Roger Beverage and Mick Thompson have been repeating the same mantra lately: Don't worry; Oklahoma's banks are financially strong. ... Or at least healthier than the norm right now.
As the nation faces the collapse and bailout of some of its largest financial institutions, Beverage, president of the Oklahoma Bankers Association, and Thompson, the state's banking commissioner, keep trying to reassure consumers that problems elsewhere in the market do not necessarily have the same impact at home.
"In contrast to the unrest and failures that have plagued Wall Street firms as well as banks in other states, Oklahoma's financial institutions remain strong," Thompson said. "During the years that preceded this latest financial crisis, Oklahoma's community banks remained committed to their Main Street customers and avoided the types of investments and lending practices that have caused problems for Wall Street."
But can the average Oklahoma banking customer trust that the bank down the street doesn't have a stake in Sallie Mae, Lehman Bros., AIG or any other company in the bailout news this week, or that they weren't more directly involved in subprime mortgage lending that triggered the mess?
"I can tell you, generally speaking, that they did not. But I can't tell you that nobody did," Beverage said. "There might have been somebody out there that made some loans in the subprime category, but they weren't making tons of them. If they were, they got the heck kicked out of them by the regulators."
At first glance, FDIC statistics show Oklahoma's banking industry isn't a perfect picture of health. The percentage of unprofitable institutions among all Oklahoma banks has doubled over the last year, rising from 2.35 percent in the second quarter of 2007 to 4.76 percent in this year's second quarter.
That increase is even steeper for big banks, the 119 in Oklahoma with assets greater than $100 million. Only 0.89 percent of those banks were identified as unprofitable last year, compared with 4.2 percent this year.
"That's not a good piece of information," Beverage said.
And when it comes to the ratio of loss allowance to noncurrent loans and leases, anything less than a 100-percent rate suggests "a little bit of concern," Beverage said. Oklahoma's banks had an 84.09- percent rate in the second quarter this year, compared with 134.44 percent for the same period last year. …