N.H. business will weather the storm.

Quietly and steadily, New Hampshire business is picking up momentum. As a local banker, I enjoy watching entrepreneurs and small-business owners use their talents to find opportunities in spite of the down economy. And when we look to invest in the community, it is these innovators who catch our eye.

According an article in the New Hampshire Banking Department newsletter by Banking Commissioner Peter C. Hildreth, "Our state chartered banks and credit unions have money to lend. They remain safe and sound due, in part, to good banking practices."

The 24 Federal Deposit Insurance Corp.-chartered banks in New Hampshire report total deposits in June 2009 of $9.2 billion, flat from the prior year. More importantly, the percentage of noncurrent loans has risen by only 0.06 percent in the state, compared to an increase of 1.25 percent nationally. These statistics suggest that New Hampshire remains in a relatively strong economic position when compared to the nation.

Even though the effects of the recession may have been milder here than in other parts of America, local banks, businesses and consumers are still affected by the national economic slump.

For example, the worst consequences of the automobile manufacturers' reorganization are occurring in Detroit, but those problems affect New Hampshire's auto industry too. In the negotiations between Chrysler and Fiat, Chrysler cut ties with six New Hampshire dealerships, leaving them with excess inventory and hurting their bottom line. General Motors also dosed at least two New Hampshire dealerships.

New Hampshire lawmakers and businesses are responding well to these new challenges. We were the first state to enact laws to help auto dealers survive the downturn, making it easier for them to convert their business models and return unsold inventory to the manufacturers.

"Whether voluntarily closing or not, these dealerships will find it easier to reduce floor inventory, manage long-term leases, and recover the costs of stocked parts. They will now more easily convert their dealerships to other auto-related businesses, potentially saving many New Hampshire jobs in the process," said Peter McNamara, head of the New Hampshire Automobile Dealers Association.

Federal programs, like Cash for Clunkers, have also increased business for local auto dealers.

Other small businesses are also using state and federal initiatives to find new ways to stay profitable. Six New Hampshire banks have opted to take funds from TARP's Capital Purchase Program, totaling over $40 million. Because this money comes from a fund designed for stable banks in need of more liquidity for lending, not for banks in danger of failure, this injection of capital indicates that banks are looking to lend more and seeing investment opportunities ahead.

A concerning time

The FDIC recently established an Advisory Committee on Community Banking to study how policy issues affect both local banks and the communities they serve, as well as to provide insight and advice on future policy. "Community banks are the lifeblood of our nation's financial system, supplying much-needed credit to countless individuals, small businesses, nonprofit organizations and other entities in large and small towns around the country," said FDIC Chairman Sheila C. Blair. The creation of this Advisory Committee acknowledges not only community banks' importance to their communities, but also looks forward to the role they can play in getting the economy back on track.

Last year the New Hampshire Legislature passed House Bill 1286, which requires mortgage loan originators be licensed as of April 1, 2009. New Hampshire has joined with other states and is utilizing the National Mortgage Licensing System to meet the new requirements. Currently there are over 2,800 licensed loan originators in the state, according to Richard Arcand of the state Banking Department. Community banks' role in lending and investing will become even more important under the recently passed laws requiring mortgage loan originators to register with both state and federal authorities, a move that will help protect consumers from borrowing beyond their means.

It is certainly a concerning economic time for everyone, but I am confident that New Hampshire business will survive and succeed. Business owners are finding or creating new ways to stay profitable and solvent, and new regulations from the state and federal government will help ease their way.

Despite the challenges and setbacks, we are making good progress. By investing in the future and our communities, local banks are helping small businesses weather the storm, and look forward to continue doing business with New Hampshire.

Jim Dunphy, chief executive and president of Manchester-based Hampshire First Bank, can be reached at 603-263-1444 or [e-mail].