By Cassidy Norton
Though it’s unusual for community banks to offer car loans, those on the books at 1st National Bank of Scotia, headquartered in Scotia, are the bank’s “bread and butter,” according to president and CEO John Burhmaster.
He says car loans have been a 1st Scotia basic since the bank’s founding, with third- and fourth-generation customers now holding car loans through the bank. Burhmaster’s great-grandfather and a group of local businessmen started 1st Scotia in 1923 “when they had trouble getting loans from the big bank across the river. And today, after many mergers and acquisitions, people are still having trouble getting loans from that bank.”
The bank has more unusual offerings, including home loans and credit cards. Along with the more traditional commercial loans, the bank’s lines of credit – and its customers – have weathered the recent recession better than many others.
The Capital Region and Saratoga County “don’t see the highs that some of the rest of the country does, so we don’t see the real lows, either,” Burhmaster said. While 1st Scotia does list foreclosed and repossessed properties on its corporate website, as of March, there were no foreclosures to be found.
Foreclosures in the area are “way below the national and state averages,” Burhmaster said. “We’ve been steady and stable.”
There have been job losses, but as President Barack Obama pointed out on a recent visit, the area has a number of four-year colleges and several highly-rated training programs for high-tech jobs, which draws employers to the area. General Electric moved its headquarters to Connecticut after its founding in Schenectady, but left behind its research and development department, where 1st Scotia has a branch. A new chip fabrication plant is moving into nearby Malta, and a lot of smaller businesses are growing up around it, providing both jobs and growth for 1st Scotia’s commercial and construction portfolios.
And of course, 1st Scotia’s home is the Capital Region of New York State, which means “the government is always spending [in the area], whether the taxpayers like it or not,” Burhmaster said.
“We’re still losing jobs, and we don’t know where the state [budget] situation is going,” he said. “There will probably be more job losses.”
Even so, there have been very low delinquency rates in commercial loans, due in no small part to 1st Scotia’s careful and exhaustive vetting process – and its commitment to customer service. “If customers fall behind, we call and talk to them, and we will continue to do that. Our relationships with our customers is where our bank profits, and to do that, we have to help our customers get through tough times,” Burhmaster said.
1st Scotia has been offering credit cards since the 1960s, first through Chase Bank and then through a local processor at another bank in the 1980s. Credit cards are now offered through a partnership with the Independent Community Bankers of America (ICBA).
“It’s a smaller model, which became very important last year” when small businesses were discovering that their lines of credit had been drastically reduced or eliminated entirely, he said. “Small businesses need credit cards to survive, and we’ve seen a great jump in that. It’s helped round out our relationships with our commercial customers, that they can come in and sit down and talk to a person about their credit card.”
Burhmaster anticipates that “there will be a lot of rule changes” in the credit card industry this year, but 1st Scotia is ready. “We’re not going to gouge our customers. We are, and will remain, steady.”
Cassidy Norton is the associate editor of custom publications for The Warren Group, publisher of Banking New York.