Print
E-mail
Comment
Area banks immune to bailout necessities due to financial responsibility
 |
| FLNB President Paul Henry (right) indicates figures on a ledger to Dayton Financial Center Vice-President Mark Herndon and things look very good for this as well as other local banks serving the local communities. |
By MIKE GEORGE
With mainstream media pumping in a steady diet of doom and gloom over the nations’ economical outlook based on what has been perceived by many as a necessary bailout of the country’s financial centers, area citizens might be concerned about local banks and how they might be affected.
With that in mind, bank presidents of three of the area’s main banks were contacted to address that question. As it turns out, there is absolutely nothing to worry about with area banks simply because they choose to operate under the auspices of continuing to have sound lending and investment practices.
“The bailout they’re always talking about is the larger, national and world banks like Citigroup,
Bank of America and these other corporations that frankly made bad investments and bad loans,” said First Liberty National Bank President Paul Henry. “Your community banks, which they define community banks as anything less than a billion dollars; Prosperity, Hull-State, Legend and First Liberty National Bank that take care of our communities, well we didn’t participate in those. We have always had sound lending practices and sound investment practices. Now nothing is 100 percent proven, so we have reserves set up for loans for when, unfortunately, somebody gets into trouble and can’t pay their car note, house note, or etc.”
The bank president then stated what these community banks have not done.
“None of these (local banks) have participated in these 100 percent sub-prime mortgages where people are losing their homes and banks are taking major losses,” stated Henry. “The other good side about it is all about Texas. Texas’ economy has been stronger than that of other states and frankly we have not seen the price of houses drop 25, and in some cases, 50 percent. We’ve seen a softening of the market simply because people are not buying right now. Whenever people don’t buy, you’ll see prices drift down until they get to a level where people get interested in buying again and that’s what’s going on now.”
The banker then described what conditions give this area its economical advantages and what indicators one might look for to determine financial decisions.
“The economy of this area is primarily based on oil and gas, manufacturing or refineries and the medical center,” stated Henry. “Those have been relatively strong throughout these times and we’ll probably see a little bit of a turndown next year with the price of oil now in the $50 range, but remember when it was $145, well that was not going to stay up that high and anytime you see a change like that in prices, it’s kind of like a rubber band – it goes up so high, then it’s going to come down and fluctuate until it reaches the new level and evens out. So, say it reaches $75 a barrel, we’ll see people continuing to prosper in this area.”
Misconception and misunderstanding by the local general public have caused a plethora of phone calls to local banks and financial institutions asking if there might be a problem getting loans they’ve always gotten in the past.
“People that have borrowed money from First Liberty National Bank over the years, will still be able to borrow money,” said Dayton Financial Vice-President Mark Herndon.
“You keep paying your bills like you’ve always done, and we’ll be glad to take care of you,” added Henry.
Terri Beene at Prosperity Bank also has to deal with customers that become nervous or anxious after hearing the doom and gloom of the national financial forecasts, relate that to the local bank.
“We’ve always been conservative with our lending,” said Beene. “At the same time, our business has not slowed down one bit. I’ve done more loans in the first seven months of this year than I did the entire year before. We haven’t noticed a decline in people requesting to borrow, but people are more concerned about their money being insured than anything else. It helped when FDIC increased their amount of insurance protection from $100,000 to $250,000, because a lot of people who didn’t have $100,000 when the first limit was set, do have that much and more now, so they were getting scared because they were having to move money around to keep it in multiple locations as opposed to when everybody kept it in one place.”
The banker went on to explain that with joint accounts in two-party names that the coverage doubles to $500,000 and that non-interest bearing business accounts have unlimited protection so they’re insured up to whatever amount is in the account. Interest bearing accounts are insured up to the $250,000 per individual. She also explained how used to be, CD’s could only show beneficiaries as immediate family members to pay on death to, but new regulations allow primaries to leave proceeds to anyone and in each case, the accounts are insured up to $250,000.
Prosperity just purchased Franklin Bank, a group of Texas banks (40 locations) based in Elgin,Texas, the FDIC closed down on Nov. 7. Prosperity paid an extra premium so that all their depositors wouldn’t lose anything, even to the point if they had over $250,000 they wouldn’t lose that additional money.
