How Healthy Are Alabama's Banks?

More than a dozen banks have failed in this country since the beginning of the year. Many bankers are getting questions they've never been asked before due to the crisis in their industry.
While no banks have failed here in Alabama - the latest takeover includes Wachovia by Citigroup.

It's a sampling of Birmingham's banks: large, medium, small. How healthy are they? How are they faring since the Wachovia buyout? And what's the future of assets at these institutions?

They are Birmingham's banks - from 118 years old - to three years old and everyone in between. Assets range from 250 million to 600 billion with mostly conservative values.

Regions Birmingham President, Bill Ritter, said, "We've really stuck to the plain vanilla banking. Sometimes that's not the most exciting thing, but it's what we knew and it turns out, proven to be very good."

The banking business has never been watched so closely - by outsiders, insiders and their customers who now understand the catch-phrases of the day: liquidity, market freeze, tightening credit. Local bankers agree these are interesting times.

Ritter said, "We've never seen anything like it."

Birmingham RBC Bank President, Robert Aland said, "You don't like to see your industry facing the troubles that it's facing."

Alabama President for Merchants & Farmers, Randall Fields, said, "It is a transitional time for banking."

A transitional time - as customers grow more concerned about their money. All banks are taking the time to reassure customers.

Bryant Bank Chairman, Paul Bryant, Jr, said, "I think the banks in alabama, community banks are sound."

First Commercial Bank President & CEO, Nelson Bean, said, "We feel like, we're in a good condition to weather the storm."

Legacy Federal Credit Union President & CEO, Joe McGee, said, "Fortunately, we're able to tell them, that their money here at Legacy is safe and sound."

From Indymac to Integrity - and the takeover of Wachovia - the FDIC and why it was created seventy-five years ago has never been more important. Bankers remind customers their money is insured - up to 100-thousand dollars. One local bank offers a bit more.

Bean said, "We have seen a good influx in deposits because of our structure, under our company, we're able to offer product that insures up to 3.4 million dollars which is unique because of corporate structure and that has generated a lot of interest."

First Commercial isn't the only bank seeing an influx in deposits. At M&F Bank - which offers 5% interest on checking accounts - it's customers are from banks that are in trouble.

Fields said, "Another reason, people want to make sure their money is federally insured, some of the monies might move out of the investment market, we've seen that transition as well."

Another market transition is loans. Most of the bankers admit - credit is tighter.

McGee said, "It certainly is, getting tighter and we have to take a closer look at the loans we do make."

Out of the six bankers we interviewed - only one said, they're not taking a second and third look at customers loan applications.

Bryant said, "All our banks and I think most of our community banks in Alabama approach it this way, we make loans to people we know, in our community."

As the industry changes and more people pay attention to it than ever before - these bankers tell me - their customer’s money is safe but there are differing opinions on their industry's future.

Aland said, "Unfortunately you're going to see some community bank failures, who knows when and where."

Fields said, "You'll see the banks that have been conservative in their leadership and their lending practices rise to the top."

Bean said, "I think there will be more fallout, hopefully not catastrophic."

Bryant said, "I think in three years, they'll be going great guns, like they are now.">

Currently the Federal Deposit Insurance Corporation insures up to 100 thousand dollars. In the bailout bill, Congress has increased it to a quarter of a million dollars. All of the bankers I talked to thought it was a good idea - and that it would increase consumer confidence.