By Cathy Spaulding
Even as stocks tumble, nationwide unemployment rises and credit markets remain tight, Muskogee and Oklahoma bankers remain confident that their customers’ accounts will survive hard times.
“Nothing is safer than money in the bank,” Oklahoma Bankers Association President and Chief Executive Officer Roger M. Beverage said during a visit to the Muskogee Phoenix on Thursday.
He and other bankers are visiting cities across the state to spread that message.
Beverage supported what he called a rescue plan for America’s lending institutions and what others have called a federal financial bailout plan. The bill, which passed the U.S. Senate on Wednesday and the House on Friday, adds $100 billion in tax breaks for businesses and the middle class and raises the limit on federal deposit insurance to $250,000 from $100,000.
In Muskogee, Beverage was joined by Don Abernathy Jr., president and CEO of The Bankers Bank; Chris Condley, chief executive officer of First National Bank of Muskogee; Dewayne Briley, president of Iron Horse Investment Group, the holding company that owns Armstrong Bank, and Billy Taylor, president of Armstrong Bank.
Beverage opened a question-and-answer session:
ROGER BEVERAGE: “Banks in Oklahoma are at the strongest they’ve been in the state’s history and the reason the economy is doing well and banks are a reflection of the state’s economy.
“The FDIC was formed 75 years ago and banks have paid into that fund to provide against the possibility of bank failures. In that 75 years, no one has ever lost a dime in an FDIC-insured bank.”
QUESTION: Not even when Oklahoma had those bank failures of the 1980s, Penn Square Bank?
BEVERAGE: “If they lost money, it was because they had more than the insured amount in the bank.
QUESTION: “Why is Oklahoma in a better financial situation than the rest of the country?
BEVERAGE: Energy, primarily. A $100 barrel of oil can do a lot for an economy and when you have a lot of folks who have invested and are producing energy — gas and oil — and are doing exceptionally well and growing very significantly. That spreads to other areas of the economy. Energy production is probably the driving force ... and agriculture. We’re close to all-time highs in wheat and corn prices.
“Oklahoma is a little bit of an island by comparison to some states. House prices have appreciated a bit, but they didn’t appreciate anything like they have in some states. The housing crisis is largely confined to seven, maybe eight states. Florida, California, Arizona and Nevada are states where speculation was a driving force behind the tremendous expansion of housing, and it has created problems. The other three states — Michigan, Ohio and Indiana — are having problems because their local economies are not as strong as Oklahoma’s. Colorado is an eighth state that has a bit of a bubble-bursting problem.”
QUESTION: What is the difference between the big bank and these local banks that are in trouble?”
BEVERAGE: “Oklahoma is made up of small community banks focused almost exclusively on the success of their local communities. The median size bank in Oklahoma has $75 million in assets. That’s a very small bank on a global scale. Even though banks such as Bank of American and J.P. Morgan-Chase are branches of Wall Street money center locations, they still employ Oklahoma bankers and my guess is they fall right in line with these guys in caring for people in their local communities.
“Bank of Oklahoma is the largest bank in the state and it is a well-capitalized, strong, well-run bank. You don’t have problems with that institution. On a global scale, it is pretty much a community bank.
“With J.P. Morgan-Chase, Bank of Oklahoma, any of these banks here, or the state’s smallest bank, as far as your readers’ money is concerned, it doesn’t matter which bank it is. It’s all insured by FDIC and backed by the strength in the capital of the banks, which exceeds a trillion and a half dollars.
QUESTION: So, do you support increasing FDIC insurance from $100,000 to $250,000?
BEVERAGE: “It’s a good idea on a temporary basis. It sends a good message to the public on the strength of the industry. If it is done on a permanent basis, most bankers will tell you they don’t know if that it’s necessary.”
QUESTION: “Have you changed the way in which you give loans? Are you being stricter?”
TAYLOR: “I think underwriting has tightened somewhat. Loan applications are being scrutinized more than they have been But we continue to fund many, many loans in the community.”
CONDLEY: “We have adequate cash in our fund for good quality loans. We have very few loans that are significantly past due.”
QUESTION: “Has the housing crisis or economy elsewhere affected the way you do business?”
CONDLEY: It has not affected the way we do business. We have not seen a liquidity crunch — liquidity being defined as cash. Our deposits are growing.”
QUESTION: What products at the bank will give me the greatest yield?
TAYLOR: Certificates of Deposit. They pay higher rates. The yield depends on what instrument you desire. There are a whole range of rates and yields out there, depending on what your desires are.”
ABERNATHY: “Most banks are looking for good loans.”
CONDLEY: “In eastern Oklahoma, I have not seen a significant decline in interest rates for CDs.
QUESTION: “Is this a good time to get a loan?”
CONDLEY: “Absolutely ... 6 percent was a good mortgage rate 30 years ago when I started banking. It is still a good rate.”
BRILEY: The thing about mortgage loans is that they are controlled by funding investors and that has been tightened nationally. Here in Armstrong Bank, we have had three good months in a row. It’s harder to get loans nationally, but demand has been strong.”
QUESTION: “Do you believe the larger banks need the bailout?”
BEVERAGE: “It is not a bailout. I wish you all would stop using that term, you are scaring the hell out of people. It is a rescue plan that will generate income back to put into the treasury. When there is a shortfall, if there is a shortfall, guess who gets to pick up the tab? It’s not the taxpayer, it’s the financial industry — banks, credit unions, savings and loans, insurance companies, securities firms. It is an investment in the underlying strength of the nation’s economy that will be recouped over time.”
“We’re not talking about bailing out Wall Street were talking about preserving system so it will continue to function for Main Street in Muskogee and Edmond .”
QUESTION: How do I decide which bank to put my money in?”
TAYLOR: “We encourage our customers to do their research. Look at banks as a community partner. Does it put money back into the community. We encourage people, especially in these times to check out the Web site Bankrate.com., which gives ratings on particular banks.
