The Edmond Sun

Bankers bullish on economy

03/11/07

EDMOND — Oklahoma is in great shape economically, according to a recent survey of 500 bank managers statewide.

Edmond’s Roger Beverage, Oklahoma Bankers Association president and CEO, said that’s good news for the local community as well as the state.

The information was reported based on a study conducted by SoonerPoll.com, an Oklahoma public opinion research firm, and presented at a press conference at the OBA headquarters in Oklahoma City last week. The poll was commissioned by the OBA.

“We intended to go to the grassroots and find out what bankers are seeing every day,” Beverage said. “We hadn’t ever done that before, to the best of my knowledge. I wanted to go to bankers themselves and ask, ‘What are you seeing?’”

The OBA president said he was pleased by the response.

“The strength of the industry is really at an all-time high,” he said. “This says great things about the state of Oklahoma’s economy. Bankers are very bullish.”

Along with many positive indicators, bankers noted a slightly negative impact created by gambling in some areas.

Adverse impact from increased gambling activity has caused a 1 percent to 10 percent increase in non-sufficient funds charges and past-due loans for a majority of Oklahoma bankers, the survey indicates. Almost 80 percent of rural bankers reported an increase in NSF charges, or overdrafts, as a direct result of gambling; just more than half of urban bankers said gambling had caused NSF charges to increase.

“I started getting isolated phone calls last fall from around the state from people who were concerned about the gambling issue,” Beverage said. “Some reported getting a lot of bounced checks written to casinos.”

Although about 25 percent of bankers surveyed reported no increase in NSF charges due to gambling, about 50 percent did report some increase.

“It’s an unintended consequence of the gambling issue,” Beverage said. “It bears watching.”

A similar trend was reported regarding late payments and past-due loans, with 67.5 percent of rural and 45.6 percent of urban bankers reporting increases caused by gambling.

“It hasn’t affected past-due loans as much (as NSF), but I don’t think we should just ignore it,” Beverage said. “Observers need to be aware.”


Is it really payday for consumers?

Problems with “predatory” lenders such as payday operators are significant in most Oklahoma communities as well, bankers said. A majority of bankers reported payday lender problems with as many as 2.5 percent of their customers. Again, a heavier impact was reported by rural bankers — 63.7 percent, compared to 48.3 percent of urban bankers.

Payday lending institutions have been legal in Oklahoma for about two years, Beverage said.

“We have watched them grow,” he said, adding he has heard of cases where consumers have borrowed $1,000 on a payday loan and ended up owing several thousand dollars in fees and interest payments. They then turn to a traditional bank for help.

“Of course, these are higher-risk loans and they demand a higher-risk premium, but the question is whether this is becoming a problem,” Beverage said. “It’s not a huge problem now, but it is something on the radar screen.”

The survey asked bankers to identify the entities from which they felt the most competition for customers. Most bankers listed other banks in the community, followed by credit unions and other financial institutions.

Credit unions were listed as the top or second most significant competition by just under half of the bankers surveyed. Bankers said credit unions have a competitive advantage, as they do not pay federal income taxes and are not subject to community reinvestment consequences.

While the majority of bankers believe both their local economy and that of the state will stay about the same, those who predicted growth believe more will take place close to home.


Economy on target

Both the state and local economies were rated “good” by most bankers, and bankers were more than twice as likely to rate their local economy as “excellent” compared to the state’s.

The study showed bankers slightly believe commercial loan demand will exceed residential loan demand in 2007.

Bankers believe by a two-to-one margin that short-term interest rates will go down, then go up. Less than half believe short-term interest rates will stay the same in the next six months.

The study was implemented as part of the OBA’s ongoing effort to enhance public understanding of the importance of the banking industry when it comes to the state economy. The survey had a margin of error of 3.35 percent.

Beverage said he’s pleased by the statewide poll and the positive outlook.

“It’s something Oklahoma and Oklahomans should be really proud of,” he said.

“Of course any survey is only a snapshot in time. The interesting thing will be the trends that develop.”

Beverage and his family have lived in Edmond for 19 years, and he said Edmond is looking at a bright economic future as well.

“What (this study) says about Oklahoma in general and Edmond specifically is good news for consumers. Banks and other providers are going to have to work harder, and that’s a good thing. Competition is good for Edmondites.”

© The Edmond Sun