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Thursday, July 24, 2008

Governor Reassures Consumers that NM Banks Solid

By Barry Massey
Associated Press
       SANTA FE — Gov. Bill Richardson has a message for New Mexico consumers: The state's banking system is sound.
    "While tensions run high across the country about the failing banks, delinquent mortgages, home foreclosures, I can say with confidence that New Mexico's banking system is strong, solid and sound," Richardson said Thursday at a news conference.
    Leaders of several community banks and the state's banking regulator joined Richardson in saying New Mexico's banks aren't suffering the financial woes that have occurred in other states that have been hit hard by falling housing prices, rising foreclosures and tighter credit.
    Earlier this month federal regulators took over the failing IndyMac Bank — the second largest financial institution to fail in U.S. history. The California-based savings and loan was one of the nation's largest home loan lenders, including riskier mortgages.
    "New Mexico is not going to have the problems other states and other banks have had because our banking system is strong and sound," Richardson said.
    There are 37 state chartered banks in New Mexico with $9 billion in assets and deposits. They are licensed and regulated by the Financial Institutions Division in the Regulation and Licensing Department.
    "Our banks are well managed and well capitalized," said William Verant, director of the division.
    New Mexico banks have experienced lower loan losses, he said. The rate of charge-offs for bad loans by state chartered financial institutions in Florida was seven times higher than in New Mexico during the 12 months ending in March and the rate in Nevada was almost 13 times higher than in New Mexico, according to statistics from the Federal Deposit Insurance Corp.
    Verant and banking executives said New Mexico's banks were stronger in part because the state's economy has been steady and there hasn't been the real estate speculation that occurred in places such as Nevada, California and Florida.
    "I think the underlying strength is the community basis of our banking system," said Verant.
    Bryan "Chip" Chippeaux, chairman of Century Bank, agreed.
    "You're dealing with local folks and you're looking your customer right in the eye. You're not going to put them into subprime mortgages. You're not going to put them into home equity lines of credit that exceed the value of their house. You're really going to deal with them on a personal basis," said Chippeaux.

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