Major banks across the country have been hit with failure. That failure brought a bail out package in November 2008 that has been passed along to taxpayers. It enlisted the cries of “help me, too” from other sectors of the national economy, such as the Big Three Automakers. The number of troubled U.S. banks leaped to the highest level in about five years and bank profits plunged by 86 per cent by the end of the second quarter, according to the Federal Deposit Insurance Corporation data released in August. Earnings from federally-insured banks plummeted dramatically with earnings of $5 billion in the period April to June of this year, which was down from $36.8 billion a year ago. Slumps in both housing and credit markets continue. Despite this most of the American banks are maintaining solvency, although not prospering in the way banks used to be before the crisis in housing and financial markets. In the midst of all this, the Bank of Montgomery in Natchitoches, Louisiana continues to secure new customers and new loans. So what makes a local bank successful as the giants in the banking industry have to have handouts to survive?
Tyler Murchison is the Chief Lending Officer at the Bank of Montgomery in Natchitoches, Louisiana, a small town in the South that has been designated as one of the nation’s foremost retirement destinations. Murchison doesn’t share the pessimism of national bank reports. Loan demand is down, however past due accounts are normal. This means people are paying responsibly. The Bank of Montgomery also has a strong service base, lots of pleasant employees and a customer service policy that truly puts the customer first. That along with the fact that the Bank of Montgomery didn’t solicit subprime mortgages and therefore didn’t get in over its head in the financial whirlpool that engulfed other banks meant it would continue to maintain a reasonable financial balance in the community.
The Bank of Montgomery is one of several banks with good reputations in Natchitoches, staffed by people who know their customers and make careful decisions. The same good service and steady hand is demonstrated by Sabine, Peoples, Exchange Bank, and City Bank and the others in the community that serve the financial needs of Natchitoches. These banks also didn’t solicit subprime mortgages or loans without investigation of customer financial records and background. That conservative way of managing business means that the local banks are on solid enough footing for customers to be confident that their money is likely being managed well. That is, of course, based upon reports of bank administrators and realtors locally.
Natchitoches folk may watch banks flounder nationally, but more than likely local banks will manage the recession with fairness and equity. That’s because in towns that live by modest standards of good business, who get to know their customers well and care about them enough to hold the reins when necessary and not reach too far to extend unstable loans, make the best type of financial business to help people and the economy get through difficulties. Rather than national banks looking to themselves for examples, they might want to look at banks at the local level to see what makes for long-term stability and success.