It”s hard to turn on the news these days without hearing about another financial institution in trouble. From IndyMac to Wachovia, reports of bank failures and acquisitions have many consumers wondering about the strength of their banks and the safety of their deposits.
Though bank failures have been well-publicized, the institutions at risk represent only a tiny percentage of our nation”s 8,500 banks. The vast majority of FDIC-insured banks – 98 percent nationwide, and 96 percent in Georgia – are considered "well capitalized," that is, having significant capital and reserves to cover potential losses in tough economic times.
Weathering the Storm
Offering a full range of services beyond deposits, from securities to insurance, community banks understand customers” needs and can guide them through ups and downs.
"Particularly in volatile times like these, the safest place for your money will always be the bank," says Doug Johnson, Vice President of Risk Management Policy for the American Bankers Association. "Your community bank will give you safety that will put your mind at ease."
Johnson believes that while banks will continue to develop and utilize innovative products and new technology, in the short term customers will see more simplification in messaging and services. "We are talking about a more conservative customer environment. Banks respond to customer needs, and customer needs will be more conservative," Johnson says. "What customers are demanding now is certainty – a consistency of income stream and a certain interest rate as opposed to a volatile marketplace – and that”s what banks can provide."
A Local Look
Joe Brannen, president and CEO of the Georgia Bankers Association – representing virtually all of Georgia”s commercial banks and thrift institutions – believes that, even in tougher markets, the key connection point between banks and their customers remains the same: "People want to know they can trust a bank with their money, that it will be protected and available, and that they will get great service."
The head of the Georgia Bankers Association since 1980, Brannen believes that Georgia banks will respond to economic challenges this year by going back to the basics. "Like any other business, banks are focusing on fundamentals: providing great service to customers, collecting deposits and making sound loans using conservative underwriting criteria," he says. "While the real estate development market is expected to continue to be under stress in the near future, bankers are seeing fairly good demand for other commercial real estate and small business loans."
With many consumers worried about media reports of troubled financial institutions, local banks have found a new way to be of service. "Another area of focus for bankers is to be good financial counselors to customers," Brannen says. "They are spending a lot of time helping customers understand their FDIC-insurance limits and helping them maximize their coverage."
Despite the current economic challenges, local bankers remain optimistic. "Even in this environment, we are seeing new entrants to the marketplace," Brannen says. "Banks have been the traditional partners to businesses and consumers, and that has not changed. With Gwinnett”s continued growth, it will remain a market banks will be eager to serve."
Indeed, Georgia”s growth rate is expected to be double the national average over the next five years, and as the state and Gwinnett County continue to draw new residents, established and new banks will continue to offer great service and banking products, competitive pricing and good financial management advice in order to attract and retain customers.
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