Lawrence Savings Bank is among the local financial institutions that are doing their part to help businesses and residents flooded by recent heavy rain get back on their feet.
Most bank presidents don’t go to work expecting to perform physical labor. But when Charlie Cullen, president and chief executive officer of The Provident Bank in Amesbury, saw his community suffering at the hands of the recent Mother’s Day storm that lasted for days and flooded many North Shore areas, he rolled up his sleeves and was prepared to lend a hand in the middle of it all.
Cullen said the effort in which he participated worked sort of like an assembly line, with local businessmen and residents scurrying to get food and wine out of restaurants and water out of several buildings that had no electricity to run pumps.
“I was down there, up to my knees in water. And it was still pouring rain. You just do what you’ve got to do,” he said. “This was like a made-for-TV movie, in a lot of respects.”
Although not every banker on the North Shore was up to his knees in water when the storm hit the communities their banks serve, many did start thinking of ways to help out. Community banks began creating loan programs to help get businesses and homeowners affected by flooding back on their feet. Several bankers refer to the loan programs as bridge loans with low rates or no-interest periods, which are designed to provide aid and carry people through the time when their insurance or other types of relief kick in.
“Clearly, [industry members are] stepping up,” Kevin Kiley, executive vice president and chief executive officer of the Massachusetts Bankers Association. “They see a need and they recognize it and they step up to help people. We are very proud of them.”
The Provident Bank was among the local banks that created special loan programs that take into consideration the conditions and damage caused by the storm. The bank currently offers an interest-free loan program specifically targeted toward local downtown businesses. For homeowners, home equity lines of credit are available at a discounted rate of 4.94 percent interest for one year.
“We are all getting together to help,” said Cullen. “Part of what we needed to do is give some comfort and reassurance that we are going to be here. We are a mutual bank. We exist for the benefit of the community. Our charter of mutuality is tested in times like these. It could have been worse and we still would have been there.”
Peabody Square, as one of several North Shore spots that experienced heavy flooding from the recent storm, looked more like a lake than a vibrant downtown community on the day after Mother’s Day. Peabody-based North Shore Bank is only about 100 yards from the square. But luckily it is located 100 yards up a hill, and therefore was able to avoid the flood damage that hit several area homes and businesses.
Due to limited road access, the bank’s main branch was closed on that Monday. However, Francis J. McCormick, the bank’s president, and Larry Harrington, senior vice president, were able to travel alternative routes and make it into work.
According to Harrington, the two of them went outside and walked down to check out the weather effects in the nearby square. That’s when McCormick told Harrington it was time to work on loan programs that could be offered to business owners and residents affected by the flood.
North Shore’s home equity loan to flood victims is offered 2 points below the rate of its current home equity loan for the first 12 months. If borrowers need longer than a year, the rate will then change to the standard rate that was available at the time the application was submitted. There is also a loan program for businesses to borrow up to $100,000 below the Prime Rate.
“It’s the community bank approach,” said Harrington. “We are the last bank headquartered in Peabody. It’s really the approach this bank takes: to say we have to give back to the community.”
‘What Do People Need?’
And the list of bank-sponsored, flood-relief loans goes on, with several Massachusetts banks taking similar approaches to help people recover from damages and financial losses from the recent storm.
At Lawrence Savings Bank, existing customers are offered a 90-day interest-free loan of up to $10,000. If the loan is not paid off in 90 days, it converts to a five-year loan that’s 1 percent under Prime. For people who were severely affected by the storm, the bank is also offering second-mortgage loans of up to $100,000
“We are trying to make it quick and easy,” said Michael Ecker, executive vice president and chief lending officer. “If you don’t help each other out in times of need, what are you doing there? Banks aren’t making money [off the flood relief loans].”
Several bankers say they expected to see more interest in their loan programs, but more people could still sign up in the future. Bankers also say creating the loans is a way of providing some level of comfort to the members of their communities who were most affected.
“When it comes to community involvement, I don’t think anybody should be surprised that the banks were among the first to step up,” said Joe Bartolotta, public relations director of Boston-based Eastern Bank, which also has created a flood relief loan program. “This is the role of banks – not just to take money. It began with the question, what do people need? Well, they need access to cash, and they need it quickly.”
Bartolotta also emphasized to point that banks are not profiting from the loan assistance programs. Eastern, like several other banks, also is promising a quick response time of 24 hours on applications. It also is waiving its usual fee.
“You can walk into several banks on the North Shore [offering similar programs], which says a lot about the industry. I really do feel good about the industry,” he said.
Sovereign Bank, whose headquarters are in Philadelphia, has expressed a willingness to be flexible with its current customers who were affected by the flood by offering payment deferrals on a case-by-case basis.
Sovereign has made available small-business loans of up to $25,000 where the borrower can chose to defer payments for up to three months. The bank also has extended $100,000 in grants to nonprofits in the areas affected.
Pat Sullivan, Massachusetts CEO at Sovereign, said even though Sovereign is larger than most of the area banks, he believes the institution is behaving more along the lines of a community bank.
“It is important that we take care of our communities. I can’t emphasize that enough,” he said.
