I'm Sorry, Your Bank is too Prudent, We're Downgrading Your Rating

wolf · 03-17-2009, 12:55 PM

I do not understand business. I just don't.

Community bank finds paranoid a smart bet FDIC begs to differ, tells bank to lend more
Boston Business Journal - by Tim McLaughlin

Joseph A. Petrucelli is one of the most cautious bankers in America.

In fact, Petrucelli is so cautious that the Federal Deposit Insurance Corp. recently criticized his bank for not lending enough.

The FDIC’s negative review of East Bridgewater Savings Bank’s loan volume is an anomaly in today’s current banking scene as lenders reel from their role in offering too many cruddy mortgage products to borrowers with weak credit.

Still, the FDIC slapped East Bridgewater Savings with a rare “needs to improve” rating after evaluating the bank under the Community Reinvestment Act.

From late 2003 through mid-2008, East Bridgewater Savings averaged 28 cents in loans for every dollar in deposit. The average loan-to-deposit ratio among similar size savings banks is more than 90 percent, FDIC data show.

“There are no apparent financial or legal impediments that would limit the bank’s ability to help meet the credit needs of its assessment area,” the FDIC said in its CRA evaluation.

FDIC examiners also faulted East Bridgewater for not advertising and marketing its loan products enough. The bank, which does not have a Web site, offers fixed-rate mortgages.

But Petrucelli and his bank occupy the other end of the spectrum in an industry that lost $26.2 billion in the fourth quarter. Even the FDIC’s own deposit insurance fund is in bad need of a boost after paying for an upswing in bank failures.

And then there’s East Bridgewater Savings.

Bad or delinquent loans?
Zero.

Foreclosures?
None.

Money set aside in 2008 for anticipated loan losses?
Nothing.

“We’re paranoid about credit quality,” Petrucelli said. The 62-year-old chief executive has run the bank since 1992.

The negative CRA rating, he said, caught him by surprise. The bank received “satisfactory” CRA ratings from the FDIC in 2003 and from the Massachusetts Division of Banks in early 2006.

East Bridgewater Savings ended 2008 with $135 million in assets and deposits of $84 million.

The bank even squeaked out a profit of $87,000. And its Tier 1 risk-based capital ratio was 31.6 percent, or more than three times higher than many community banks in Massachusetts.

But in the eyes of regulators, East Bridgewater Savings looks stingy. Its net loans and leases equaled 21 percent of assets. That compared with 72 percent among 385 savings banks across the country with assets between $100 million and $300 million.

classicman · 03-17-2009, 01:40 PM

They are too conservative. Thats all. Further proof that being prudent doesn't pay.

Pie · 03-17-2009, 02:41 PM

Quote:

Originally Posted by wikipedia

A mutual savings bank is a financial institution chartered through a state or federal government to provide a safe place for individuals to save and to invest those savings in mortgages, loans, stocks, bonds and other securities.

They weren't meeting the terms of their charter. How is it surprising that they got smacked on the wrist?

classicman · 03-17-2009, 04:01 PM

Where did you find that they were a Mutual Savings Bank?

Pie · 03-17-2009, 04:17 PM

Quote:

Originally Posted by classicman

Where did you find that they were a Mutual Savings Bank?

Here.

Quote:

Originally Posted by Bridgewater Savings

About Bridgewater Savings
Bridgewater Savings is a mutual savings bank committed to providing our customers with professional service and quality products. Since 1872 we have continued to experience steady asset growth, and remain independent and prosperous. Sound management, innovative services and conservative operating practices have contributed to make us an exceptional institution.

Amazin' what a little bit of research will turn up.

classicman · 03-17-2009, 07:35 PM

Boy I googled it and couldn't find it for shit. Thanks.

Beestie · 03-17-2009, 08:31 PM

Good homework, Pie.

The CRA was instituted to address redlining: a practice where banks would not loan money to purchase properties in certian areas. Turns out these areas had certain demographic similarities.

