Kennedy: Coffers at area’s smaller banks are fuller this year

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In the latest annual report detailing bank market share, which the Federal Deposit Insurance Corp. calculates each fall based on deposits, the institutions serving the Albany-Schenectady-Troy metro area line up as they often do, with KeyBank, Citizens and Trustco as the top three.

Key inevitably dominates as No. 1, with double or more the market share of No. 2 Citizens, even though No. 3 Trustco has more branches than any of the 24 institutions in the region.

Look a little farther down the list, though, where more of the homegrown banks are found, and you’ll see that while they generally rank as they did last year, their coffers are fuller.

Saratoga National Bank & Trust, for instance, had $673.3 million in deposits as of June 30, versus $489.6 million on that date last year, according to the FDIC report. First National Bank of Scotia showed $511.3 million in deposits this year, versus $434.4 million on June 30 last year.

That’s no anomaly: Both locally and nationally, banks are awash in deposits put there by consumers and businesses alike worried about the course of the economy as we navigate through the coronavirus pandemic.

Indeed, the chairman of the FDIC, speaking in August as the agency reported on the second-quarter performance of banks whose deposits it insures, noted that more than $1 trillion in new deposits went into banks in the April-to-June period “as individuals and businesses sought safety during the uncertain economic environment.”

It was the second consecutive quarter to see that much growth, Jelena McWilliams said, adding that the increases “far exceed any deposit growth the FDIC has seen in the past.”

The windfall comes with a few headaches, however.

“It would be impossible, and irresponsible, to be able to lend out the kind of money that is flowing quickly into our banks, at the same rapid pace,” John H. Buhrmaster, president and CEO of First National Bank of Scotia, told me by email.

Yet sitting on the money means “that for every dollar we are not able to lend, we are only earning 0.1 percent – not enough to build requisite capital quickly,” he noted.

Commercial lending has slowed, both he and David DeMarco, president and CEO of Saratoga National Bank & Trust, said, as businesses weigh election, tax and economic uncertainty. But demand for consumer mortgage and car loans is brisk, each indicated, using the term “record” to describe the volume growth.

DeMarco averred it was “a little more challenging” to run a bank with “idle cash balances and nowhere to put it,” but said banks were holding their own.

Buhrmaster likened the community banks to the small businesses they serve: “We are resilient and we are survivors,” he wrote.

“It is very difficult to put the money to work, but with creative planning, we are making progress,” he said.

Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected]

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