Worcester Business Journal

February 19, 2024

Issue link: https://nebusinessmedia.uberflip.com/i/1516001

Contents of this Issue

Navigation

Page 14 of 23

wbjournal.com | February 19, 2024 | Worcester Business Journal 15 B A N K I N G & F I N A N C E F O C U S MANUFACTURING T & Journal's AWARDS MANUFACTURING S U M M I T & EXCELLENCE AWARDS WBJ Worcester Business Journal The Worcester Business Journal will be recognizing some of the area's top manufacturing firms with our 9th annual Central Mass "Manufacturing Excellence Awards". Winners will be profiled in the special section on Manufacturing in our April 1 issue of the Worcester Business Journal, and we'll hold a special awards ceremony along with a keynote address and panel discussion on the manufacturing industry in late April 2024. NOMINATION DEADLINE: FRIDAY, FEBRUARY 23, 2024 We will be recognizing manufacturing companies in the following categories: CALL FOR NOMINATIONS! For details and nomination form visit www.wbjournal.com/manufacturing n GENERAL EXCELLENCE – C ompanies that are the best of the best. • Under 25 employees • 25 -99 employees • Over 100 employees n EMERGING MANUFACTURER n PRODUCT DESIGN & INNOVATION n WORKFORCE DEVELOPMENT & PRODUCTIVITY n GREEN MANUFACTURING n COLLABORATION IN MANUFACTURING n MANUFACTURING CHAMPION Supporting Sponsor: PARAGUS STRATEGIC I.T. Presenting Sponsor: Corporate Sponsor: before the pandemic, lower borrowing costs are expected to result in higher consumer and commercial loan de- mand," she wrote. e effectiveness of interest rate changes in supporting a healthy econ- omy depends on how well they respond to complex economic factors. Where the rate hikes were a response to inflation, proposed cuts would aim to prevent the economy from cooling excessive- ly, resulting in rising unemployment. Bank officials see contradictory signals about how big a danger that is. "Anecdotally, some companies are cutting," Stewart said, pointing to UPS's January announcement of plans to cut 12,000 jobs. "But it's not showing up in the unemployment numbers yet." Another potential sign of a faltering economy is rising delinquencies on loan repayments, he said. Right now, the banking industry is in a moment of un- usually low credit problems, so any rise in those issues just represents getting back to normal. "Banks need to be careful what they wish for," Connors said, adding while a 3% rate might be ideal, if the Fed dropped rates that low it would be as a result of widespread problems like customers and businesses struggling to repay loans. "I would rather be dealing with inter- est rate problems than to be dealing with foreclosing on homes, foreclosing on businesses," he said. "It's a cycle. We can weather the storm, but you don't want to start throwing people out of their homes." Keeping the local trust e vulnerability of banks took on new salience for lenders in spring 2022, with the collapse of regional banks Silicon Valley Bank and First Republic Bank in California and Signature Bank in New York. While the reasons for the failures were complicated, among them was the jump in interest rates, which affected the prices of bonds the banks had invested in. "One thing the industry did learn from that is how quickly people can move their money out of a bank," Stewart said. "It doesn't matter how much capital you had or how profitable Brian Stewart, CFO of Middlesex Savings Bank U.S. bank interest rates, 2007-2024 '07 0 2% 4% 6% 8% 10% '08 '10 '12 '14 '16 '18 '20 '22 '24 8.25% 8.50% Bank prime loan rate Note: All rates are from January of their respective years. Source: Federal Reserve Bank of St. Louis you are. Banking is still a confidence business." Central Massachusetts bankers say they're not worried about facing the same fate as those banks regardless of economic turbulence. One reason is community banks in Massachusetts use the industry-sponsored Depositors Insurance Fund to insure deposits over the FDIC limit of $250,000. Another is local and regional banks in the area work with a balanced collection of companies in stable industries and aren't exposed to volatile markets like cryptocurrencies. "We do traditional banking, we do it conservative- ly, we do it with our depositors' interests in mind," Plourde said. "We don't take big swings at things that make no sense." Another source of trust in the area's banks, even in the face of economic uncer- tainty, is their combination of up-to-date technology and a personal touch, the three Central Massachusetts bankers said. "You want to know the people you're doing business with," Plourde said. "When you call, you're going to actually speak to somebody. You can sit down with some- body." When it comes to the Fed's choices, bankers say it's important to contextualize current events within a bigger context. While current interest levels may seem shocking to borrowers who got used to rock-bottom rates in the 2010s, rates were frequently higher than they are now from the 1970s through 2000. "I can remember my first mortgage was double digits," Steward said. "Historically, these aren't high rates." W

Articles in this issue

Links on this page

Archives of this issue

view archives of Worcester Business Journal - February 19, 2024