Lebanon
Mutually owned Mascoma has been regulated by the federal Office of the Comptroller of the Currency, which inherited oversight of federally chartered savings banks after the Office of Thrift Supervision was dissolved as part of the Dodd-Frank financial law adopted in the wake the financial crisis nearly 10 years ago.
Now the bank is seeking to swing its charter to the state to be regulated by the New Hampshire Banking Department, which also oversees Claremont Savings Bank and Sugar River Bank. Ledyard National Bank operates under a federal charter, while Wells River Savings Bank is chartered in Vermont. Lake Sunapee Bank earlier this year was sold to Maine-based Bar Harbor Bankshares, which is chartered in Maine.
“We think there is advantage to being regulated by a regulator that is more focused locally than nationally,” said Barry McCabe, executive vice president and chief operating officer of Mascoma Bank.
“The Comptroller of the Currency never really had a lot of experience with mutual banks when they became our regulator (in 2011),” McCabe said, “and right now the Comptroller is operating with two sets of rules, one for national banks and one for savings banks.”
McCabe said it’s confusing — for both the bank and the regulator — about which rules apply when it comes to regulating a mutual bank.
The switch back to a state charter is actually a return to Mascoma’s roots, McCabe said. It wasn’t until 1996 that the then 97-year old bank sought a federal charter because it was acquiring the eight branches of Green Mountain Bank in Vermont. At the time, McCabe said, interstate banking required a federal charter, although those rules were later repealed.
McCabe said depositors will not notice the difference, and added that a state charter is no less stringent than a federal charter.
And federal supervision is not going away entirely, he said, because as a member of the Federal Deposition Insurance Corp., which insures depositor accounts, Mascoma will still be audited by the Boston branch of the Federal Reserve System.
“The Federal Reserve is going to make sure we are being run safely and soundly,” McCabe said. “It’s not like it’s going to be any easier with the state.”
Many smaller independent banks have been complaining about the paperwork imposed on them under the financial rules adopted in 2011. Community banks argue that they never engaged in the high-risk financial maneuvers and shaky lending practices embraced by large banks in the run-up to the 2007-09 financial crisis and subsequent recession.
A “mutual” bank is a bank that is owned by its depositors, as opposed to shareholders. Mascoma typically plows profits back into the community through the support of area nonprofits. The charter switch is also expected to result in a cost savings, which would allow Mascoma to increase funding to community organizations, McCabe said.
McCabe said the state has already approved the charter change and the bank is now waiting for the Federal Reserve in Boston to approve the move, which he anticipates will be completed by the end of the month.
When that happens, there will be only one savings bank in New Hampshire that will continue to hold a federal charter: Federal Savings in Dover, N.H., according to the Office of the Comptroller of the Currency.
Between Oct. 1, 2016, and June 30, 2017, a total of 38 financial institutions have sought to convert their bank charter from federal to the state level, according to a spokesman for the Office of the Comptroller.
John Lippman can be reached at jlippman@vnews.com.
