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www.wbjournal.com Worcester Business Journal • 2014 Central Mass By The Numbers 23 W ithin the last year, asset growth has stag- nated for some of the area's largest banks. But credit unions have been enjoying an upward climb. For instance, assets remained flat for Bank of America, while they jumped 7.4 percent for TD Bank and dropped 8.33 percent for RBS Citizens Bank. In contrast, the area's largest credit unions mostly saw increases in their assets, with Digital, Workers' and I-C federal credit unions each seeing double-digit jumps. It has been a difficult time to grow assets organi- cally, according to John Heerwagen, CEO of Natick- based Middlesex Savings Bank, which saw no growth in the last year. Asset growth is typically driven by deposits, but lower interest rates produce less deposit growth from customers. "Deposit growth has been muted over the last two or three years," Heerwagen said. "The growth in deposits has been muted for banks that don't have eye-popping" promotions for certificates of deposit. Middlesex doesn't push for asset growth, which can be artificially boosted through acquisitions, he said, but rather emphasizes growth in checking accounts and loans. The checking account growth represents a bank's reach into the community, Heerwagen said. And, even though the bank is not growing its assets, there is room within its asset portfolio to expand its loans. "We're very focused on loan growth," he said explain- ing that the company is below the acceptable industry ratio of assets to loans. "Loans earn more for a bank more than investments such as buying Treasury securi- ties that in this environment don't yield as much." Commerce Bank has grown its assets 8.5 percent in the last year, which President and CEO Brian W. Thompson credits largely to the Worcester-based institution's size. The bank site in a sweet spot of being smaller than the national banks but larger than many of the other regional banks, he said. That allows Commerce to have the resources of a larger bank while concentrating on a particular region. "We're as busy as we have ever been on the corpo- rate lending side, which has been our focus. We are seeing a lot of opportunity both locally and through- out our markets," Thompson said. "The economy is more at the new normal today and I think people are looking ahead more than playing defense, which they might have been in the past." Tim Smith, CFO at Fitchburg-based Workers' Credit Union, said the continued asset growth of credit unions relates to both a broadening of knowl- edge about them as an alternative to banks as well as an ongoing expansion of the services the industry provides. "To the extent that credit unions have done better than banks, I think (for) some of that has to do with what is going on perception wise. People are learning about credit unions more and more," he said. "Even though we provide some of the same products, it has been a good story for us." While credit unions started out serving narrow populations such as a single company's employees, various regulations have been loosened over time, allowing the credit unions to access business that had historically been reserved for banks. There are still restrictions on credit unions, Smith said, such as lim- its on commercial loans, leaving the credit unions to continue to focus on mortgages and auto loans. All three executives were enthusiastic about the coming year. But Thompson, of Commerce Bank, cautioned that continued low interest rates will pose a problem for smaller banks in the area. "It will be a busy time for the banking industry, but to a lot of banks the low interest that is out there makes it a difficult operating environment," he said. "Generally, I think the health of the banking industry is pretty good." n By Sam Bonacci Worcester Business Staff Writer Will a better economy help boost banks' assets? Sources: FDIC, UMass Donahue Institute, Mass. Department of Revenue Number of Central Massachusetts communities with only one bank branch: Bank of America's share of the banking market in Marlborough as of June 2014: QUICK HITS FINANCE & ECONOMICS Leading banks in key communities Which banks have the highest market shares in the largest Central Massachusetts communities? Bank of America and Middlesex Savings Bank each lead the pack in two. 18 36.4% Percentage of municipal tax revenue in Ayer that came from industrial properties in fiscal year 2014, the highest percentage in Central Massachusetts.): 22% Deposits in the 46 banks located in Worcester as of June 2014: $3.51B Number of communities in Central Massachusetts that drew property tax revenue from open space during fiscal year 2014. 5 Worcester Commerce Bank 29.6% Framingham TD Bank 23.3% Leominster Fidelity Bank 33% Fitchburg Rollstone Bank & Trust 44.2% Marlborough Bank of America 36.4% Shrewsbury Bank of America 26.5% natick Middlesex Savings Bank 37% Franklin Rockland Trust 27.2% Milford Milford Federal Savings and Loan 26.2% Acton Middlesex Savings Bank 40.2% Sources: FDIC, UMass Donahue Institute NOTE: Data as of June 30, 2014 Share of deposits Town Bank in community