Icebound Northeast Rediscovers Banking by Hand

The ice storm of the century has forced banks across the Northeast to return to some decidedly old-fashioned ways of doing business.

With the heat and electricity out, employees at Community Bank in Canton, N.Y., this week cashed checks and recorded deposits using paper, pencils, and hand-held calculators. As to how much money was in the accounts, the bank simply took customers at their word.

"We are in a rural area where we know most of our customers, and we trust them," said James A. Wears, regional president of the $1.3 billion- asset bank. "But we're going to have a processing nightmare when power is restored."

The problems have hit banks throughout upstate New York, northern New England and southeastern Canada. A severe ice storm on Jan. 7 knocked down power lines across the region, leaving some two million people without electricity. So far, there's no word on when power will be restored.

In eastern Maine, Machias Savings Bank has been told that the wait could be as long as six weeks. So the bank has borrowed a diesel generator from a local farm to keep its computers running.

"There are nine miles of transmission lines that are down," said Edward L. Hennessey Jr., president of Machias Savings. "The only power we have are these huge generators."

While banks fight to keep the lights on, they're finding customers are starved for cash-mostly to buy food-and counting on their banks to be open. Instead, they're finding many automated teller machines on the blink. And in the hardest-hit areas, banks are still closed.

"We have been trying to reach other banks in our area to offer help," said John Alan Phillips, president of $85 million-asset North Country Savings Bank, Ogdensburg, N.Y. "But so far, we can't even get through to them on the phone."

North Country Savings was able to open all three of its branches by Tuesday. But less than 20 miles southeast, power and phone service remain out, a week after the storm hit.

In Maine's capital, Augusta Federal Savings Bank managed to keep at least one of its two branches open throughout the storm, even though power was intermittent.

"We were cashing checks for people who weren't customers," said Arlene Prescott, Augusta Federal executive vice president. "Companies in town were calling us and asking us to honor their checks."

Androscoggin Savings Bank in Lewiston, Maine, survived the brunt of the ice storm and decided to open its Auburn branch from 11 a.m. to 12:30 p.m. on Jan. 10, but lost power around noon.

"We stayed open, cashing payroll checks and customer checks in the dark," said Anne F. Craigs, senior vice president of the $260 million-asset thrift.

With so many banks crippled, there was no way for some area residents to get money. Ms. Craigs said a woman who works at the bank took her children out for dinner on Sunday, but could not find a working ATM. She used a check to buy gift certificates to eat at a food court in the local mall.

When cash was not available, some towns improvised.

Stephen W. Ensign, president of Lake Sunapee Bank in Newport, N.H., said the grocery store in nearby New London, where there is a branch, offered supplies such as gas and food in exchange for IOUs.

Some banks are promising tolerance for overdrafts and bounced checks. They are also offering loan deals. But so far, customers are more interested in withdrawing what they have.

"No one is worrying about small home improvements when the power is going on and off," said Walter G. Wilmshurst, president of $50 million- asset Massena (N.Y.) Savings and Loan Association.

Mr. Phillips said North Country Savings is offering customers short-term loans of up to $1,000 at a reduced interest rate of 6%.

On Wednesday, President Clinton declared a state of emergency for parts of Vermont, New Hampshire, New York, and all of Maine, authorizing federal aid to repair damage to public property.

The Finance Authority of Maine, a state-sponsored small business assistance agency, has announced a program with banks to offer loans of up to $25,000 to small businesses. The loans are guaranteed by the agency up to 90%

And in New York, the state's banking department urged banks not to penalize customers who bounce checks or miss payments because of storm- related problems.

Fleet Financial Group's Maine subsidiary is distributing Red Cross supplies through its branches in the state. Brian Grip, spokesman for Fleet Bank of Maine, said trucks loaded with blankets and water began arriving on Thursday afternoon.

"Our network of branches are in communities that are being impacted, so it made sense for us to offer our assistance," Mr. Grip said.

Meanwhile, banks say they are doing what they can to keep employee morale up.

Mr. Hennessey of Machias Savings said about half of his employees didn't have power at home so the bank made its showers available. It has also set up flexible schedules so workers can go home to add fuel to wood stoves or take care of children and elderly relatives.

Maine Bank and Trust, Portland, is holding a lottery for its 50 employees who lost power. The one whose electricity is restored last wins the grand prize.

"Our executive committee suggested that the prize should be a generator," said Samuel A. Ladd 3d, executive vice president.

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