Thrifts report recovery misses both coasts, except for Florida.

WASHINGTON -- The recession is long over, but not everyone in the thrift industry is dealing with a booming economy.

At the Savings and Community Bankers Association's annual convention in Orlando recently, executives shared their views on local economic conditions with American Banker.

Their comments provide an anecdotal look at the nation's economy through the eyes of the thrift industry -- not unlike the banking industry's "Beige Book," which the Fed is due to release on Wednesday

In Michigan, for example, life couldn't be better, said Thomas R. Ricketts, chairman and president of the $12 billion-asset Standard Federal Bank in the Detroit suburb of Troy.

"In Detroit, our economy is doing extremely well," he said. "The American car has come back, which has helped our community."

Although Detroit isn't just a car city, his community does well when carmakers earn profits.

"I haven't seen it this good in many, many years," said Mr. Ricketts, who runs the largest thrift east of the rocky mountains. But things aren't so cheery in New England.

"The Massachusetts economy is continuing its slow recovery," said David E Holland, chairman, president and chief executive officer of the $522 million-asset Boston Federal Savings Bank in Burlington, Mass.

While residential lending is picking up, commercial and construction lending is slow, he said. Perhaps the most economic activity they are seeing is in the bank merger field. "The consolidation continues at a rapid pace in New England," Mr. Holland said. That should continue as the big banks fight among themselves to gobble up smaller ones, he added.

Cornelius D. Mahoney, president and CEO of $236 million-asset Woronoco Savings Bank in Westfield, Mass., agreed with the grim prognosis.

"We still lag behind the general economy," Mr. Mahoney said. "The mortgage business is slow now.

"There is a predominance of manufacturing jobs which have moved South with the eclipse of the economy in New England," he said.

"A great deal of consolidation continues in Massachusetts," he said, and thrifts there are seeing perhaps their strongest competition from area credit unions.

In the West, the recession still dogs the market.

"I don't see strong evidence of it getting better yet," said James F. Montgomery, chairman and CEO of the $36 billion asset Great Western Bank in Chatsworth, Calif.

But even though the Southern California market is still, "bouncing along the bottom," he said, "I still wouldn't trade that marketplace for any other longterm."

Economic signals are far more positive in the Southeast.

William L. Young, president and CEO of $13 million-asset Metro Savings Bank, said his city, Orlando, is, "part of a very strong economy."

"There is a lot of evidence of recovery in the economy in Orlando," Mr. Young said. "We're seeing a lot of construction taking place -- a lot of applications."

In the inner city, where his thrift is headquartered, "We've seen an increase in stability" for communities and job growth, he said. "The demand certainly is here for an institution of our size."

Across the state from Mr. Young, most lending areas except the mortgage market are strong.

Rudy E. Schupp, chairman and CEO of $208 million-asset Republic Security Bank, West Palm Beach, Fla. said he still sees lots of construction lending in Florida.

"The small business market is strong for two reasons," Mr. Schupp said. It has had a boost from a stronger economy, and smaller thrifts have seen more demand as the banking business consolidates, he said.

He sees community banks tapped often for small business loans for companies with less than $10 million in annual sales.

But he acknowledges that, "The residential mortgage loan market is clearly soft." In New Jersey, the economy has been hit hard as companies downsize.

Arlyn D. Rus, chairman, president and CEO of the $335 million-asset Raritan Savings Bank in Raritan, said, "I'd like to think we are out of the recession, but we are riding along the bottom."

His thrift is in central New Jersey, the home of a number of large pharmaceutical companies. "We have been impacted greatly by their downsizing," he said.

"I don't see these corporations rehiring at the levels they are letting go," Mr. Rus said. "For the short run, that has a negative impact on us."

One bright spot is small business loans. "We are certainly seeing an upturn in this area," Mr. Rus said.

A Pennsylvania thrift has found itself somewhat insulated from the economic changes swirling around it. E. Lee Beard, president and CEO of $280 million-asset First Federal Savings in Hazleton, said her county had taken pains to attract a variety of industries to the area to replace coal mining jobs as that industry shrank.

"Over the past year, the economy hasn't significantly changed," said Ms. Beard. "We don't have significant highs in our economy, but we don't have significant lows."

Refinancing has of course slowed, but First Federal has benefited from the actions of other area banks. "The small business owner is being turned away from the big banks."

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