Just as true, but maybe more important for you to know, local
community banks are performing well amidst big bank failures. Our
local small-town banks, and at least one bank president, want it
known that consumers shouldn't paint the banking industry with a
Steve Aughenbaugh, the president of the State Bank of Lincoln,
wants to make sure area residents understand that there isn't a
banking crisis in this community. "I think this is a good time to
tell the people of Lincoln and Logan County that most of our
community banks are strong, well-capitalized, profitable and
continue to loan money as they have in the past, some for over 100
years. Our community banks have been relatively unaffected by the
problems on Wall Street," he said. "We did not get into the risky
lending activities that the big Wall Street firms got into, and
A report by the Independent Community Bankers of America confirms
Aughenbaugh's statement. The report notes that most small-town banks
across the country are on solid footing, if not growing in assets.
"While the financial crisis has affected banks of all sizes and in
all regions, community banks continue to lend and are typically
faring much better than the larger banks because they didn't
participate in the high-risk activities that led to problems we are
experiencing," said ICBA President and CEO Camden R. Fine. "This
survey clearly shows that the vast majority of community banks are
well-positioned to survive the economic downturn and, perhaps, even
reclaim some of the customers from larger banks."
The report, which is based on information gathered through a
February 2009 survey of 743 community bank respondents, examines the
effect of the current financial crisis on community banks. "Of the
community banks surveyed, 55 percent have seen an increase in
deposits as a result of new customer acquisition. Only 17 percent
have had customers withdraw deposits from their institutions," the
"Community banks are acquiring new customers at a faster rate
than in the past. Of the community banks surveyed, 57 percent saw an
increase in new retail customers during the third and fourth
quarters of 2008 compared to the first half of the year, while 47
percent saw an increase in new business customers.
"Community banks are still lending, and 40 percent have seen an
increase in loan origination volume over the last year. Only 11
percent believe the crisis has ‘significantly' curtailed their
institution's ability to lend. Economic compression and mixed
messages from the U.S. government are key factors driving down loan
Christine Barry, research director with Aite Group and author of
the ICBA report, summarized the findings: "By striving to serve
their customers' best interests without straying from traditional
practices, most community banks have been able to grow deposits,
acquire new customers, better position themselves in the eyes of
customers and maintain stable financial statements."
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The Independent Community Bankers of America report concluded, "Some
community banks feel they are seeing more opportunities today than
they have in the past several decades."
Aughenbaugh confirmed that is what Logan County's banks, most
especially State Bank, have seen. Local banks have not fallen into
the financial problems we read about every day in the news. "We are
strong and growing," he said.
Aughenbaugh overviewed State Bank's position: "We didn't do any
subprime lending here. We have realized a huge increase in deposits
at the State Bank of Lincoln because of our superior financial
strength, and we invest those deposits right back into our own
community. On the lending side, with the drop in home mortgage loan
rates, we look for our lending activity to more than double in
2009. Two of our larger commercial loan projects include financing
for Lincoln College's new $8.6 million Lincoln Center and St.
Clara's Manor's new $8.7 million assisted-living center."
The president added that the bank has already processed $80
million in mortgages in 2009. The bank has already matched the total
loaned out in the mortgage department for all of 2008. Much of that
dollar amount is due to the lower interest rates. Currently rates
are the lowest they have been in decades, and consumers are lining
up to take advantage of them.
The independent rating company Bankrate.com gives State Bank a
five-star rating, with "superior" ratings in all four categories:
capital adequacy, asset quality, earnings and liquidity. But State
Bank isn't the only bank rated highly. Almost all other area
community banks are rated as four-star by the company.
So when news of another banking failure makes the news, it is
important to remember that our local banks are strong and on solid
financial footing. And that's something to bank on.