Community Trust, Inc. : final project report

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Southern New Hampshire University
As stated in the thesis project, "My project involved working with a newly formed group, Community Trust, Inc. The group was initiated in response to the rapid collapse of small, local banks in the Northampton area. Perhaps the most dramatic example of this early 90's activity came when a local bank, Heritage/Northampton Institute for Savings, was acquired by Fleet Bank. During the four month period between the announcement of the acquisition and the actual take over, thousands of depositors pulled a total of 36,000 accounts from the soon-to-be Fleet Bank. A total of $320 million in withdrawals (representing a third of Heritage's nearly $1 billion in deposits) fled the bank. The overwhelming majority of these deposits translated into dramatic increases in deposits for the remaining smaller, local banks. In addition to Heritage/NIS, the region also lost several other long-standing local banks during the early 90's (Nonotuck Savings Bank and the First National Bank of Northampton). A range of sectors in the community were concerned by the shrinking number of possible lenders, and in particular, by the dwindling number of locally-based financial institutions. A group of individuals from Hampshire and Franklin counties sponsored a series of forums during 1993 entitled "Capital Solutions-Capital Ideas." From these public forums, a core group of individuals (representing banking, venture capital, small business, and non-profit sectors) began planning the most effective way to meet credit gaps and obstacles that small businesses face in obtaining financing. The earliest and perhaps most compelling goal that the group expressed (prior to incorporation) was to start a community bank that would take the place of some of the failed local banks and be uniquely responsive to the needs of the community (especially the small business community). Many of the early players, who were big names and titles from the region, I believe were attracted by the idea of founding a bank. There was a strong appeal for many early participants in the idea of owning and controlling a bank: banks traditionally being seats of local influence and resources. The plan to start a new community bank was abandoned early on because of the very high capitalization threshold required for a bank charter. In its place, the more manageable idea of a community loan fund became the group's purpose, but in that transition many early players were lost because (my speculation) the loan fund just did not have the same appeal as a bank. Those people interested in pursuing the creation of a community loan fund incorporated as the non-profit Community Trust, Inc. (CTI) in the fall of 1993, and held their first annual meeting in November 1993. At this time, and no doubt also in response to a period of tight credit, the group began to talk about unmet financing needs. During the short life-span of the group to date, there has been an evolution in the perception of exactly what the community's unmet credit needs are. The mission, purpose, and direction of CTI likewise has changed. During the course of this report, I will, as much as possible, describe the group's process in a chronological way. This discussion should help to explicate changes in the group's status from the time of my project contract to the present." (Library derived description)