Erin Haust writes, “The FDIC has given a negative review to a Massachusetts community bank with no delinquent loans or foreclosures on its books and no anticipated losses”:
The “needs to improve” rating is a result of the bank being picky about lending, according to the FDIC’s interest in the Community Reinvestment Act.
Joseph Petrucelli, chief executive of East Bridgewater Savings since 1992, told the Boston Business Journal that his bank is “paranoid about credit quality.”
Apparently that will get you a poor rating in the eyes of the FDIC. The agency also faulted Petrucelli for not promoting the bank’s loan products enough. East Bridgewater Savings does not have a website and offers fixed rate mortgages.
In comparison to others in the lending business, EBS only made an average of 28 cents in loans per dollar deposited over the last five years while its banking competitors had a 90% average loan to deposit ratio, according to Fox News reports. The bank also turned a profit last year of $87,000.
The rare “needs to improve” rating is a slap in the face to a bank that chose not to make risky loans at the strong suggestion of the federal government. The Community Reinvestment Act is of 1977 is “intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound banking operations.” as stated on the act’s website.
The key words here are “consistent with safe and sound banking operations.” Petrucelli successfully navigated the banking collapse in this country by keep his bank safe and using sound banking procedures. How is that worthy of a poor rating by the FDIC?
Chris Muir’s latest “Day By Day” cartoon strikes a similar note: