a larger bank — while SunTrust and PNC received Ds. Bank of America got an F. Ouch!

The first sign that this isn't an ordinary warehouse in southwest Baltimore is the bright blue murals of screwdrivers, wrenches and other tools painted on the exterior. Inside, the real thing: shovels, rakes, hammers, paint trays, pliers, hard hats, ladders, wheelbarrows, electric drills and just about every tool imaginable for rehabbing a house or sprucing up a park. It's like a mini Home Depot. This is the home of the new Baltimore Community ToolBank, a nonprofit that opens today and the third of its kind in the country.

Maryland small businesses gripe that they can't get loans from banks. Lenders complain of a dearth of borrowers. Is there any way to get these two together? The state is going to try, under legislation expected to be signed into law today. Maryland will use a carrot — or, rather, up to $50 million in deposits — to encourage banks here to lend to small businesses. Basically, participating banks that make loans to small businesses will receive an equal amount of deposits from the state.

The op-ed by State Employees Credit Union CEO Rod Staatz ("Let credit unions do their job," April 25) compels me to respond on behalf of the Maryland banking industry. In his commentary, Mr. Staatz, who runs Maryland's largest credit union, argues that the congressionally-mandated cap on credit union small business lending should be more than doubled (from 12.25 percent of assets to 27.5 percent of assets) as called for in a bill (S. 2231) pending in Congress. We strongly disagree.

Howard hospital appoints Cservek to public relations post Kevin M. Cservek has been named senior communications project manager, assigned to the public relations department of Howard County General Hospital. He will work on internal and external communications, and will help to implement a new physician portal on the hospital's Web site. Cservek joined the hospital this year after five years as senior public relations specialist at Harbor Hospital in Baltimore. He is a graduate of Towson University.

At a banking conference in North Carolina late last year, bankers from across this country and Canada were bemoaning the sorry state of their industry: Low interest rates were squeezing profit margins, problem loans were on the rise and the North American economy was down for the count with no rebound in sight. Baltimore banker Edwin F. Hale Sr., one of the scheduled speakers, had arrived at the conference with no such complaints. He had already known that this area's community banks were performing well.

If our largest banks are the "one-percenters" of American capitalism, small business is our 99. And, just as our largest corporations are ruling the roost in Washington, so too do they rule in Annapolis. In fact, Maryland's politics have become so lopsided over the last decade that support for Maryland's small businesses has degenerated into a mere talking point - "backbone of our economy," "the engine of economic growth," etc. Here's Exhibit A. In spite of all the talk from big business groups about taxes and regulation in Maryland, the top issue for small businesses is lending.

In coming years your community bank may be merging with a rival, closing branches and redesigning the interiors of branches that remain, says Columbia-based banking consultant Anita G. Newcomb. With nearly three decades of experience running banks, handling bank mergers and advising banks on strategy, Newcomb sees smaller lending institutions combining in a manner similar to what happened to the industry after the financial collapse of the late 1980s. All banks are pressured by new red tape, fee limits and interest rate squeezes.