New Hampshire's Community Banks Are Still Pretty Healthy

About a third of the New Hampshire’s locally owned community banks are “mutual savings banks”.
That means they’re owned by their depositors, instead of shareholders.
The most famous example of this type of institution might be the Bailey Building and Loan, from the classic holiday film, “It’s a Wonderful Life.”
--Tape from Movie--
This type of bank is in high-concentration in New England.
They’re typically conservatively-run.
They retain their earnings, and keep the capital close to home.
The oldest one in New Hampshire is Laconia Savings Bank.
It opened in the Lakes Region 177 years ago, and its President, Mark Primeau says it’s well-insulated from the Wall Street Credit Crunch.
PRIMEAU: when people say credit crunch locally, I say, what credit crunch? We have plenty of money to lend.
MULLEN: 100-million dollars in capital reserves, to be exact.

Primeau and the heads of other mutual savings banks say their customers shouldn’t worry about their deposits or the availability of credit.
As a rule these institutions use their depositors’ money cautiously.
They reinvest it as mortgages and loans to people and business in their communities.
LITTLE: they live in that community, they’re going to deal with successes and the failures that result from their decisions that result from their decisions so they’re very very cautious.
MULLEN: Jerry Little is President of the New Hampshire Banks Association.
LITTLE: I know from talking to community bankers all across the state of New Hampshire, regularly, that folks steered a wide berth around the sub-prime mortgage products during the entire period that they were available.
MULLEN: And Little says mutual savings banks don’t typically invest in the notorious, high-risk securities that are at the center of the current financial crisis.
LAVARACK: We don’t get pressured by outside forces to make a quick buck.
MULLEN: Sam Lavarack is Vice President of Meredith Village Savings Bank, a 139-year-old mutual savings bank.
LAVARACK: we don’t have stockholders so we can look well into the future to what makes for a strong business model, and what will make money for the bank in the long run, not just in the next 12 months.
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LOGUE: For many of those guys, that’s hollow. They take the same kinds of risks as we do.
MULLEN: Dennis Logue Chairs the Board of Directors of Ledyard National Bank, a publicly owned New Hampshire bank.
LOGUE: we get a daily report card in how we’re doing because we can look at our stock price, relative to book value, where as mutual savings banks don’t have that sort of transparency//so there’s the chance, I think a larger chance that they would stray from conservative principles than we would.
MULLEN: Logue also teaches a course in Management of Financial Institutions at Dartmouth’s Tuck Business School.
And he says, any bank that’s prudently run won’t feel as much heat from the Wall Street meltdown.
LOGUE: I think it’s something more to do with being a community Banker, than it has to do with being in New England or New Hampshire, or being a mutual savings bank, versus a stock bank.
MULLEN: The state has another layer of protection.
It’s economy overall is pretty healthy.
Unemployment is relatively low compared to the national numbers, and the median income is relatively high.
But one thing many New Hampshire bankers agree on, regardless of their business model.
If the national economy continues to slide, it’s only a matter of time before the ripples hit home.
For NHPR News, I’m SM.