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Canton bank
execs: money is safe in Massachusetts
By Jay Turner
Citizen Staff
While the
recent federal seizure of California-based IndyMac Bank has had
depositors all over the country on edge, people who entrust
their money to Massachusetts community banks, including Bank of
Canton and Canton Cooperative Bank, apparently have nothing to
worry about.
According to
top executives at both local institutions, deposits in
Massachusetts-chartered banks are especially safe, as they carry
more insurance than bank deposits in other states.
“No
depositor in Massachusetts has ever lost a penny,” explained
James Egan, president and CEO of Bank of Canton. “You can have a
million; you can have $5 million in deposits.”
Although
most community bank customers are familiar with the FDIC, which
insures their accounts up to $100,000, they may not be aware
that they also enjoy unlimited coverage under two
state-initiated entities: the Depositors Insurance Fund for
savings banks and the Share Insurance Fund for cooperative
banks.
The state
government established both the DIF and SIF in 1934, during the
Great Depression when banks were failing at an alarming rate.
Massachusetts then added FDIC coverage after opting out of it
for a time, leaving the DIF and SIF to cover all amounts over
$100,000.
Still, in
the aftermath of such a high profile collapse as IndyMac’s, the
lack of awareness about the added protection has resulted in
more phone calls from concerned customers wondering if their
money is at risk.
“Based on
what’s been in the national media, we’ve definitely gotten some
inquiries about the bank from customers,” said Canton
Cooperative Vice President Nick Maffeo.
Maffeo said
it usually takes just a brief explanation of the bank’s
membership in SIF to put to rest any fears, but added there are
other reasons to have faith in Canton Cooperative beyond the
insurance coverage.
“[Recent
bank closings] relate to problems primarily with subprime
lending,” he said, “and that is a business we’re not involved
in.”
Maffeo
pointed to the fact that the bank has “little to no problem
loans” on the books due to its conservative lending practices,
and has, like a lot of community banks, more than double the
capital-to-asset ratio of most larger institutions.
And while
growth is a goal for any business, Maffeo stressed that Canton
Cooperative is more concerned with satisfying its loyal customer
base in and around Canton.
“For us,
it’s more about being an asset to the community,” he said.
Egan,
meanwhile, noted that Bank of Canton is financially “in
excellent shape.”
“We’re doing
gangbusters,” he said. “We’re doing better in the residential
mortgage business than we did a year ago.” In fact, Egan said
the bank is doing $6 to $10 million in business per week,
compared to $2 to $3 million per week last year.
Regarding
the DIF, Egan said it is stronger, dollar for dollar, than the
FDIC, explaining that member banks contribute money, which
continues to grow through investments. He said the fund even got
stronger when banks were closing during the recession of the
early nineties, and now members are getting a dividend back
every year because “it continues to grow so much.”
And even
though there is pessimism surrounding the national economy as of
late, the bottom line, according to Egan, is that community
banks, particularly in Massachusetts, are safe.
“If people
stay dealing with their community bank, they will never get in
trouble,” he said.
August 14, 2008
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