Uncertainty is in the air for many Americans this summer as the country grapples with the continued impact of the COVID-19 pandemic and the highest inflation in more than 40 years.
It is expected the US Federal Reserve will raise the target range for the federal funds rate by 50 or 75 basis points by the end of this month, bringing the total increase for this year to 2.00-2.25 percentage points. This is on the heels of the largest rate hike since 1994 in May 2022 and likely not the last hike before the end of the calendar year.
“The elephant in the room is that economic headwinds are coming our way,” said Martin K. Birmingham, president and CEO of Five Star Bank. “We haven’t dealt with an inflationary period like this in decades and it comes with wide-ranging impact across everyone’s working model.”
The good news is Birmingham and fellow leaders of local banks in the Rochester region are prepared to help private and commercial customers navigate the choppy economic climate ahead. The Rochester Business Journal sat down with some of these leaders to find out what they are seeing in terms of the biggest challenges customers are facing and how their financial institutions are helping meet them.
Tompkins: Don’t hesitate to call
An acorn and oak leaf – symbolizing strength and stability – are part of the logo of Tompkins Community Bank, a regional bank headquartered in Ithaca that was established in 1836 as Tompkins Trust Company. Bobby Uy and Brett Owen, both vice president and commercial lending relationship managers, want customers to know that, despite the economic conditions ahead, those values endure.
“With the interest rate uncertainties and sideline events like disruptions to the supply chain and an increase in fraud nationwide, we are seeing the fear of an impending recession,” said Uy, who also noted banks are willing to lend and eager to discuss options on everything from borrowing to investment needs with individual and commercial clients. “Don’t hesitate to call because that’s what we’re here for — to provide strategies.”
Owen noted that local banks were critical in helping customers understand, utilize and leverage new technology during the early days of the pandemic and, in a similar way, can help them navigate this new challenge of inflationary pressures and economic uncertainty.
“As a local bank we all live in the communities where we work,” Owen said. “We want to see our local economy do well. Communication is so important to us – being in front of our clients, being available to them and helping them through challenges.”
ESL: Stay in touch with us
ESL Federal Credit Union’s Voice of the Customer system culls information from a variety of sources, including emails and vignettes of what employees are hearing from members inside the branches.
“We listen to our customers all the time,” said Calli Makridis-Beck, the credit union’s customer experience and purpose manager, which includes oversight of ESL’s financial wellness program. What they’re hearing as the biggest challenges right now: the impact of a rising rate environment, record-high inflation and downward trends in the market. “We encourage our customers to reach out at any time so we can work with them on an individual basis.”
ESL, which is headquartered in Rochester, was founded in 1920 and provides personal banking, business banking, mortgage services and wealth management services through its locally based 23-branch network. The company offers many digital tools for members to stay access, monitor, and stay on top of their finances, which is an important part of staying confident in a turbulent economy, Makridis-Beck said.
The credit union also offers an online financial education center that is available 24/7 and has modules on a wide array of timely topics like debt management, mindful living, managing volatile income, building emergency savings and budgeting for families.
“The most important thing is for customers to stay in touch with us, especially during these times,’ Makridis-Beck said. “Financial institutions across the board are looking to support their customers. Reach out at any time to let us know what your day-to-day needs are or if you’re in a bit of a pinch.”
Five Star: Leading with our human capital
“Uncertainty that comes from a cloudy economic environment,” is what Birmingham is seeing as top of mind from customers of Five Star Bank. The community bank offers a wide range of consumer and commercial banking and lending services through a network of more than 45 locations throughout Western and Central New York.
He notes that liquidity – a business’s ability to raise cash when it needs it – is very important in a volatile economic environment like the current one, as is an understanding of how higher interest rates impact a multitude of areas, including the ability to access credit.
These are all topics local bankers are well-versed in and eager to educate their customers on via one-to-one meetings and phone calls.
“In times like this, the importance of local banking relationships gets re-enforced,” Birmingham said. “Communication is a lot easier to do with local players on an in-person basis as opposed to, say, an online-only bank.”
Shelly J. Doran, director of investor and external relations for Five Star Bank, noted that the company’s lenders are reaching out more than ever to talk to customers about topics like cash flow, budgeting, rising interest rates and how a softening economy may impact their revenue.
“We are doing everything we can do to be responsible operators of our company so that we are fully prepared and leading with our human capital,” Birmingham said. “From our perspective, these economic cycles do come and go and we are confident we will be able to help companies continue to grow and thrive despite the challenges.”
Caurie Putnam is a Rochester-area freelance writer.i