Amid the national news of crisis in the banking industry, there are many bright spots in the industry and Brownwood’s local banks say that good business practices have them looking toward a bright future.
According to local bankers, the problems being reported in the national media are generally affecting money center banks and super-regional banks. In some cases, the local bankers said, these types of banks made too many questionable mortgage loans, sometimes called sub-prime, which have contributed to the current situation.
“We have been and will continue to follow sound business and loan practices,” TexasBank Vice Chairman and CEO C. Norman Tinkler said. Keith Clark, Executive Vice President at Citizens National Bank agreed.
Both said that community banks, particularly their own banks in Brownwood plus Mills County State Bank and American State Bank, as well as most community banks located in Texas, are faring well despite the mortgage problems that are growing on each coast.
“Texas is just kind of insulated right now,” Clark said. “We’re not seeing the same things that they are on the (East and West) Coasts.”
That statement was amplified last Friday in comments made by Cliff McCauley, chairman of the Independent Bankers Association of Texas.
“Texas community banks did not participate in the exotic mortgage frenzy that created so much havoc when the bubble inevitably burst. They pretty much stayed with the types of lending they have done for years – to local consumers and small businesses,” he said in Austin on Friday.
Cynthia Blankenship, chairman of the Independent Community Bankers of America, and vice chairman and COO of Bank of the West in Grapevine, spoke in Washington last week.
“As common sense lenders, community banks are highly capitalized, well-regulated and more risk averse than big banks,” she said.
Most of the questions that the banks are getting right now, according to Tinkler, are about FDIC insurance. On July 11, the Office of Thrift Supervision shut down Pasadena, Calif. bank Indymac Bank. As a result, FDIC was named conservator and suddenly that organization’s insurance coverage has gained nationwide attention.
“Some recent news reports and commentaries have raised concern about the safety of deposits in community banks. These reports are irresponsible and wrong. These are the facts; community bank customers’ insured deposits are safe in community banks. No one has ever lost a penny of deposits insured by the Federal Deposit Insurance Corp. (FDIC) held in community banks,” Blankenship said.
Both Clark and Tinkler said that one of the keys to making good loans is for banks to know their customers. For the most part, they both said, those customers have done business with the banks for years and have developed positive working relationships.
“Many of our members see an increase in business opportunities as consumers seek stability and the comfort of doing business with someone who knows them and actually cares about their financial well-being,” McCauley said.
Customers of local banks who have questions about their deposit accounts, FDIC insurance or any loans they may have should contact their banker and ask questions until they feel secure about those accounts, Tinkler suggested.
“The bottom line is Texas community banks are doing just fine, thank you. And, we intend to continue to serve our customers – and any new ones who happen to want to bank with someone committed to their community and financial future – just as we always have,” McCauley said.