“What the public needs to know is to be careful out there,” said Beene. “I mean this is the first Texas bank to be closed in I don’t remember when, but before they were closed down, Franklin Bank was offering in the newspaper that week paying for a 13-month CD, five percent. If a bank is paying five percent while all the other banks are paying 2.65 or 3 percent on the same term CD, doesn’t that make you wonder why and how they could be doing that? Well, it tells you they’re in a crunch and need the cash really quick and to me, that’s a red flag. People just need to stop in think in those situations, how can a bank pay so much higher than what other banks are paying?”
The banker agreed with FLNB as to how the local community banks have a commonality of business practices.
“We haven’t been in the sub-prime lending practices,” Beene state. “We haven’t been in the out-of-state mortgage business and are all still doing old fashion banking the old fashion way with sound lending and investment practices. As a matter of fact, Franklin Bank was dealing with sub-prime rates and following some of the practices of those national banks which led to their being closed down. All other Texas banks have done well because they did not participate in that.”
Legend Bank’s Arlene Langham also commented as to her bank’s prowess in the community.
“In our areas, we have not really seen the effects on banks that have been published in the media,” said Langham. “Totally, we have sound business practices, and we have always had sound business practices in place. We’re not investment bankers, nor is anybody in our area. Our policies have always been sound, so therefore our business is business as usual. We’re not changing anything in our lending practices as yet, simply because we’ve not been affected like that. So, our goal is to proceed as we have in the past.”
Langham went on to say that, surprisingly, their secondary market loans have already been as many as last year, but even they have seen a slowing, or calming down over the past month.
“Over the past month, it’s been a little slower and we’ve seen credit standards from the underwriters get a bit tougher which could affect mortgage loans going forward,” stated Langham. “I really think any slowdown is going to be contributed to consumers hearing all the negative press are pulling back and are concerned, and rightfully so, but it has nothing to do, realistically with these local community banks, but rather what’s being said or read in the media. It has scared everybody.”
Evidently, at least according to these three banks, those fears are unfounded when it comes to dealing with community banks that continue to make sound financial loan and investment decisions like they’ve always done. For them, for these, it’s business and usual and business is good.
With that in mind, bank presidents of three of the area’s main banks were contacted to address that question. As it turns out, there is absolutely nothing to worry about with area banks simply because they choose to operate under the auspices of continuing to have sound lending and investment practices.
“The bailout they’re always talking about is the larger, national and world banks like Citigroup,
Bank of America and these other corporations that frankly made bad investments and bad loans,” said First Liberty National Bank President Paul Henry. “Your community banks, which they define community banks as anything less than a billion dollars; Prosperity, Hull-State, Legend and First Liberty National Bank that take care of our communities, well we didn’t participate in those. We have always had sound lending practices and sound investment practices. Now nothing is 100 percent proven, so we have reserves set up for loans for when, unfortunately, somebody gets into trouble and can’t pay their car note, house note, or etc.”
The bank president then stated what these community banks have not done.
“None of these (local banks) have participated in these 100 percent sub-prime mortgages where people are losing their homes and banks are taking major losses,” stated Henry. “The other good side about it is all about Texas. Texas’ economy has been stronger than that of other states and frankly we have not seen the price of houses drop 25, and in some cases, 50 percent. We’ve seen a softening of the market simply because people are not buying right now. Whenever people don’t buy, you’ll see prices drift down until they get to a level where people get interested in buying again and that’s what’s going on now.”
The banker then described what conditions give this area its economical advantages and what indicators one might look for to determine financial decisions.
“The economy of this area is primarily based on oil and gas, manufacturing or refineries and the medical center,” stated Henry. “Those have been relatively strong throughout these times and we’ll probably see a little bit of a turndown next year with the price of oil now in the $50 range, but remember when it was $145, well that was not going to stay up that high and anytime you see a change like that in prices, it’s kind of like a rubber band – it goes up so high, then it’s going to come down and fluctuate until it reaches the new level and evens out. So, say it reaches $75 a barrel, we’ll see people continuing to prosper in this area.”
Misconception and misunderstanding by the local general public have caused a plethora of phone calls to local banks and financial institutions asking if there might be a problem getting loans they’ve always gotten in the past.
“People that have borrowed money from First Liberty National Bank over the years, will still be able to borrow money,” said Dayton Financial Vice-President Mark Herndon.
