Maryland Community Newspapers Online
With the deepening of the nation's financial crisis, most Maryland banks appear to be in good financial shape, stronger than the national average in key categories, Maryland Bankers Association officials say.
But the same might not be true of some of their customers. A growing number of people are showing up at area unemployment offices, and nearly 1,000 turned out last weekend for a Gaithersburg housing fair that featured, for the first time, foreclosure advisers.
One of those at the fair, Alicia Cristina PanameŇo, 46, a single mother of four, is struggling to keep the condominium she bought last year. She had to sell the Gaithersburg home she bought four years earlier.
Two years ago, she refinanced the home for the third time, and the broker gave her a deal she couldn't believe — only 2 percent interest, cutting her mortgage payments from $1,650 a month to less than $1,100.
"I was jumping for joy," she said. "I thought to myself, ‘This is an angel that descended from heaven.'"
But on her first statement, she saw something she didn't understand about deferred interest. Every month, that figure kept rising. She was forced to sell the house last year and move her children, ages 3 to 12, into the condo.
Making her circumstances worse, her house-cleaning clients have let her go as they cut costs. Down now to only a few clients, she makes maybe $1,400 a month. Her condo mortgage is $2,500 a month.
She has already maxed out five credit cards, and last month took out another for $3,000. That covered September. She has no idea how she will pay her October bills.
"What am I going to do?" she said in Spanish, breaking into tears. "I pull my kids to me and tell them that I love them. I try to give them what joy I can, but I'm drowning in all of it, and I can't tell them. I can't let them know that I'm suffering inside."
Picture brighter for banks
Most banks in Maryland have seen profits decline this year, but they still have assets and cash. About 80 percent of Maryland banks and thrifts rate at least satisfactory in their last review in the 2008 second quarter by financial research company Bankrate, which rates institutions' financial strength and stability.
Among the categories in which Maryland banks are strong is net charge-offs — the loss banks take when borrowers default — to loans. The rate among Maryland institutions was 0.28 percent as of June, significantly below the national average of 1.16 percent, according to the bankers group.
"Maryland banks have strong capital and are well-positioned to meet customer needs in the midst of a very challenging economy," said Alison D. Tavik, director of communications, marketing and consumer education for the Maryland association. "Consumers understand the high degree of safety and security of banks."
The picture isn't as bright for some other major U.S. banks. In the latest upheaval, executives with Wachovia Corp. agreed Monday to have Citigroup of New York acquire its banking operations for about $2.2 billion in stock.
Wachovia, based in Charlotte, N.C., is the parent of Wachovia Bank, whose $7.5 billion in deposits make it the fourth-largest bank in Maryland. Citigroup is the 12th-largest bank in Maryland, with deposits of $1.3 billion in 16 offices.
The Federal Deposit Insurance Corp. engineered the deal, but officials emphasized that Wachovia, which has a troubled mortgage lending business, did not fail.
"These are the dark ages for a lot of banks," said Bethesda banking consultant Paul Joegriner, a former executive with Chevy Chase Bank and American Partners Bank. "Once the dust has settled, what we will see in the future is strategic acquisitions of banks with solid core deposits and an established franchise. I expect that Goldman Sachs and Morgan Stanley will go on an acquisition binge for core deposits now that they are commercial banks with FDIC coverage."
Unemployment offices busy
Seven years ago, Washington Armstrong III was doing just fine. He was employed as an engineering technician in New York City, earning more than $42,000 a year.
Then the events of Sept. 11, 2001, occurred, and Armstrong was laid off. He hasn't worked steadily in his field since then.
Fast forward to September 2008, and Armstrong is living in Takoma Park, working as a security guard and earning $11 an hour.
"I'll be 62 in November, and I'm at the age where [employers] look at that and throw you to the side," said Armstrong from the Montgomery Works employment office in Wheaton. "I have applied for all kinds of jobs and am just not getting any return calls. All I'm trying to do is get my foot back in the door."
For Gaithersburg resident Lisa Gannon, who pulled money out of her retirement account after quitting her job in January due to health problems, the fruitless search for a new job has lasted four months.
"I feel bad for people who want to retire," she said. "I wouldn't blame people for wanting to pull [all of their savings] out of retirement plans."
While the Washington region has the highest employment level in the country, even that area's job growth has slowed. The Bethesda, Gaithersburg, Frederick area has added 1,000 fewer jobs this year than last year, according to reports from area financial officers.
From January through September this year, unemployment claims statewide were up 22.8 percent from the same period last year, said Tom Wendel, assistant secretary for the Division of Unemployment Insurance.
For the past 10 weeks, he said, unemployment claims have increased 38.4 percent. Unemployment offices are paying out roughly $4 million a week more than last year at this time, he said. The payouts range from $25 to $380 a week, depending on what the worker earned.
About 24 percent of claims are from people who used to work in white-collar jobs. That has remained consistent from last year, Wendel said.
Job prospects have become scarcer as the unemployment pool fills with professional workers laid off from jobs in declining industries, such as banking, real estate and some areas of law.
Rosa Orellana, 44, has been job hunting for two months. The Gaithersburg resident lost her administrative assistant job in Kensington after being laid off from the bank where she worked. To support herself and her 17-year-old daughter, Orellana has lived on unemployment insurance benefits.
Early Monday she was in the Montgomery Works office applying for more positions and preparing for an interview later in the day. Montgomery Works is a collaboration of state, county and nonprofit assistance that is offered free of charge to unemployed workers.
"I was making more than $15 an hour plus bonuses," Orellana said. "Now, many of the jobs that are out there want you to do more and only make $5.50 an hour. Who can live on that?"
Since last year, Alfredo Quiroga, resource specialist for a Montgomery Works office in Wheaton, has noticed an increase in the number of clients seeking services. He also has seen a decrease in the number of available jobs, specifically blue-collar jobs in the construction industry.
Quiroga said that typically 30 to 40 people would attend past employer job fairs. "The last time we had one, 250 people came," he said.
Staff writers Janel Davis, Sebastian Montes, Kevin James Shay, Steve Monroe, Jen Beasley, Joe Beck, Robert Dongu, Marcus Moore and Bradford Pearson contributed to this report.
