Debits – over-regulation and governmental uncertainty
Credits – devoted employees and loyal customers
By Carolyn Roy, Carolyn@natchitochestimes.com
Leaders of several financial institutions in Natchitoches are optimistic that the local economy will mirror that of the nation with slow and steady progress in 2019. They have concerns about over-regulation and governmental uncertainty but generally believe the new year will be a profitable one. They all point to their greatest assets—-devoted employees and loyal customers. They shared their views on a number of questions including the high and low points of the past year, factors affecting their growth, the effects of good and bad economies and financial trends. Here are comments they shared with the Natchitoches Times.
BOM continued in 2018 as we have for several years with good growth and income. The highlights of the year were several banking bills passing in congress that eased regulation on community banks. Not enough but lessened the burden slightly. Low points are Louisiana’s continued sluggish economy and budget problems in Baton Rouge. Leadership or lack there of in Baton Rouge continues to be the largest problem our state faces. Tax gimmicks, “economic cliff”, cutting higher education continues year after year. Business and Industry doesn’t want to come to or invest in a state with so much uncertainty. I think the Federal Reserve has gotten ahead of itself in raising interest rates and has slowed an economy that has been vibrant and growing with basically no inflation. Workers need higher wages and those have been coming but with the slowing economy, this could change. Low oil prices are great for the consumer with lower gas prices but to low and it hurts our state and causes job losses.
To me this is a major item to watch in ‘19. There’s probably no industry affected more by the economy than banking. A weak economy slows economic growth which slows borrowing needs which slows businesses investments. When the economy turns bad, banks curtail lending and liquidity dries up and that’s what leads to a recession. BOM plans to continue to grow strategically. We will continue to pursue branches in markets we feel fit our needs. We will also continue to pursue others to purchase if the price is right and the culture fits well with BOM’s culture. Over the past three years we have made four strategic purchases and expanded our footprint from Bossier to Rapides parish. Early in’19, we will open our 14th location.
No matter the economy, we will continue to make moves we feel are strategic for BOM for the long-term. In ‘19, BOM enters its 116th year in business. We have grown from one location to 14 with a full-service independent insurance agency as well as a financial consulting business as well. We have approximately 125 employees. BOM’s strength is easy and I can say it in 1 word, “Employees.” We have the best staff in our industry and that is what sets us apart. Banking is a commodity. We all offer the same basic products, basically the same rates and terms. It’s how we at BOM deliver these products and services.
We believe in giving back to our community and our staff is very proud of the communities we serve. In ‘18 we had bank-wide over 5,000 volunteer hours. This is not volunteer hours during work time, this is after hours. Weekends, nights, mornings, our staff works and gives back. I challenge everyone, myself included to shop local, volunteer your time and energy to our communities. If we don’t do it, nobody else will. Thank You VERY much to our customers and clients.
Exchange Bank had a very good year in 2018. We have enjoyed some modest growth and continue to benefit from long-term relationships. Uncertainty is the enemy of a good business climate and we have had a lot of uncertainty from our national political leaders. The discussion over the tariffs combined with a wet harvest season affected a lot of farmers and that is a major factor for our local and state economy. The regulatory climate is better, but it is still stifling for community banks. Small, community banks were not the reason behind the economic problems from 2008, but we have endured numerous regulatory restrictions as a result of those difficult times. Community banks are a good barometer for a local economy.
If the local area is doing okay, then the local banks are generally doing okay. I would not describe our local economy as booming, but there are areas of our state that are far worse off than we are. We are not in the business of predicting interest rates, but the Federal Reserve has indicated that rates will continue to rise in 2019, but maybe a little more modestly than what was originally thought. It also appears that the political discourse in Washington will continue to dominate the discussions and lead to increased volatility. We can’t control either of those issues so our focus will continue to be on meeting the needs of our customers, employees and shareholders.
Exchange Bank is pleased to be the oldest continually operating financial institution in the state of Louisiana. We are proud of our heritage, but we are even more excited about our future. Our employees combined with our stability and capital make up our most significant strengths. We’ve been in business for over 126 years and we’ve been through the normal ups and downs of business cycles. Since 1892, we’ve helped make Natchitoches a better place and we are looking forward to the next 126 years of business here in our hometown.
We are happy to report to the Natchitoches community that City Bank & Trust Company had a very good year in 2018 and were well above our budget. Our home loans increased during the year and we also had a very good year in the secondary home mortgage business. We also increased deposit rates several times throughout the year for our customers. We think loan demand should increase more this year. Local property taxes increased in 2018 but we welcome the opportunity to help our local education system, etc. State and Federal regulators are in the banks almost every year or two and I feel that banks, in general, are much more stable than years ago.
The upcoming CECL Regulation should also increase banks stability. As the Fed increased rates four times in 2018, that actually encouraged people to buy or refinance now before rates increased even more. Interest rates are still very low in comparison to the 1980’s. With oil prices down, it puts a little more money in people’s pockets and that certainly helps the local economy. A good economy definitely helps our local community and our bank. A bad economy effects some local employment as we have some customers in the oil service business. Although with fracking, the break-even well price has declined, which has helped the oil industry.
