Local institutions steady during financial turmoil
Despite turbulence at the national level, local financial institutions are solid.
That's the message Flathead Valley banks and credit unions are telling customers, echoing a statement issued earlier this week by Montana's commissioner of banking and financial institutions.
"Montana banks are doing well, despite the challenges that many financial institutions are facing in this current difficult economic climate," Commissioner Annie M. Goodman said Tuesday.
Financial institutions in the state are somewhat insulated from the national economy's extreme fluctuations, said Jeremy Presta, Park Side Federal Credit Union's president and chief executive officer.
"The nice thing is in Montana, we're not immune to what's going on in the rest of the country. However, we're kind of insulated to a certain extent," he said.
"When things are booming all over the country, all over the world, we're pretty steady. But when things are bad all over the country, all over the world, we're pretty steady."
The industry has slowed a little, said Don Bennett, president of Freedom Bank in Columbia Falls.
"Most people have put everything on hold. They're waiting to see what's going to happen," he said. "It's caused a slowdown, but other than that, I think things are going OK."
That's especially true compared with other markets across the country, Bennett said. In places such as Arizona, California and Florida, where financial institutions engaged in riskier lending practices, banks and credit unions are in much worse shape than in Northwest Montana.
"They're really feeling the crunch," he said. "They're much more overinflated pricewise on real estate and had a lot looser lending guidelines than we've had here."
Flathead financial institutions "have pretty much stuck to the basics of financing," he said. "We're meat-and-potato kind of lenders. We don't get involved in fancy derivatives or subprime loans and that kind of stuff."
The credit market is tighter than it was a few years ago, in large part because of the loose lending guidelines Flathead bankers tried to avoid. But local banks and credit unions do have money to lend.
"The ability to get loans has definitely tightened up," Presta said. "Lenders are definitely tightening up their underwriting.
"Whether we're actually seeing that here in the valley, I can't say. We're still lending money out."
So are Glacier Bancorp's banks, according to Mick Blodnick, president and chief executive officer.
"There's no doubt that it's far different than it would have been in 2005 or 2006," he said. "For a lot of individuals, credit was readily, readily available. Those standards have definitely tightened up, but for good, quality borrowers, there are multiple options.
"You keep hearing that credit markets have absolutely seized up, but I just don't see it around here."
Glacier Bank, the company's Flathead Valley presence, has exceeded corporate expectations in deposits and loans this year, Blodnick said.
Whitefish Credit Union also is doing well, according to manager Charles Abell.
"From our standpoint, while other institutions have tightened up, our loan demands have been strong," he said.
Whitefish Credit Union's delinquencies are lower than usual, though Abell expects those numbers to be closer to average this winter. Park Side Federal Credit Union's delinquencies and loan losses have increased slightly, but it's "nothing to get too concerned about or worried about," Presta said.
For the most part, customers haven't seemed very panicked.
The Emergency Economic Stabilization Act of 2008, which Congress passed last week, temporarily raises the basic limit on federal deposit insurance coverage from $100,000 to $250,000 per depositor. Under this legislation, the basic deposit insurance will return to $100,000 on Dec. 31, 2009.
Raising the limit has helped put some customers' minds at ease, Blodnick said.
"I really think that FDIC's done a good job of getting the message out that no one who's had insured deposits at a financial institution ever lost a single penny of their money," he said.
Before Congress approved the bailout plan, more customers were depositing funds in more than one financial institution to stay within the $100,000 insured limit, Presta said.
"I can't say I blame them. It's their money," he said.
"We haven't had a huge drop in deposits. There hasn't been a mass exodus. I do think some people have redistributed it to make sure their funds are covered by the federal government."
Presta advises customers learn more about how to protect their deposits.
"The more you know, the better informed you are, the better decisions you'll make with your own money," he said.
He also encourages people not to panic, a sentiment Blodnick shares.
"A knee-jerk reaction pulling money out - I just don't believe that's the right thing to do," he said. "I think that any bank around the country would say the exact same thing."
Bennett emphasized the importance of optimism in rebuilding confidence in the banking industry and the economy.
"I know this is kind of a tumultuous time, but I actually feel pretty positive," he said. "I think we'll come out of this thing stronger than ever."
"I just think a lot of what's going on is negative hype," he added. "I think if people keep a positive attitude, that that's going to help bring us out of this sooner."
