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. …