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Banks should be safe

During the nation’s financial crisis money in banks will likely remain safe, local banking officials said

“It seems to me like the local banking industries should be in good shape,” said Collin McCrary, bank manager and vice president of investments for Wachovia Securities, LLC in Troy.

Jimmy Ramage, president and CEO of First National Bank in Brundidge, said community banks aren’t involved in the crisis directly.

“By having local boards, we concentrate on the areas in which we are charted,” Ramage said. “The majority of every loan we make is within a 40 to 50 mile radius of the bank so we know the area, the real values of the property and what’s going on with the economy.”

In fact, Alabama Bankers Association CEO Dan Bailey said banks throughout the state are matching up well compared to others across the nation.

“Relative to many other states, our banks are doing well,” Bailey said. “We’ve had some modest decrease in profits in the second quarter, but it’s a very small decrease compared to nationally.”

Shanon Rust, a spokesperson for Regions Bank, said Regions customers have no reason to be concerned.

“I can tell you we’re in a stable situation,” Rust said. “Unlike many institutions struggling through this difficult time, Regions is in good shape.”

Bailey said the biggest threat facing the state’s banking systems is the uncertainty of the shaky state of the nation’s economy.

“The banking system reflects the state of the economy, and if the national economic crisis worsens, it would cause Alabama banks to do the same,” Bailey said.

Ramage, who is also the mayor of Brundidge, said local impact won’t be a direct one.

“The thing that’s going to impact the community is just the trickle down. As the economy goes down food prices go up, fuel prices go up, utilities go up — our customers get caught up in that,” Ramage said.

“It makes it harder for them to live and make their payments.”

Bailey said standards for obtaining loans may tighten until this is resolved.

“Alabama banks have always focused on the ability of the borrower to repay the loan,” Bailey said. “But we’re probably going to see some tightening of credit standards.”

McCrary said along with higher loaning standards, there could be a smaller job market in the county.

“The job market is going to be tighter because small businesses will have a significant slowdown,” McCrary said. “But then, the thing about Troy and Pike County is we have the university, the road department and several reliable, strong institutions in our area from which we can draw strength.”

In a statement released Wednesday, Gov. Bob Riley said residents of Alabama should have no concerns over their money in state banks, as the Federal Deposit Insurance Corporation insures at least $100,000 each depositor has in the state.

Riley said he has no plans of having to use the insurance in this time of crisis.

All bankers agreed the last thing depositors should do is panic.

“I think the main thing we’re seeing is a normal amount of concern and people are wanting to review their assets with their advisor,” McCrary said. “And, that’s the right thing to do instead of panic.”

McCrary did say people should have well-diversified stock deposits and emergency cash available in times like this.

Ramage said it’s important for consumers to review where all their money is and monitor the situation.

“Don’t panic, just check out all you’ve got,” Ramage said. “It will have some impact, but the good news is it won’t be direct, hopefully.”

On Thursday, Washington officials, President Bush, and the two contenders for his seat, held a meeting to discuss the plan to buy out failing mortgages, but no final agreement has been made yet.

U.S. Senator Richard Shelby, R-Ala., told the Associated Press he does not support the $700 billion bailout, which would require taxpayers to pick up the slack.