The financial problems that Congress is attempting to alleviate do not directly involve local banks in the Hannibal area, according to several bank presidents. This is because local banks are deposit banks, and are a completely different type than the investment banks in New York that are failing.
“The problem is the confusion between an investment bank and a deposit bank,” said Stevens Plowman, who has been president of F&M Bank and Trust Co. in Hannibal for the past 20 years. “The failures that have happened are investment banks, and there are none in our area.
“All local banks are deposit banks,” Plowman explained. “There is a big difference between an investment bank and a deposit bank. Deposit banks are the ones that have FDIC insurance. They have regulations and capital requirements and consistent earnings.
“If you are with a deposit bank, there is no reason to be unduly concerned,” Plowman continued. “Don’t worry about the safety of the deposits.
He added that one problem is TV reporters, who “throw this banking word around incorrectly.”
Plowman was in Washington last week with the Missouri Bankers Association, where he met with the FDIC, the Treasury Department, the Office of Thrift Supervision and the Federal Reserve, and “they explained their current anxieties to us.”
He noted that the bank failures that have happened are investment banks, which only do business with other businesses. “Investment banks don’t have regulations,” he said. “They have very little capital. That is why they fail. They are expected to have very volatile earnings.”
Local banks well
capitalized - Lee
“We are fortunate here in our area, because we do have very well-capitalized banks,” said Jerry Lee, president of Commerce Bank in Hannibal. “Commerce is rated by independent rating services as one of the safest regional banking companies in the whole United States,” he said.
“But generally speaking, it’s not just Commerce - all the banks in our area are well capitalized and sound banks. Depositors can feel very safe in any of our banks.
“One of the things we have heard a lot of is how people can’t get loans and companies can’t get loans, and that is not true in the area,” Lee said. “We have plenty of money to lend.
“What I think you are going to see is all banks going back to the way it used to be. You have to be qualified to borrow money. The banks in our area, thankfully, have always operated that way. If a qualified borrower comes to any bank in Hannibal, I can assure you they will find there is money available.”
Ron Verdier, president of HNB National Bank, which now includes Perry State Bank, said “we are talking about a national crisis as well as a potential global crisis, but as far as the local economy around Hannibal and surrounding area, the banks are strong and solvent.
“The bottom line is you have to have faith in your bank,” Verdier added. “Speaking on behalf of HNB Bank and I’m sure, my colleagues in this area, we are sound and not directly impacted by what is happening on the national scene.”
He added that the Missouri Bankers Association and American Bankers Association keeps his bank up to date on an hourly basis.
The bailout in Washington will not be solved quickly he said. “Something that has been in the making for years certainly cannot be solved in a week, without new diligence in analyzing everything.”
Minor trickle-
down expected - Trower
“Even though we are completely different from the Wall Street banks, there could be some trickle-down effect, but it will be minor to us,” said Jerry Trower, president of the Palmyra State Bank, which includes the Bank of Hannibal.
“If the whole nation is affected, it will affect us in the long run,” Trower added. “We could see our earnings not be as great as they had been in previous years. We (local banks) are so blessed with capital that even if our earnings aren’t as high, we will still be very safe.”
Trower agreed that the news media is misleading. “One of the problems is they have called investment companies banks. We are completely different. ...The stock market has no effect whatsoever on the safety of the community banks.”
He advised investors that “if they have cash in Money Markets or something like that, I think it would be a good time to be buying into the stock market, because of the fact that it is depressed right now.
“I heard a prediction this morning (Monday) at an investment seminar in Kansas City,” Trower reported. “They were predicting the S&P 500 to be at 1400 at the end of the year. ...There are people who think we are getting close to the bottom of the market, but I’m not panicking.”
Plowman opposed
proposed bill
Regarding the failure of Congress to approve the economic recovery act on Monday, Plowman agreed with those voted against it. “Personally I’m against it,” he said. “I think there is tremendous problem, and something should be done, but not that program. I think they should have some government assistance, but not that program.”
He explained that “everyone from Washington, D.C., keeps saying this is just as bad as 1929, but in 1929 bankers jumped off skyscrapers. Nearly 100 of them committed suicide. I haven’t seen a single banker commit suicide (this year).
“The losses today that are happening are not to individuals, they are to other companies,” Plowman added. “There will be businesses genuinely hurt, and there will be some that will fail, but they took too much risk. I don’t think it’s going to be a lot of businesses.
“I don’t believe any business should borrow beyond their means,” he said, or “any individual should borrow beyond their means. If they have, they should cut back. But if you have businesses or individuals who have not borrowed beyond their means, I don’t see any reason for them to cut back.”
Now is good time
to buy stocks
Linda Straube, financial advisor with Edward Jones in Hannibal, on Monday advised investors this is a good time to buy “really good quality assets that are on sale right now,” such as General Mills, AT&T, Pepsi, General Electric and Walgreens.
“We use so many of their products every single day, and that is what being a stockholder is about in corporate America - being an owner in some of these companies.
“Just because the market fell, we are not going to quit eating and buying necessities. ...Buy, but make sure the diversification suits. Buy now while they are getting a lot of value at current prices, but they are also getting excellent dividends.”
Also, look at mutual funds, she said. “If you own very good quality mutual funds, it is a good time to add to it. Put some money to work.
“Purchasing now in one of the market pullbacks historically has been very advantageous to the long-term investor,” Straube said.
Selling stocks that have fallen is not a good decision, she said, although, “when we are most inclined to sell is usually when the markets are at their low. It is just the opposite for successful investors.”
Before making any financial decision, she said, “everyone has to look at their own investments very carefully. We want to make sure they are properly diversified, and stick with high quality.”
As Edward Jones, she said, “we are Mid-west based and have conservative values.”