The local banking business may slump a little this winter, Blodnick said, but that's typical in the Flathead, regardless of the national situation.
"There is seasonality built into our markets that you maybe don't see in Arizona, Texas, Florida," he said. "Historically things have always slowed down, except maybe for the boom years of 2004, 2005, 2006. …
"I would expect that during the winter and early spring months, we're going to see a slowing trend probably more in line with what we have seen historically, excluding maybe the last three or four years."
Abell, who has 43 years of experience in the credit union business, made a similar prediction.
"Things may get a little tougher this winter," he said. "You always have foreclosures and delinquencies. … For anybody in the money-lending business, that's part of the deal."
The economy always is cyclical, he added.
"Business cycles have been part of the American economy since its inception," he said. "There have always been ups and downs, times when we overbilled.
"The average down time is always much shorter than the average up time."
The Flathead's insulation from the national market may help the area get back on track sooner than the rest of the country, Bennett said.
"I wouldn't be surprised to see us recovering in the spring," he said. "I think next year will be a good year."
He emphasized again the importance of having confidence in local banking institutions.
"I just don't have any hesitancy whatsoever: Put as much money as you want in any bank in the Flathead," Bennett said. "They're all real strong."
The Associated Press contributed to this story.
Reporter Kristi Albertson may be reached at 758-4438 or by e-mail at kalbertson@dailyinterlake.com.
alcohol
How can things get better considering: manufacturing has been largely off-shored, the worthless, horrifically leveraged derivatives haven't been written off as losses, the Federal Reserve private bank still controls the money supply and continues fueling inflation? Yes, great, will get a check for $1800/month ssn and be able to buy a beer and bag of pretzels with it and am expected to "make it". Then, when we revolt, the 1st Battalion nukes us with their ray panels. Marvelous...
Rob123
Bull: And the baby bear sat down at the table and said "somebody ate my porridge!" Tha papa bear sat down at the table and said, gruffly, "Somebody ate my porridge!" The mama bear looked over and said "Bitch, bitch, bitch, I haven't even made it yet."
alcohol
Rob, Jack and Jill went up to hill, to fetch a pail of water, Jack fell down after getting shot by a Chinese sonofabitch that moved in after the start of Civil War II. You watch, comrade, when $1000 buys a can of spam. Your job at the plant, enjoy..until they put a gook in your seat. Been in sheet metal for decades..see what China is doing in mejico and in the states. Take off your blinders funny boy.
DavidS
This is a propaganda article. The Interlake loves to do propaganda like this about local businesses and institutions. They always paint a rosy picture and never tell you about the underlying problems, the mistreated employees or the huge backlog of unpaid debts. A few months or a year later you read that the business has declared bankruptcy and is gone. Rest assured several of the Flathead Valley's banks will also be gone by this time next year.
Al Steiner
This time next year, 15% or more of the houses in this valley will be in default, unemployment will be running over 10%, and we will all be talking about the "worst Glacier Park visitor numbers on record." That, and the dollar will be worth about 80% of what it is now, as aggressive inflation kicks in. Doom and Gloom? Hardly, wait til you see the valley in FIVE years (60% of the population moved out, boarded up subdivisions, etc). The piper will have to be paid, and he doesn't take fiat money.
Lee
I am amazed at the posts here. I must live in California and you have no idea what life is like there or in most of this country. The Flathead valley is paradise compared to most places these days. Count your blessings and be grateful for what you have. Be grateful the building is slowing down, you really don't want to over build like California. Be glad your banks are old fashioned and believe in making only qualified loans. Be glad you are so fortunate to live in such an incredible place.
Rob123
Bull, dsrobins,Al Steiner: I actually work each day, buying and selling commodities for mainstreet businesses. In 2005 I made $0 profit fighting the chain stores with their easy money, yet kept my market share, wondering how in the hell all these people moving in and buying houses were going to survive when they no longer built each other houses. My eyes are open, and know there is going to be pain. But I am not a rascist, Bull, nor totally gloom and doom. Those who didn't or don't have their eyes wide open can whine all they want, as they fall from middleclass to the safety net; and those of us with $ saved pick up the assets at pennies on the dollar. That's Capitalism, you whiney Bozo's. And anyone can play, assuming they know how to wean themselves and be self-sufficient. You 3 talk like Union boys who want it all on a silver platter, guranteed for life. HUH! "Cut your own wood, and it will keep you warm twice"......
bombergirl69
but.. but.. rob, I liked the image of you as the overnight guy at the nuke power plant, with your little lunch in your brown paper bag, waiting intensely by "the button".Did n't you say somewhere that was your job? :) I agree with you here and love the 3 little bears story...
