The Federal Reserve's decision to raise its benchmark interest rate on Dec. 14 - the second such increase in a year and only the second, too, since December 2008 - drew mixed reactions nationwide from banking and economic experts. Many saw it as an encouraging sign of an ongoing, if slow, national economic recovery, while others viewed it as possibly lessening both banks' profitability and consumers' interest in and ability to afford loans.

But Connecticut area banks, which collectively were on pace to post strong results for 2016, maintain that the Dec. 14 rate increase - from a range of 0.25 to 0.5 percent to a range of 0.5 to 0.75 percent - is small enough to not have an adverse effect. Further, they said that expected additional increases this year - likely two or three - should not noticeably dampen business.

Fairfield County bankers said they are most concerned about the small business segment.

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Rick Muskus, Patriot Bank Chief Lending Officer

At Patriot Bank in Stamford, Richard A. Muskus, executive vice president and chief lending officer, noted that if debt services rise incrementally for small businesses, 'They will have to make changes to their business model and business planning. Additional rate increases could limit their cash flow to the point where they may not be able to hire that additional person or be in a position to borrow money for equipment or another store.'

'Should a small business owner be expanding or contracting in this environment? Only the individual business owner knows for sure,' Muskus said. Taking on additional employees or equipment without the ability to turn it into revenue right away can be especially concerning in light of interest rate hikes, he said.

Muskus said that Patriot is 'executing well' on the 21 percent of its overall business that comes via small business loans; he'd noted earlier that historically just 11 percent of the bank's business comes from that sector. He added that one of the bank's 'target goals' is to become an approved U.S. Small Business Administration lender in the first quarter of this year.

Read more at the Fairfield County Business Journal

Patriot National Bancorp Inc. published this content on 05 January 2017 and is solely responsible for the information contained herein.
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