In your words: Bank presidents react to meltdown
The Daily Sentinel asked several local bank presidents and branch managers to air their reaction to recent Wall Street events. Here’s what they had to say:
Regional president for Alpine Bank
• Public perception is that all banks are the same. That is not the case. The bank problems in today’s environment are not banks; they are brokerage houses, insurance companies, hedge funds, etc. These aren’t banks. Banks are chartered by a regulatory agency and have intense regulation and examination and oversight from a seasoned banking regulator. These other entities will take your money and invest it in every type of investment from corporations, to currencies, commodities, real estate, foreign markets and many others. They do not provide insurance or any guarantee of return. They often can provide high returns. Obviously with great returns come great risks, which is where we are today. Many of their investments are not performing, causing dramatic losses.
Alpine Bank is a commercial bank chartered by the state of Colorado with oversight from the Federal Deposit Insurance Corporation and the Federal Reserve Bank. Basically all of our investments are in loans in Western Colorado, which is performing very well in this market. We do have a securities portfolio that is governed by our regulatory authorities. They have guidelines that we can only invest in bank-rated securities with a very diversified portfolio. We undergo full scope examinations by one of the above regulators at least every 12 months to determine compliance with all laws. We are required to meet substantial capital levels and loan loss reserve levels to compensate for market fluctuations. Currently we are not experiencing any of the national issues. Commercial banks are very different from all of those other financial service providers who claim they’re “just like a bank.” They aren’t.
A real bank is FDIC-insured and actually has the word “bank” in its name. Others claim to be “just like a bank,” but they aren’t. Just as consumers shift their business to a real bank in uncertain times, we now see major brokerage houses (Morgan Stanley, Goldman Sachs) actually convert to banks, knowing it is the better, more stable kind of financial institution even though that means they must now comply with regulations and be examined by the government.
Curtis G. Taylor
President & CEO of Grand Valley National Bank, based in Heber City, Utah
• Economic cycles are a certainty. Increases and occasional decreases in real estate and other prices are to be expected. It’s not really a question of if, but rather when and how deep, the cycles will be. We bankers have to practice what we preach to our customers: Run your business in a way to prepare for these cycles.
A good bank does just that. It grows steadily with deposits from local people who feel loyalty to the bank because it strives to meet their needs. When times get tough, those customers stay with the bank because they trust the people who run the bank. They know they have FDIC insurance to back up the bank’s strength.
We read and hear of “banks” who have failed, but the most notable failures were not really banks like our community banks. They are investment “banks” that do not operate with the same rules as community banks.
Current national economics are troubling. Well-run businesses and banks will survive current and future challenges and thrive in coming years.
Steven M. Irion
Community bank president, Wells Fargo, Grand Junction
• The Federal government continues to act quickly to address the nation’s economic health. We look forward to seeing how the government’s latest response unfolds.
Wells Fargo remains strong. We’re a diversified financial services company, and our time-tested business model has allowed us to succeed through all types of business and economic cycles.
For our customers — individuals and businesses — that means we continue to lend, following the same disciplined approach we’ve always used, and that their deposits at Wells Fargo Bank are safe.
For our community, it means we continue contributing to organizations that help keep our community strong.
Wells Fargo Bank, N.A. is the only bank in the U.S., and one of two banks worldwide, to have the highest possible credit rating from both Moody’s Investors Service, “Aaa,” and Standard & Poor’s Ratings Services, “AAA.”
Wells Fargo & Co. is one of the best-capitalized large U.S. bank holding companies in the country. Our capital ratios are among the strongest in our peer group. One of the best measures of our capital strength is our return on equity — how effectively we use our shareholders’ investment in our stock. It’s consistently one of the best in the business, and at the end of Q2 2008 our ROE ranked second among our peers.
Senior vice president, region manager, Bank of the West
• While the unprecedented financial crisis continues to unfold, with the much-anticipated sale of Washington Mutual just the latest event, Bank of the West continues to be well-capitalized, strongly rated, FDIC-insured, and eagerly lending and seeking deposits. We continue to make significant investments in technology, infrastructure and people, to grow our business and better serve our customers. Our deposits continue to grow and we are working to play a constructive role in a very challenging period.
As a conservative lender and an originator of prime mortgages, we had minimal subprime assets or related investments on our books. We believe that nearly all commercial banks — 98 percent of them — are faring pretty well and will continue to serve their customers as safe and sound institutions. The undercapitalized investment bank model, highly profitable for Wall Street but unstable, has now virtually disappeared, and we’re confident that with appropriate government intervention, stability will return to the credit markets on which everyone indirectly depends for a smoothly flowing financial world.
With 16 branch locations on the Western slope, including two in Grand Junction, we continue to focus on serving our customers and maintaining the safety of their assets.
John R. McCallister
President, First State Bank of Hotchkiss
• This is not solely an economic issue, rather a political-economic dilemma. For some time now, regulators have allowed the big banks and financial institutions to grow beyond their abilities to regulate. The products being offered were not fully understood, either by the marketers, or by regulators. Now, not unlike one kid throwing a spit wad in school, the entire class stays late.
The problem in the housing industry was identified more than two years ago. The reaction by administration officials was that the U.S. economy was too big to fail, that it “automatically” would heal itself. And the smoldering issues were swept under the rug. Nothing was addressed, no action was taken, and the fire suddenly exploded in August of last year. Then came the lies, as the titans of industry tried to hide the flames licking at their heels, again hoping that the economy would right itself. There was no magic, though, and when the fire got too hot, they had to break the glass and pull the emergency handle. But, it was too late. They had waited too long, and now there is a destructive, angry economic wildfire whipped by fear, gobbling up almost every financial entity in its path, and the firefighters, led by Federal Reserve Chairman Bernanke and Treasury Secretary Paulson, can’t keep up.
Sadly, we have become a country of greed and entitlement. Greed got us here, and we expect the Fed to bail us out. And, so, like wild pigs, we are allowing ourselves to be captured by the “fence of socialism” — while we eat the “comfort corn,” the fence is being quietly erected, one side at a time.
There are too many Democrats, too many Republicans and too few Americans in Washington, D.C. Until such time as that is reversed, we continue the slide.