Last year was the worst for banking in general since the Great Depression. The consensus is that it will take another year or so to correct current conditions. The global downturn is creating survival of the fittest conditions, but Kentucky’s financial community generally likes its survival prospects. Their prudence earlier in the decade steered most state bankers away from high-risk activities and left them with balance sheets that will get them through a tough 2009 and position them for growth when the economy turns upward again. Kentucky’s diverse economy is an asset in the meantime.
The commonwealth’s community banks say they enjoy good levels of trust with their customers.
“I expect it will get worse before it gets better, but sooner or later demand will again match supply and people will start spending again.
“The challenging times are another reminder to all of us about risk. The market is an effective mechanism and with any return there is commensurate risk. We also learn that the smartest aren’t always the best as the market can spawn a form of greed from the likes that have appeared on Wall Street. Don’t ever underestimate the value of accountability in those with whom you do business because when challenges arise you want to be able to touch the people you need.”
“The rollercoaster ride on Wall Street is the main topic of conversation today. Our bankers are reassuring customers, while the sky might be overcast, it is definitely not falling. We’re letting both business and retail customers know we are here to help them map out a strategy to get through these tough times, which are predicted to continue into the coming year. Our bank, both locally and nationally, is healthy, and benefiting from consolidation taking place in our industry. And as we like to say, “We’re open for business.”
“While businesses are being more cautious with their plans and level of business for 2009, Louisville business leaders are being prudent and responsible in executing their business plans with discipline during this time of economic stress. Activity is slower, but businesses continue to expand and invest for the long-term and are working closely with us on their credit needs and overall financial plans.”
“Past due and nonperforming loans have increased, especially in residential construction and development. Inventories are still double normal. We expect housing to remain very soft.
“As the Federal Reserve made unprecedented cuts in the interest rates, lower margins and increased loan loss provisions led many banks to report forth quarter losses and some losses for the entire year. Bank earnings are down.
“A next wave of loan problems may be in commercial real estate with announced shutdown of retailers and increasing vacancies in office and retail buildings. Kentucky banks are some of the best capitalized and tend to be run conservatively. Expect few or no bank failures in the state unless the recession/ depression runs an extended period of years.”
“JPMorgan Chase & Co. has continued to provide financial services including lending to businesses and consumers in Kentucky. In fact, Chase is in a unique position to grow during these challenging economic times because of our well-capitalized position of strength.
“We’ve seen significant demand for acquisition financing from our commercial clients. Companies that are doing well are looking to buy their competitors. We’re in a ‘survival of the fittest’ economy, and Chase is well-positioned to help our clients.”
“Although the Fed has lowered interest rates to historically low levels, consumer confidence has been further eroded as unemployment has risen and the stock market has fallen. Consumers are taking advantage of rates and are rushing to refinance mortgage debt. We expect this to continue into spring and for home and automobile sales to slowly rebound as the year progresses. Strong community banks should weather the storm, but it likely will be a very mixed year with growth still below normal ranges.”
“The financial services industry experienced a tumultuous 2008, and this year will bring additional challenges. The current situation will likely produce changes that affect both the banking industry and the entire economy. Financial service professionals must now – more than ever – be trusted advisors to their clients and help them through this time. A positive note is that the Central Kentucky economy, though far from immune to national struggles, is performing better than national averages. This is largely due to our diverse economy and a highly educated workforce.”
“It should be no surprise to anyone that the past year was the most difficult for the banking industry since perhaps the 1930s. In early 2008 we were worried about an inverted yield curve and the effect that it would have on our net interest margin. Now our concerns are regarding falling collateral values, constricted borrower cash flows, and reduced sales of both new and existing homes. We are thankful for a relatively stable local economy and hope that 2009 is a better year for all.”
“These times have led to increased apprehension among bank customers — both in terms of their bank’s ability to continue to provide lending products and services, and the safety of their deposits. Those banks that succeed will be the ones to answer the consumer’s cry for personal attention.
“Stock Yards Bank & Trust has worked to build confidence with its customers by delivering products and services with an attention to detail and a commitment to exceeding expectations. These efforts to establish trust and demonstrate unparalleled safety and soundness in our practices have led to a sense of tremendous loyalty among our customers, for which we are truly grateful.”
“While Central Kentucky has not experienced the severest impact, businesses here are certainly experiencing the stress of the current U.S. economic environment. It is a particularly difficult time for some smaller retail businesses. We expect to see businesses with more diversified, conservative business plans continue to draw on their best practices and maneuver through this economic cycle with success. ”
“With the current state of the U.S. economy, it is good to be a community bank in Kentucky.The economy never gets as good in Kentucky as other states, but it never gets as bad either. The diversity in the economic base within Kentucky has created an environment where financial institutions have not been as adversely impacted as those in other states. Kentucky’s banks are considered stronger and more stable than banks in other states. Community Trust’s strong capital position allowed us to decline participation in the Treasury’s Capital Purchase Program, and we continue to offer the same products and service that we have for the past 105 years.”
“2008 presented a combination of challenges unprecedented in the nation’s history. Although less severe than in many areas, Kentucky experienced many of the same economic realities. We expect many of these issues to continue through at least the first half of 2009. Economic conditions have forced many individuals and businesses to refocus on the fundamentals of finance: increasing savings, borrowing and spending within their means, and becoming more knowledgeable about their unique situations. Banks, too, are focusing more on the fundamentals.”
“While BB&T feels optimistic about the long-term Kentucky economy, we are prepared for a challenging 2009. BB&T has avoided many of the challenges that have plagued the industry. Slowdowns in the real estate, automobile and manufacturing sectors have ripple effects in the economy, which all have an impact on Kentucky’s economy. BB&T is responding by working closely with our client. BB&T has experienced very good growth in loans and deposits, and we look forward to continuing to be among the strongest banks in the country.”