Rob123
Yeah, bombergirl69, that was my job, but Homer Simpson replaced me. I just couldn't handle the stress of the China Syndrome. (-:
alcohol
Yeah Robbie, what happened to the "sack lunch guy" image at the power company? Too low brow? Now you are purporting to be a "commodities" broker. Great! I'd like to pick up 100k in Swiss Pamp. Can you help me out Mr. Wheeler Dealerman?
alcohol
You are Habu, eh Rob.
Rob123
Poor, poor Bull. Just a used Trojan; but to let you in on my sack lunch job pushing buttons as the night watchman: "Springfield Nuclear Power Plant is a fictional nuclear power plant in the television animated cartoon series The Simpsons. The plant, owned by Charles Montgomery Burns, is located at 100 Industrial Way. The plant has a monopoly on the city of Springfield's energy supply, and the carelessness of Mr. Burns and the plant's employees often endangers the residents and natural environment of Springfield." Now you Know! Don't cry for me my Argintina, ole bull will backstop your spending, with Bolivian coca hauled to Potasi and mixed with Silver, then on to Sucre.
cowboyznut
I think this blog is exactly why I read keep up the good work everyone..really very entertaining!
JA
What a pile of crap! Of course the bankers of the valley are going to say everything is great, they dont want people to panic and pull their money. Its the same old poor reporting DIL has done in the past when they asked the realtors what they thought the future for the local real estate market was or course theyre going to say its great. Is it that hard to find non- biased experts to interview, or is it that you just dont want an honest answer. This valley is going through its worst economic down turn in recent history. Just ask anyone in Whitefish (who works for a living) if they think the local economy is solid. The article also says that we are not as bad off as Arizona and California. Trust me, with most of our out of state home buyers coming from California and Arizona we are not isolated from their destruction. Just like everything else here we are a year to two years behind the other states so we are just now seeing the start of the real estate crash, which means we will be a year or two slower than everyone else to
JA
recover.
Rob123
Why JA, what a pessimistic outlook. My local yokel bank stock still pays dividends, since the local yokel loan officer kept his eye on the ball and sold anything that was even close to sub-prime or "iffy" to fannie and freddie or an overpayed MBA at an Investment Bank, long ago. Of course, if your a Short Seller looking for a victim and think rumor and innuendo will cause you to benefit and make your house payment, your in the wrong game, boy. Some bleeding, yes. Death & Crash, NO! Unless your talking stricly Mortgage Finance Boutiques without Cash from Deposits, then your on to something. Time will tell.
erok
Great! I will be building my house this spring!
JA
Rob, My state pension is worth about half of what it was before, my house has lost a third of its value and now my job (because I cant afford to retire) is close to being eliminated because of a slowing local economy. I think I have a reason to be pessimistic.
Rob123
erok2020: Good for You! 20% down, a job, a little history, no sweat. Back to basics.
Rob123
JA....Since your not a Short Seller, I have empathy. Talk to your banker. Don't hide or make it worse. The local system is healthy, with LESS PROFIT, but not RED INK.
maggie
In agree with JA.........everywhere you look, there are homes for sale, and the bank forclosure list is huge!! Take a look on the net at it. Construction has nearly come to a standstill, hence there go the jobs.,.and if there isn't a problem, why do my oreo cookies cost nearly $5 a bag now. Hmmm?
Abenaki
Time doesn't heal all wounds. There's a gaping hole in the economic fabric and it will either knit closure or further tear. We here in NW Montana may be somewhat 'better off' right now. As JA says. "Time will tell".
Rob123
always montana: I didn't say there wasn't a problem Far from it......But there is room to wiggle, and remember, the Bank absolutely does NOT want your house. RE-Negotiate, firmly but politely. test what the limits are to keep you there!
toadzilla
I love how both BO and JM are going to solve the current money problems by not raising taxes? One taxing the rich and one taxing the poor. It's going to take a little more than that. If we all want this ball to bounce we are all going to have to help put some air into it. Flat Tax!!! It is fair and it will help.