The tariff struggles have not really affected the local economy up to this point. Home prices seem to be stable in our area. We expect to see the Fed slow down on rate increases in 2019. We have given back to our deposit customers as we have increased some deposit rates again, already this year. Debit card transactions have increased as people are writing less checks and internet banking has dramatically increased and changed the way people bank. City Bank is a community bank established in 1933. We have five locations in Natchitoches and Sabine Parishes and we have 65 employees.
City Bank has consumer and commercial loans with very competitive rates. We offer checking, savings, CD’s and IRA’s. We also have an investment checking account that is presently paying more than some CD rates. City Bank has deep roots in the community with a very strong board and our employees are well trained and really do an excellent job for our customers. We are committed to doing the right thing for our customers and our community. Our loans are in good condition and we are very strong in our bank’s liquidity position. I look forward to another great year in 2019.
Our employees serve the community in various positions as members of the Chamber of Commerce, Service Organizations, supporting local schools, NSU, Natchitoches Regional and local law enforcement, firemen and EMT’s. We operate our bank in a safe and sound manner every day and we strive to provide excellent customer service where you can get a response quickly. We are optimistic about the future and invite you to call or come by anytime.
Mary Ann Nowlin
La Capitol FCU performed well in 2018, returning as much as $6 million to our members through better loan and savings rates and lower fees. Our rewards checking account was recognized as one of the “Top-High Yield” checking accounts by Kiplinger Magazine in the October 2018 issue. Also, La Cap contributed over $100,000 to various charities community service organizations in 2018. We’re proud of that. The increase in the Federal Funds Rate during 2018 helped improve interest spreads and resolution of the State’s budget problems improved business and consumer confidence.
Changes in leadership at the Consumer Financial Protection Bureau provided some regulatory relief during 2018, but the ever-increasing volume of regulation and regulatory costs continues to be a concern, especially for small, community credit unions and banks. Louisiana citizens will need financial services no matter what the economy looks like. La Cap is ready to assist members with their financial needs in any economy with competitively priced products and services, and free on-line financial education and budget tools. That could be a mortgage loan for their dream home, an IRA savings account with an above market interest rate or assistance to manage their credit union accounts following major life event, such as a natural disaster or economic crisis.
In fact, La Capitol FCU is currently working with members affected by the US Government shutdown. Moderate growth is projected for La Capitol for 2019. The 2019 US GDP growth is expected to be slower at 2.25 percent, inflation stable at 2.25 percent and the unemployment rate to remain low. Interest margins will tighten as the pace of Federal Fund Rate increases slows and the cost of funds increase. Higher mortgage loan rates and increasing home prices will slow home sales. Auto sales will be affected by higher auto loan rates. Savers should see higher interest rates on their deposits. La Capitol FCU is a full service financial institution with 16 branches statewide and two branches in Natchitoches. We have been serving the people of Louisiana for 58 years.
The credit union offers a full range of financial products: •Loans – home loans, credit cards, a full range of secured and unsecured consumer loans, and commercial loans •Deposits – savings, checking, IRA and certificate deposit accounts. •State of the art home banking and mobile app •Insurance – credit protection, home and auto insurance through TruStage Insurance •Investment advisory services through LPL Financial Services La Capitol FCU employees almost 200 Louisianians and serves 48,000 members, as well as members of other credit unions through the shared branching network.
Our strengths are the following: •Member service levels •Financial strength Leading edge technology •A focus on the communities we serve •Committed and engaged employees •Integrity, honesty and quality In the upcoming year, La Capitol FCU looks forward to improving the financial well-being of our members and making a positive difference in the lives of our members and the communities we serve.
We are continually grateful for the outpouring of support for Engage, a locally owned financial institution. Membership has increased substantially and we’ve help individuals and businesses by providing more loans in 2018 than in previous years. We are a federally insured credit union and a high point in 2018 was introducing microbusiness loans (very small business loans) to small business owners in our region. We successfully completed a name change, as part of a planned expansion, to convey to the public that we are not just a credit union for the employees of Red River Mill, but for most of Northwestern Louisiana. We are financially strong and poised for continued growth in 2019.” We benefit from consumer confidence, and increasing small business growth in our region can be an indicator of a strong economy or a time when residents are launching small part-time businesses to income patch. While Louisiana remains one of the states with the fewest consumer protections from usury predatory lending, we are fortunate that consumers are becoming increasingly educated that they do not have to rely on payday lenders, auto title lenders, or rent-to-own.
As a CDFI (Community Development Financial Institution), we make loans to people of modest means, with blemished credit, at affordable rates. In times of a bad economy or economic downturn, we see more demand for unsecured consumer loans, whereas in times of increased consumer confidence and an in a better economy, we typically see more families wanting to purchase homes and automobiles, and entrepreneurs who are ready to launch and expand small businesses.
We expect to see increased demand for commercial products, and as we are beginning to longitudinally track credit scores, we expect that some of our credit-impaired borrowers will begin to take advantage of our free credit counseling and budgeting opportunities, to improve credit scores. Also, as we continue to attract younger Gen X, Y, and Millenial borrowers, we expect average loan balances will increase as those borrowers are reaching their peak borrowing years. We are a full-service financial institution, federally-insured, and we offer products ranging from checking accounts and certificates of deposit (CD’s) to affordably priced loans for everything from autos to very small business loans.”