Port Jefferson banks experience recession aftershock firsthand

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Port Jefferson has always been considered one of the more financially successful towns on Long Island but one local bank has witnessed, first hand, the financial distress faced by many local small business owners.

Ever since the economic distress, most recently faced by America in September of 2008, the term "Main street" has come to refer to the small town economies across the U.S. Many of these towns have been hard hit by the recession and are still struggling to recover.

Port Jefferson, NY, has always been a "Main Street" town, located on the north shore of Long Island. It boasts small local businesses, in a quaint coastal setting, where one can feel the cool sea breeze as they stroll the streets taking many back to their childhood. It's also quite famous for being a popular tourist attraction, having a large local fishing industry, and maintaining a high quality education system. In recent years, however, many people living in the town have been strongly affected by the recession’s after effects, especially small business owners. The local Long Island banks have seen this aftershock first hand.  One of these banks, Empire National Bank, which is locally based, has been on Long Island since 2007. This commercial bank handles the monetary needs of many of Port Jefferson's small businesses.

The types of traffic at a local bank can be used as a measure of the financial well being of the town it’s located in. Anything from what kind of loans people are taking out, to how many people are collecting unemployment, can reveal the lingering effects of recession on main street. Jeanne Dahl, an Assistant Manager at Empire National Bank said, “People are really hurting, especially small businesses.  It's unfortunate but even the banks are having a hard time.  Most banks aren't even lending these days”

According to Dahl many parts of Port Jefferson are being struck by the high unemployment rates, which have been seen all across America. Dahl said “People that you thought had great jobs are now unemployed.  It seems businesses let employees go that are making the larger salaries as a way to save money.” According to the 2010 U.S census, Port Jefferson’s median Per Capita income is $69,000, which is almost $30,000 more than the United States average. However, since 2008, Suffolk County, where Port Jefferson is located, has had an increasing unemployment rate, rising almost 3 percent higher to a 7.4 percent level in only two years according to The U.S. Bureau of Labor Statistics. Edy Meyer, the manager of the Port Jefferson Empire National bank branch said, "Small business are letting people go, either cutting their hours or just laying them off, to save money."

The small businesses that are forced to lay people off due to the Economic situation are suffering in their own ways as well. Many thought the worst was over but are now forced to find different ways to pay off their debts since business is slowing down rapidly in the small coastal town. According to Dahl Empire Bank receives about 2-3 requests a week from commercial clients looking for a small business loan, a line of credit. This loan is then given to a business, which they use as a reserve, mainly when their cash flow is slow.

Many businesses are having a hard time paying their monthly bills because business is down such as during the recession. What many are now doing is taking an advance on their loan and then transfer it into their checking account and pay the bills.

What this transfer does is sets up the bank itself to take on the debts owed by the client who then pays off the bills at a monthly rate directly to the bank. The major problem with this, however, is that it puts a large strain on the bank to keep up with the funds people owe especially if they took the advance because they couldn’t pay their bills originally and thus may not be completely reliable in paying the bank back. This has forced banks to be pickier about who they lend money to. Chris Hilton, Empire National Bank’s, VP of Loans said, “Despite the uncertainty and doubt that lingers over the economy like a dense fog, banks ARE making loans. What is different is that banks are making loans only to creditworthy borrowers. New loans are being made by commercial banks, especially community banks that have deep roots in the communities they serve”

A large number of these local community banks are facing several problems of their own in Port Jefferson. Dahl said, “There are a lot of banks that have over extended themselves.  They start to grow too fast, building too many branches, like Bank of Smithtown.  In one year they built 5 branches then they ran into financial trouble and now Peoples United, a bank out of New England, came in a took them over.  Soon there won't be any more of the old familiar banks around any longer.” When a bank fails the people who hold money with it tend to lose better interest rates, which they may have built up over some years. Almost always clients of a failed bank tend to face some sort of financial problem with a new bank according to Meyer.

Using the bank as a means of escape from debts is a growing problem in the Port Jefferson area. With unemployment skyrocketing and banks across Long Island failing more and more people are losing money and their well being. A lot of people in the banking industry believe that irresponsible clients cause their own problems and that the bank should not be looked at as a long term solution to paying bills. Doug Manditch, the CEO of Empire National Bank said, “I do believe in capitalism; there has to be failure. And if you've failed, you should fail." The future economic well being of Port Jefferson is still unknown but it seems to be recovering at a slow and steady rate.