Local banks healthy and ready to lend

LYNN – Don’t say the word “bailout” to banker Arthur Horgan or other local small bank executives who say they managed customers’ finances prudently while their bigger brethren got into financial trouble.”I hate the term,” said the Equitable Cooperative Bank president.For that matter, don’t use the word around Bruce Spitzer, spokesman for the Massachusetts Bankers Association, who said publicity about major financial institutions getting tossed a federal life preserver has tainted all banks.”No bank in Massachusetts has received bailout money,” Spitzer said Thursday, quickly adding that 12 of Mass Bankers’ 200 members received Capital Purchase Program money they plan to pay back.CPP is designed to stimulate lending by banks but Spitzer said the money has only gone to banks in good financial health willing to pay the money back.”These are not bad funds,” he said.Big institutions like Bank of America Corporation, American International Group and Citigroup Inc. got a financial helping hand after the federal government deemed them too big to fail.But Equitable Cooperative Bank and Saugus Bank have not received federal money and Horgan and Saugus Bank President Kevin Tierney say they don’t need it.”Local banks are healthy, they are still lending and they have adequate reserves to make it through these economic times,” Tierney said, echoing Spitzer by observing that small local banks stayed away from sub prime mortgages and “exotic” loans that got other banks in financial trouble.”Local banks are being lumped in with other banks; it’s frustrating.”Horgan said Equitable’s deposits have increased as “depositors abandon Wall Street.”Spitzer said many local bankers combined “Yankee conservatism” with lessons learned from the 1989-1991 financial crisis to stay away from risky loans.By contrast, banks in Florida, Georgia and other states invested heavily in construction projects and development and are staggering under the repercussions rippling out from those economic sectors.A worsening economy, Spitzer acknowledged Thursday, could saddle Massachusetts banks with new challenges they have avoided to date. “We recognize we’re not out of the woods.”