Page 87 - BusinessWest September 1, 2021
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 chief operating officer of Greenfield Cooperative Bank. “The point of our business is to get deposits ... so this goes against everything we were taught.”
In normal times, banks take in depos- its and lend that money out to business- es and individuals. Balancing the num- ber of loans to deposits helps determine what interest rates will be paid to savers and charged to borrowers. Banks profit on the difference between the two.
But these are certainly not normal times. These days, banks have record deposits and diminished loan demand — for several reasons, which we’ll get into later — which translates to lower interest rates for savers and borrowers, as well as lower profits for banks.
Howland pointed out that the lower interest rates are great news for people looking for a business loan or a mortgage.
“The residential and commercial rates are down to levels that were incon- ceivable 10 years ago,” he said, adding that, moving forward, banks will be com- peting much harder to entice people to borrow money than deposit it.
By All Accounts
There are many theories as to why depos- its have soared at area banks — and why those deposits are going largely untouched.
Dan Moriarty, president and CEO of Monson Savings Bank, suggested that once people tight- ened their spending during the pandemic, they may have changed their overall spending pat-
terns, which is in many ways good for consum- ers, but not for the overall economy.
“It’s good for consumers to increase their sav- ings and their capacity to have money, but it also slows down the economy,” Moriarty told Busi- nessWest. “We believe there is still some pent-up rebound spending by both consumers and busi- nesses that we will be seeing.”
increase their savings and their capacity to have money, but it also slows down the economy. We believe there is still some pent-
up rebound spending by both consumers and businesses that we will be seeing.”
Howland agreed, noting that there are a number of reasons contributing to the surge in deposits, with one of them bring what he called a “flight to quality.”
“With all the uncertainty in the world, people understand that putting their money into a bank where their deposits are insured by the FDIC is one of the safest moves you can make,” he said, adding that, despite the consistently upward movement of the stock markets, many consum- ers are seeking a safe harbor in which to park
It’s good for consumers to
        Tony Worden says he never expected there to be too many deposits and not enough people to lend to.
cash is sitting still, for the most part, and the key to any bank generating revenue and earning profits is loaning its deposits out to borrowers.
“I never thought I would say there are too many deposits and not enough people to lend the money to,” said Tony Worden, president and
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