So, in exchange for Federal benefits such as a reduced capital reserve ratio among other things, banks agreed to make mortgage money more available.

This bank isn't being risk averse, they are up to something else. To have zero money set aside for default risk is utterly shocking. No wonder they got a smackdown. I have a feeling the Fed figured out what else they were up to but couldn't prove it so used the smackdown as a warning shot. A bank that doesn't have a web page? Red flag.

There are many reasons to open a bank. Not all of them involve banking.

Pie · 03-17-2009, 08:36 PM

Quote:

Originally Posted by Beestie

A bank that doesn't have a web page? Red flag.

There may indeed be issues with their practices, but they do have a web page: http://www.bridgewatersavings.com/

Beestie · 03-17-2009, 08:41 PM

Quote:

FDIC examiners also faulted East Bridgewater for not advertising and marketing its loan products enough. The bank, which does not have a Web site, offers fixed-rate mortgages.

Quote:

Originally Posted by Pie

There may indeed be issues with their practices, but they do have a web page: http://www.bridgewatersavings.com/

WhoIs record for bridgewatersavings.com

Record expires on 26-Mar-2010
Record created on 25-Mar-1997
Database last updated on 11-Mar-2009

Looks like some web designers were busy over the weekend!

Pie · 03-17-2009, 08:47 PM

Holy crap, I was moving too fast. The place I found is Bridgewater Savings, not East Bridgewater Savings. Wrong company entirely.

I apologize!

ZenGum · 03-17-2009, 09:25 PM

I reckon Beestie is on the right track. You're in business, so go do some business. Banks make money from borrowers, not depositers. How can they be surviving with so little in loans, hmm? Why have they chosen to do this? Mere prudence doesn't account for it. This is very suspicious. Money laundering? Tax-dodge? Other financial shenanigans? A pyramid scheme, perhaps? Anything this outside the ordinary should get a thorough audit. It might well turn out that they are an honest, upfront, prudent bank - but I'd be surprised if they do.

classicman · 03-18-2009, 09:41 AM

Quote:

Originally Posted by Pie

The place I found is Bridgewater Savings, not East Bridgewater Savings. Wrong company entirely.

Thats what I kept finding info on yesterday when I was searching. Then I had to leave work. Thats why I asked you where you found it. You may have been too fast - I ran outta time.

03-17-2009, 12:55 PM	#1
wolf lobber of scimitars Join Date: Jul 2001 Location: Phila Burbs Posts: 20,774	I'm Sorry, Your Bank is too Prudent, We're Downgrading Your Rating I do not understand business. I just don't. Community bank finds paranoid a smart bet FDIC begs to differ, tells bank to lend more Boston Business Journal - by Tim McLaughlin Joseph A. Petrucelli is one of the most cautious bankers in America. In fact, Petrucelli is so cautious that the Federal Deposit Insurance Corp. recently criticized his bank for not lending enough. The FDIC’s negative review of East Bridgewater Savings Bank’s loan volume is an anomaly in today’s current banking scene as lenders reel from their role in offering too many cruddy mortgage products to borrowers with weak credit. Still, the FDIC slapped East Bridgewater Savings with a rare “needs to improve” rating after evaluating the bank under the Community Reinvestment Act. From late 2003 through mid-2008, East Bridgewater Savings averaged 28 cents in loans for every dollar in deposit. The average loan-to-deposit ratio among similar size savings banks is more than 90 percent, FDIC data show. “There are no apparent financial or legal impediments that would limit the bank’s ability to help meet the credit needs of its assessment area,” the FDIC said in its CRA evaluation. FDIC examiners also faulted East Bridgewater for not advertising and marketing its loan products enough. The bank, which does not have a Web site, offers fixed-rate mortgages. But Petrucelli and his bank occupy the other end of the spectrum in an industry that lost $26.2 billion in the fourth quarter. Even the FDIC’s own deposit insurance fund is in bad need of a boost after paying for an upswing in bank failures. And then there’s East Bridgewater Savings. Bad or delinquent loans? Zero. Foreclosures? None. Money set aside in 2008 for anticipated loan losses? Nothing. “We’re paranoid about credit quality,” Petrucelli said. The 62-year-old chief executive has run the bank since 1992. The negative CRA rating, he said, caught him by surprise. The bank received “satisfactory” CRA ratings from the FDIC in 2003 and from the Massachusetts Division of Banks in early 2006. East Bridgewater Savings ended 2008 with $135 million in assets and deposits of $84 million. The bank even squeaked out a profit of $87,000. And its Tier 1 risk-based capital ratio was 31.6 percent, or more than three times higher than many community banks in Massachusetts. But in the eyes of regulators, East Bridgewater Savings looks stingy. Its net loans and leases equaled 21 percent of assets. That compared with 72 percent among 385 savings banks across the country with assets between $100 million and $300 million. __________________ wolf eht htiw og "Conspiracies are the norm, not the exception." --G. Edward Griffin The Creature from Jekyll Island High Priestess of the Church of the Whale Penis

