Local community banks may fare better in the current economic climate than corporate giants.
United Citizens Bank Chairman/President Keith Perry said Henry County’s one remaining locally-owned bank still comes from a strong position, noting 60 consecutive five-star ratings for the bank. The bank, which began under its current name in 1975, is a blend of three former Herny County banks founded from the 1870s to the 1930s.
“We are strongly capitalized,” he said. “still solid.”
Farmers Deposit Bank President Carroll Yates said small community banks in Kentucky have fared especially well. “We didn’t get into any derivative lending like reverse mortgages,” he said. “We have plenty of money to lend.”
One strength community banks enjoy is one-on-one customer contact, Perry said. “At least with local banks,” he said, “people have a better feeling they’re getting straight answers,” he said.
Perry added that United Citizens’ Bank has not curbed its loan programs. “We don’t have any loans in foreclosure and would encourage loan demand,” he said, but he did acknowledge the gloomy economic climate. “The interest rate environment will hurt earnings for awhile, but we will survive. When you read about mega stupid banks versus intelligent small banks, you get it.”
Farmers Deposit Bank was the first bank to establish itself in Henry County. It opened in 1867 and still calls Eminence home.
There are many reasons Farmers Deposit is holding its own. “We’ve been very conservative,” Yates said. “We don’t try to go outside the business we know. If we don’t understand it we don’t do it.”
United Citizens Bank stands ready to make loans, and interest rates are extremely low. “We have plenty of money to lend,” Yates said. “Interest rates are about as low as they can get. If they’re looking for a new car now is the time to buy.”
Yates said the problem solvent banks are facing is that people are not borrowing. Fear of job loss and recession are making potential borrowers skittish. “They’re afraid even though they have the ability to pay today, it might not be there tomorrow,” he said.
The consumer will have to decide borrowing is safe again, Yates said, before the tide will really turn. “A lot of what drives the situation is perception,” he said.
Yates predicts a gradual turnaround. “During my banking career, I’ve seen lows then highs,” he said. “2009 could be tough, but we’ll all suffer through it.”
PBI bank was contacted for this story, but did not respond by press time.
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