Mass. banks healthy, see less loan demand
Massachusetts banks are in good financial shape and continue to offer home and business loans, said state legislative leaders who hosted an economic summit on Beacon Hill yesterday. However, though they have money to lend, some banks are beginning to report falling loan demand because of the slowing economy.
House Speaker Salvatore DiMasi and Representative Ronald Mariano, the Quincy Democrat who chairs the joint Committee on Financial Services, presented this outlook after speaking with industry representatives at the State House yesterday as part of a series of meetings with business leaders over the nation's financial crisis.
Banks in Massachusetts were relatively healthy by standard measures, such as amount of delinquent loans, based on the most recent federal data available, collected in June. However, since then loan defaults have begun to rise, according to Mariano. But these aren't significant enough to cause much worry, he said.
"I think it's a reflection of the contraction of the economy," he said. "This is nothing they didn't expect, and nothing they can't weather through."
Mariano also said auto lending is down about 5 percent in Massachusetts so far this year, and commercial loans may be down another percentage point or two.
With more than 140 independent banks here, Massachusetts has a higher proportion of deposits held in local institutions compared with other states. Regulators hope Massachusetts escapes the worst of the credit crisis since few of these institutions made the riskier types of mortgage loans that have led to problems elsewhere. DiMasi also cited the state's wide mix of industries, including new but small fields like biotechnology and clean energy.
That analysis matches what banks are reporting anecdotally, said Suzanne Moot, a banking industry consultant in Milton. "The vast majority of Massachusetts community banks aren't affected by the difficulties," she said.
Ross Kerber can be reached at kerber@globe.com. 