03-17-2009, 01:40 PM	#2
classicman barely disguised asshole, keeper of all that is holy. Join Date: Nov 2007 Posts: 23,401	They are too conservative. Thats all. Further proof that being prudent doesn't pay. __________________ "like strapping a pillow on a bull in a china shop" Bullitt

03-17-2009, 04:01 PM	#4
classicman barely disguised asshole, keeper of all that is holy. Join Date: Nov 2007 Posts: 23,401	Where did you find that they were a Mutual Savings Bank? __________________ "like strapping a pillow on a bull in a china shop" Bullitt

03-17-2009, 07:35 PM	#6
classicman barely disguised asshole, keeper of all that is holy. Join Date: Nov 2007 Posts: 23,401	Boy I googled it and couldn't find it for shit. Thanks. __________________ "like strapping a pillow on a bull in a china shop" Bullitt

03-17-2009, 08:31 PM	#7
Beestie -◊\|≡·∙■·∙≡\|◊- Join Date: Feb 2003 Location: Parts unknown. Posts: 4,081	Good homework, Pie. The CRA was instituted to address redlining: a practice where banks would not loan money to purchase properties in certian areas. Turns out these areas had certain demographic similarities. So, in exchange for Federal benefits such as a reduced capital reserve ratio among other things, banks agreed to make mortgage money more available. This bank isn't being risk averse, they are up to something else. To have zero money set aside for default risk is utterly shocking. No wonder they got a smackdown. I have a feeling the Fed figured out what else they were up to but couldn't prove it so used the smackdown as a warning shot. A bank that doesn't have a web page? Red flag. There are many reasons to open a bank. Not all of them involve banking. __________________ ♠ ♥ ♣ ♦

03-17-2009, 08:47 PM	#10
Pie Gone and done Join Date: Sep 2001 Posts: 4,808	Holy crap, I was moving too fast. The place I found is Bridgewater Savings, not East Bridgewater Savings. Wrong company entirely. I apologize! __________________ per·son \ˈpər-sən\ (noun) - an ephemeral collection of small, irrational decisions The fun thing about evolution (and science in general) is that it happens whether you believe in it or not.

03-17-2009, 09:25 PM	#11
ZenGum Doctor Wtf Join Date: Oct 2007 Location: Badelaide, Baustralia Posts: 12,861	I reckon Beestie is on the right track. You're in business, so go do some business. Banks make money from borrowers, not depositers. How can they be surviving with so little in loans, hmm? Why have they chosen to do this? Mere prudence doesn't account for it. This is very suspicious. Money laundering? Tax-dodge? Other financial shenanigans? A pyramid scheme, perhaps? Anything this outside the ordinary should get a thorough audit. It might well turn out that they are an honest, upfront, prudent bank - but I'd be surprised if they do. __________________ Shut up and hug. MoreThanPretty, Nov 5, 2008. Just because I'm nominally polite, does not make me a pussy. Sundae Girl.

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