Locally chartered banks are turning to a back-to-basics approach and battening the hatches, expecting the 14-month-old recession to continue through much of this year.
Across the Baltimore metro area, banks have focused on lending where possible, maintaining their own balance sheets, and kept a close eye on the Obama administration’s first moves to right the economy.
1st Mariner Bank wrote $200 million in 30-year conforming mortgages in January alone, bank chairman and Chief Executive Officer Ed Hale said. Hale credited lower rates for the boost, and said it provided a glimmer of hope in an otherwise bleak economy.
“We’re going to try to earn our way out of it and get back to profitability,” Hale said. “We think that we were on the front end of it, we’d like to be on the leading edge coming out.”
But the federal government remains the most powerful factor on this year’s banking landscape.
An administration official, speaking on condition of anonymity, said Monday the overhaul of the government’s $700 billion financial rescue program is likely to include a partnership with the private sector to buy troubled assets.
The official said the plan would use government money to support private sector purchases of bad assets that are weighing on banks’ balance sheets and keeping them from resuming more normal lending.
The government effort to support private sector purchases of banks’ problem assets would be just one element of a major overhaul of the federal Troubled Asset Relief Program, which has come under heavy criticism for distributing billions of dollars with few requirements on how banks would use the money.
The Bush administration, led by then-Treasury Secretary Henry Paulson, committed the first $350 billion of the $700 billion program, leaving the final half for the Obama team.
However, local community institutions aren’t counting on direct federal help this year. Glen Burnie Bancorp CEO Mike Livingston said the bank didn’t seek federal funds when they were first offered last year, and has continued to make basic consumer and small business loans.
“The simple thing I’ve been saying for years is to stay with traditional banking,” Livingston said. “We didn’t ask for any TARP funds, we’ve been very conservative with the needs of our communities.”
The Associated Press contributed to this story.
