Community bankers stay cool in light of crisis
Customers have no need to panic, say local CEOs  

By Ken Esten Cooke
Reporter Publisher

 You know the stereotype—the stingy community banker that won’t “take a chance” on loans for businesses and individuals.
 But stereotypes are just that and, fortunately for borrowers, community banks find themselves on much more sure footing than the big Wall Street firms that are bankrupt or being sold.
 Many local banking customers want to know how the financial crisis, which Congress may or may not help with a bailout, will affect their deposits and loans.
 But local banking presidents Mike Vance of Citizens National Bank and Richard Williams III of Classic Bank say that community banks are well-capitalized and still ready to do business.
 “People have a tendency to panic when they see the nightly news and hear ‘bank failure’ and they think it applies to everyone,” Williams said on Friday.
 But local community banks don’t borrow through troubled institutions such as Washington Mutual, which was sold.
 “We (community banks) have what’s called a Fed Funds line where we borrow from some of the bigger banks and we can use those lines if we need to,” Williams said. “There’s also a ‘banker’s bank’ in Dallas and a regional bank that we use. But we’ve got plenty of liquidity, so we’re in a good position.”
 Williams also said the Texas economy has fared better than the rest of the nation and that has helped it weather troubled times.
 Vance agrees with Williams and said his bank does very little borrowing.
 “We may borrow some money one day, then not for 30 to 45 more days,” he said. “We borrow from them when we need extra money and sell to them when we have extra money.”
 Vance said as far as the mess in Washington goes, Citizens does not have anything in its portfolio that will be affected.
 “All loans we make are secured by local properties and we make sure the borrowers are credit worthy—they’ve got jobs, can support and substantiate their incomes, they make a down payment—they’re what we consider to be credit-worthy borrowers.”
 Vance said those who “got us into this mess” were mortgage brokers making loans to people without verifying income, loaning in excess of purchase prices, and putting people in homes at an introductory rate with an unrealistic expectation they would be able to refinance on their growing home value.
 “We’ve been fielding a lot of calls about FDIC insurance,” Vance said. “But our bank is in a strong position.”