Daily Oklahoman

Bankers bullish on state's economy

Their greatest concern is on the impact of gambling

03/09/07

By Don Mecoy
Business Writer

Oklahoma bankers are bullish on the state's economy but are concerned about the impact of gambling and payday loans on bounced checks and past-due loans, according to a scientific survey released Thursday.

Most of the 500 bank managers who responded to the SoonerPoll.com survey reported that gambling has caused a 1 percent to 10 percent increase in nonsufficient funds transactions and past-due loans. Nearly 80 percent of rural bankers reported higher nonsufficient funds problems, the survey found.

Roger Beverage, president of the Oklahoma Bankers Association, said bankers across the state call him occasionally about the impact of gambling on customers. The mostly rural location of casinos in the state likely contributes to higher incidence of problems in those areas.

"This confirms for me what I've been hearing on an isolated basis from bankers around the state,” Beverage said. "This is something that we need to be aware of. This is a new phenomenon for bankers and for Oklahoma generally”

The poll, commissioned by the bankers association, is the first time bankers have been queried about their opinions and observations, Beverage said. SoonerPoll Chief Executive Officer Bill Shapard said a second poll, planned for next year, could help determine if the gambling problems are growing worse.

Most of the bankers reported that more than 2.5 percent of their customers had sought help from a bank with payday loans, the short-term, high-interest loans that were legalized in 2003 in Oklahoma. Again, the impact was greater in rural areas than in cities.

"What we're trying to do is figure out what bankers are seeing — not from their own practices because that isn't what they do — but from their customers who are coming back and saying ‘Hey, I need some help.'” Beverage said.

Most of the bankers responding to the poll offered an optimistic outlook on their local economy and the state's economy. More than three out of four respondents rated the current health of the local and state economies at "good” or "excellent.”

Chad Wilkerson, Federal Reserve regional economist, said the bankers' positive assessment is consistent with recent economic data. Oklahoma's employment growth, which had been outpacing that of the nation, has slowed to about 1.5 percent, a rate virtually identical to that of the nation.

Gary Simpson, Oklahoma State University finance professor, said the state's economic growth has slowed from the torrid pace of 2005-06, but he agreed with most of the survey respondents that the state's economy is in good shape.

Looking ahead, about 90 percent of the bankers said they expect their local economy and the Oklahoma economy to grow over the next six months.

Simpson said he also anticipates growth, but at a slower pace due to sluggish housing activity, weakness in worker productivity and high energy prices. "But we will have growth,” he said.

About half of the bankers predicted long-term and short-term interest rates will remain unchanged, although about one-third of respondents said they expect short-term interest rates to fall.

"That could mean the cost of borrowing goes down,” Beverage said. "What that means for bankers is they're going to have more competition, tougher competition for business, but that's good news for Oklahoma consumers because that competition is going to help them be more prosperous and borrow at lower costs.”

Nearly half of the bankers said they are "somewhat concerned” or "very concerned” about over-valued real estate, either commercial or residential.

Wilkerson said even if state property values were to fall "it would be from, if not all-time, then close to all-time asset quality.”

The scientific survey of bank managers was conducted in January and February and has a margin of error of plus or minus 3.35 percent.

© The Oklahoma Publishing Company