Worcester Business Journal

36 2018 Economic Forecast • Worcester Business Journal • www.wbjournal.com As the banking industry consolidates, expect loans and loan amounts to increase Main Street Bank begins M ain Street Bank began operating in April 2017, its name reflecting Top banking and finance stories of 2017 More lending, fewer banks B a n k i n g & F i n a n c e BY GRANT WELKER Worcester Business Journal News Editor W ith the American economy humming along at a steady rate – with job rates, house- hold spending and consumer confidence all up – financial institutions lent more in 2017 than at any year since before the Great Recession, according to the Federal Reserve. In Massachusetts, banks loaned nearly $100 billion in the third quarter of 2017, a jump of $7.7 billion, or 8 percent, over the same period in 2016, according to the Federal Deposit Insurance Corp. That lending is up nearly $35 bil- lion, or 54 percent, in just five years. Consolidation that's sure to come With so many small banks still dot- ting the area, it's only a matter of time when more of them join, as several did in 2017, or are bought out by a larger competitor. In 1987, there were 13,723 bank- ing institutions nationally, according to the FDIC. By 2016, it was down about two-thirds, to 5,112. Continued low-interest rates Interest rates have been projected to inch upward all year, but mostly stayed pat at a lower level than had been seen in decades until the Great Recession. In mid-December, the Fed raised the federal funds rate to a range of 1.25 to 1.5 percent, on strengthening job num- bers and increased household spending. But the benchmark borrowing rate remains far below historic levels. While rates have risen slower than expected, the Fed said it expects rates to rise further in 2018. Stronger focus on in-branch experiences Despite a smaller number of financial institutions than in the past, the num- ber of branches keep rising. Why? Because banks say they still want to be close to their customers, even if so much more of banking now is done online. While people can deposit checks with a scan of their phone and pay off a credit card with a few taps, banks have repositioned their branches to be more informal and to focus on helping cus- tomers with other needs, such as ques- tions about loans or refinancing. Edward Manzi, CEO of Fidelity Bank, which acquired Colonial Co-operative Bank Homes sales, like at the Emerson Green housing development in Devens, have benefitted from low interest rates. Avidia Bank's new Framingham branch, which opened in December, is the start of an eastern expansion focusing on more than physical branches. the smaller-town history of its prede- cessors, Marlborough Savings Bank and North Middlesex Savings Bank. Both banks date back to the 1800s: Marlborough Savings Bank to 1860 and North Middlesex Savings Bank to 1885. The two don't overlap much in their geographic areas, with Marlborough's branches spanning only from Sudbury to Westborough, while North Middlesex's are farther north, from Littleton to Lunenburg. The two banks merged with 14 branches and nearly $1 billion in assets. The president and CEO of North Middlesex Savings Bank, Walter W Chris Foley, senior vice president of UniBank, stands in the new style of branch, which features a cafe area and universal bankers who can address a variety of needs for customers who walk through the door. The SpencerBANK headquarters in Spencer became Cornerstone Bank, as the merger with Southbridge Savings Bank went through in June.

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