Banks remind depositors
their money is safe

Copyright © 2008
Gallup Independent
By Jim Tiffin
Cibola County Bureau

GRANTS — Having lived during the Great Depression era of the late 1920s and early 1930s, 86-year-old Kathleen Webb has a better perspective than most on the current financial crisis on Wall Street and throughout the nation.

“We were poor,” she said. “My father worked on a muddy road for $1 a day and he had a team of horses so he got another $1 a day,” she said. “That was a big deal.”

Webb said young men were marching in front of the White House in Washington selling pencils or apples for a penny each.

“I saw families camp out on the Lafayette Square directly across from the White House, those tent camps were called Hooverites,” she said.

“Thank God, when President Roosevelt came into office he started the commodities, 100 pound barrels of lard, beans and potatoes. That saved our family.

“We would have starved to death if he hadn’t stated that program,” she said. “There was no work anywhere for anyone.”

Local banks solvent

Pat Dee, president and chief operating officer of First Community Bank, with branch officers in Gallup and Grants said today’s financial crisis, with Wall Street investment banks such as Lehman Brothers and Merrill Lynch failing and the government’s bailout of insurance company AIG, is much different though, than the problems in the Great Depression.

Today’s bank customers have accounts insured by the federal government up to $100,000, per account, he said.
That was the problem back then, no bank deposits were insured.

“We learned lessons from that and that is why accounts are insured by the Federal Deposit Insurance Corp., today,” he said.

First Community has 60 branches in several states, including New Mexico, Arizona, Colorado, Arizona and Utah, although the two branches in Utah are closing.

Those branches were part of a bank that was purchased by First Community and his firm has decided they no longer want to be in Utah.

First Community Bank, which is federally chartered, has assets of $43 billion and 100,000 customers, he said.

“Our asset to liability ratio is about 100 percent,” he said.
The problem with the banks that are failing is that they have made too many loans that they cannot cover because of the losses, due in large part to the sub prime lending practices, (which is where a lender will make a loan to someone who cannot pay it back and then takes a loss when that person defaults), he said.

Ron Williams, president of Grants State Bank, said the bank, although chartered by the state of New Mexico, is also insured by the FDIC and accounts up to $100,000 are safe.

He said the bank has 3,500 customers and $100 million in assets.

“We are well capitalized,” he said.

Banks in New Mexico are very sound. In fact we are second in then nation in profitability behind the banks in Oklahoma,” he said.

On the net: First Community Bank, www.fsbnm.com; Grants State Bank, www.grantsbank.com.