“You keep paying your bills like you’ve always done, and we’ll be glad to take care of you,” added Henry.
Terri Beene at Prosperity Bank also has to deal with customers that become nervous or anxious after hearing the doom and gloom of the national financial forecasts, relate that to the local bank.
“We’ve always been conservative with our lending,” said Beene. “At the same time, our business has not slowed down one bit. I’ve done more loans in the first seven months of this year than I did the entire year before. We haven’t noticed a decline in people requesting to borrow, but people are more concerned about their money being insured than anything else. It helped when FDIC increased their amount of insurance protection from $100,000 to $250,000, because a lot of people who didn’t have $100,000 when the first limit was set, do have that much and more now, so they were getting scared because they were having to move money around to keep it in multiple locations as opposed to when everybody kept it in one place.”
The banker went on to explain that with joint accounts in two-party names that the coverage doubles to $500,000 and that non-interest bearing business accounts have unlimited protection so they’re insured up to whatever amount is in the account. Interest bearing accounts are insured up to the $250,000 per individual. She also explained how used to be, CD’s could only show beneficiaries as immediate family members to pay on death to, but new regulations allow primaries to leave proceeds to anyone and in each case, the accounts are insured up to $250,000.
Prosperity just purchased Franklin Bank, a group of Texas banks (40 locations) based in Elgin,Texas, the FDIC closed down on Nov. 7. Prosperity paid an extra premium so that all their depositors wouldn’t lose anything, even to the point if they had over $250,000 they wouldn’t lose that additional money.
“What the public needs to know is to be careful out there,” said Beene. “I mean this is the first Texas bank to be closed in I don’t remember when, but before they were closed down, Franklin Bank was offering in the newspaper that week paying for a 13-month CD, five percent. If a bank is paying five percent while all the other banks are paying 2.65 or 3 percent on the same term CD, doesn’t that make you wonder why and how they could be doing that? Well, it tells you they’re in a crunch and need the cash really quick and to me, that’s a red flag. People just need to stop in think in those situations, how can a bank pay so much higher than what other banks are paying?”
The banker agreed with FLNB as to how the local community banks have a commonality of business practices.
“We haven’t been in the sub-prime lending practices,” Beene state. “We haven’t been in the out-of-state mortgage business and are all still doing old fashion banking the old fashion way with sound lending and investment practices. As a matter of fact, Franklin Bank was dealing with sub-prime rates and following some of the practices of those national banks which led to their being closed down. All other Texas banks have done well because they did not participate in that.”
Legend Bank’s Arlene Langham also commented as to her bank’s prowess in the community.
“In our areas, we have not really seen the effects on banks that have been published in the media,” said Langham. “Totally, we have sound business practices, and we have always had sound business practices in place. We’re not investment bankers, nor is anybody in our area. Our policies have always been sound, so therefore our business is business as usual. We’re not changing anything in our lending practices as yet, simply because we’ve not been affected like that. So, our goal is to proceed as we have in the past.”
Langham went on to say that, surprisingly, their secondary market loans have already been as many as last year, but even they have seen a slowing, or calming down over the past month.
“Over the past month, it’s been a little slower and we’ve seen credit standards from the underwriters get a bit tougher which could affect mortgage loans going forward,” stated Langham. “I really think any slowdown is going to be contributed to consumers hearing all the negative press are pulling back and are concerned, and rightfully so, but it has nothing to do, realistically with these local community banks, but rather what’s being said or read in the media. It has scared everybody.”
Evidently, at least according to these three banks, those fears are unfounded when it comes to dealing with community banks that continue to make sound financial loan and investment decisions like they’ve always done. For them, for these, it’s business and usual and business is good.
Submit a Comment
|
You must be logged in to post a comment.
|
Not yet a registered member?
Click here to become one. Comments to stories and articles on the Web site are not edited or pre-approved before appearing online. Readers posting comments are solely responsible for those comments. Comments must be germane to the story to which they apply. Online comments that are libelous, profane or personally attack another site participant can be reported as abuse using the link provided on each comment. Comments reported as abusive will be reviewed and may be removed from view, as will off-topic comments. BE CIVIL. Individuals continually posting abusive comments to the site may have their registrations revoked. |
