Published: October 05, 2008 07:17 pm            

Local financial institutions: No reason to worry

Despite banking collapses making headlines nationally, those with local financial institutions insist they are in good shape.

Gary Simpson, Oklahoma State University finance professor and Oklahoma Bankers Association chair of commercial bank management, said there is no safer place for money than a commercial bank.

“It’s FDIC insured,” Simpson said. “There’s not any safer place. They don’t have to worry. It’s that simple.”

Simpson recently analyzed all 249 commerical banks in the state and determined “the vast majority are safe and sound.”

“The No. 1 reason is that our economy is stronger here than in other parts of the country...” Simpson said. “We just are in a little bit better economy and also I think our bankers have just been maybe a little bit more conservative, possibly as the result of some of the things we went through in the 1980s, early 1990s with the oil boom and bust we had here.”

Jerry Rackley, executive director of corporate marketing for Stillwater National Bank, said his company was “never in the subprime lending business.”

“I think if you look back at all the dominos that have fallen to get us where we are today with respect to the economy and the current credit crisis, you can link a lot of it back to subprime lending that some of the banks were involved in,” Rackley said. “I’m sure they are very sorry that they got involved in those. We never did.”

He added, “It was a strategic decision. Even back then when people were making what looked like easy money on it, it didn’t seem like a wise decision for our bank and our shareholders and our customers so we just avoided it. It has turned out to be a very good thing that we didn’t do that.”

Rackley said those concerned about their money should pay attention to the health of their bank. SNB, he noted, is publically traded and has “a lot of information available.”

He said the company grew and made a profit in the most recently reported quarter.

“Those things are very encouraging when you look at a bank that even in a year like this is growing and being profitable,” he added.

Also important is the bank’s markets. He said SNB is strong because it is in good markets in Oklahoma, Texas and Kansas.

“We don’t have a presence in what the industry calls the toxic mortgage hotspots like California or Arizona,” Rackley said. “We just avoided all that by being in a very good market. This is a great market to be in right now economically.”

Ben McLarty is vice president of marketing for University and Community Federal Credit Union.

He said the credit union is in good shape and believes the extra regulations of a credit union make for a safer investment.

“We are a little more carefully watched,” McLarty said. “We have examinations at least once a year. They tend to be very strict about what we can and cannot do. They won’t let us invest in anything that is even remotely risky. The chances of us losing money and defaulting and closing the doors are very minimal.”

If a credit union were to fold, it is covered by the National Credit Union Administration, which is like the FDIC.

“If anything happens, the deposits we have on account will be covered,” McLarty said. “That insurance has never, I don’t think, failed to pay when a credit union has gone under. But as far as I’m concerned our credit union is doing well and we don’t have anything to worry about right now.”

He said he wasn’t aware of any foreclosures by his credit union.

McLarty, Rackley and Simpson each offered advice for those worried about their investments.

The consensus was “don’t panic.”

“Don’t listen to everything the TV commentators say,” McLarty said. “I sometimes think they are just trying to scare people more than anything else.”

He said the young should ride it out while those closer to retirement age could consider more conservative investments like bonds, CDs or treasury bills.

Simpson said “any kind of panic moves are probably the worst thing you can do.”

He said to look at what type of losses one would be taking before changing a portfolio, because right now they are only on paper. Tax penalties are another consideration.

Rackley said to use FDIC coverage to your advantage and recommended talking to your banker about how to do that. The $100,000 of coverage will cover each account, so one could put money in their own name, a joint account, one each payable upon death to family members, etc.

        

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