Seeking to assure depositors of his bank's stability, Mt Washington Bank President Ed Merritt has invited customers to a series of evening meetings in the lobbies of the bank's branches. This session took place November 12 at the Gallivan Blvd. bank office. Ed Forry photo

One way to weather the financial storm is to get to know what your banker is up to

By Edward J. Merritt

There is no better time than now to get to know your banker. During these turbulent financial times, there has been a lot of confusion regarding the regional, national and global economic environment. The average person has been bombarded with terminology such as "bailout," "credit markets," "foreclosure," and "delinquencies" throughout the media. These concepts can seem confusing and overwhelming.

To help simplify the complex and mixed messages that consumers are receiving, Mt. Washington Bank has been proactive in ensuring that both the individual customer and the community as a whole are accurately informed. We believe in helping people understand the issues facing our economy and feel the results of these efforts will enhance overall confidence in the banking industry.

At Mt. Washington Bank, we have taken steps to help clarify economic concerns by hosting a series of meetings for our customers. Over the past 60 days I have personally met with over 200 customers. We invited them into our branches to help them make sense of the litany of complex economic issues. Customers had the opportunity to ask questions about our bank or the state of the economy. This initiative has been very well received and we feel good about doing our part as a true community bank. Throughout all of this economic turmoil, Mt. Washington Bank remains focused on what we do best - building strong, lasting relationships with our customers and actively supporting our communities.

Throughout these meetings a number of excellent questions were asked that focused on the following: What is really going on out there? How did we get ourselves into this situation in the first place?

In its simplest form; financial institutions made loans to borrowers who ultimately weren't in a position to pay them back. Many banks did not aggressively participate in this type of lending due to more stringent lending practices and prudent regulatory oversight as compared to mortgage companies. A $700 billion economic bailout package is in place to inject capital into financial institutions and strengthen the banking industry resulting in more credit being available to consumers and businesses. This bailout has been put into motion, and it is starting to work. I believe this bailout plan is good for our economy and was appropriate given the status of global and national economic conditions in place when Congress passed this plan.

This economic downturn that began approximately 18 months ago led to significant increases in "foreclosure" activity. Foreclosure is what happens when a lender can legally repossess a property if the owner falls behind in making mortgage payments. Foreclosure has been happening at an alarming rate because people were granted mortgages that in hindsight they could not afford. Today, there are fewer mortgage programs available, and loans are more difficult to obtain in our current market. Many houses and condominiums that are new to the market are being listed at foreclosure prices, which is driving down home prices overall. All of these factors are contributing to the problems we are facing today.

This has obviously been a turbulent time for banks and many financial institutions have been impacted by this economic downturn. What is very important to remember is that the Massachusetts banking industry is very healthy. At banks like Mt. Washington Bank, our industry has been working with borrowers who are struggling to come up with payment plans to help them keep their homes. If borrowers find themselves in a situation where they are having a hard time making mortgage payments, we encourage you to reach out to your bank and come up with a solution together. An important factor for consumers who may be worried about the safety of banks is to understand is that just because a loan is delinquent, it doesn't necessarily translate into a loss for the company. In many cases, delinquent loans will get paid and the bank will not incur any financial losses.

It cannot be stressed enough - your money continues to be very safe in a bank. This is a good opportunity to once again talk with your bank to understand the level of deposit insurance coverage in effect. Your deposits are currently federally insured by the FDIC up to $250,000 per depositor, per bank. In many cases it is possible for a depositor to have federal deposit insurance in excess of the $250,000 limit. In addition, banks like Mt Washington Bank carry excess deposit insurance, meaning any deposit not insured by the FDIC is insured, in our case, by the Share Insurance Fund.

You should check with your bank and inquire if they carry excess deposit insurance coverage. I am proud to be part of a solid stable industry that operates in the Commonwealth of Massachusetts, and I must emphasize that no consumer has ever lost a penny in a Massachusetts bank!

Edward J. Merritt is the President and Chief Executive Officer of Mt. Washington Bank.