Officials: Local banks OK

By Andy Brown

Published: July 25, 2008

The failure of IndyMac Bank and the recent struggles of both Wachovia Corp., and Regions Financial Corp., have left many people wondering just how safe their bank, and more importantly their money, is.
Earlier this week Treasury Secretary Henry Paulson said the list of troubled banks will grow longer as they struggle to cope with big losses on bad mortgages, but overall he says the U.S. banking system is “safe and sound.”
Ameris Bank President Jerry Gulledge echoed Paulson’s sentiments and said that banking institutions in the Eufaula area are “very sound.”
“Our local banks are strong, and I don’t think our customers have any reason to worry,” he said. 
“Most of the banks that are in trouble are the larger banks that have been caught up in this mortgage-lending catastrophe. That doesn’t have much of an impact on us because we don’t hold the mortgages.”
Robert Bennett III, president of Farmers Exchange Bank, agreed.
“The fact of the matter is that in some cases the media has over-hyped this,” he said. “There certainly are some issues that banks have to deal with, but those issues are primarily related to the much larger lending institutions and particularly sub-prime lending.
“There’s going to be very little change with our community banks. I personally think all the banks in our area are well run and are well capitalized. I don’t think the average customer is going to notice a change.”
The headlines, especially those regarding IndyMac, have raised plenty of questions for customers across the country, including those in the Eufaula area.
“We have people come in every day,” Gulledge said. “It’s mainly older people that are on a fixed income. They just want to make sure everything is OK. We do our best to answer their questions and assure them that everything is fine and that there’s no need to worry.”
Despite the recent news of financial struggles for IndyMac, Wachovia, Regions and even Fannie Mae and Freddie Mac, Bennett says most banks have enough capital and large enough earnings to stay in business. He says banks have seen recessions before and they know how to handle it.
“The most important thing a customer can do in a situation like this is to stay calm,” Bennett said.
“One problem banks face during times like this is undue panic. Customers run to the bank and pull their money out and the banks lose a lot of deposits. There’s no reason to do that here. Customers in our area can feel good about their banks.”
According to Bennett, only 90 of the approximately 10,000 banks throughout the nation are in trouble. So far this year, only four commercial banks and one savings and loan (IndyMac) has failed.
Even if a local bank were to fail, there are measures in place to protect a customer’s deposit.
The Federal Deposit Insurance Corporation (FDIC) insures up to $100,000 per deposit and $250,000 per individual retirement account.
Customers concerned about their bank’s well-being can go to the FDIC Web site (http://www.fdic.gov) or http://www.bankrate.com and look up the financial condition of any bank.