EDMOND — While many lending institutions across the nation are seeking funds under the Treasury Capital Purchase Program, bank representatives say conservative lending and a sense of community have left most Oklahoma banks in a position to decline those funds in spite of difficult economic times.

According to the U.S. Department of the Treasury Web site, the purchase program was created under the Emergency Economic Stabilization Act to encourage U.S. financial institutions to build capital to increase the flow of financing to U.S. businesses and consumers and to support the economy. Under this program, the Treasury will purchase up to $250 billion of senior preferred shares on standardized terms.

“What we enjoy in Oklahoma are conservative banks that maintain more capital than banks in New York and West Coast banks,” said Keith Geary, CEO, chairman and president of Capital West Securities, the largest locally owned brokerage firm in Oklahoma. “We don’t have the irresponsible lending of other institutions.”

He said a concentration of family owned banks in Oklahoma also is a factor in the state’s current economic stability. Oklahoma banks know their customers and don’t tend to subject themselves to the same risks that other banks do nationwide for the sole purpose of generating more revenue, Geary said.

“They’re careful lenders,” he said.

Many banks, including Arvest and BancFirst, keep healthy loan to deposit ratios of about 80 percent. Some banks have ratios as high as 100 percent or more, which means they loan out more capital than what they have.

“Many of the banks in Oklahoma went through the 1980s,” said Brad Krieger, chairman of the Oklahoma Bankers Association. “While it was a difficult time, people learned. We haven’t made the same mistakes. On an overall basis, the banks in Oklahoma are well capitalized.”

Geary said some of the downsides to participating in the purchase program is that the regulatory burden still is unknown, the funds tend to have higher than market interest rates and a bank’s progress might slow as they pay off these loans before starting new projects.

“What we opted not to do is be part of the Capital Purchase Program,” Krieger said, Oklahoma City and regional executive vice-president for Arvest Bank. “We didn’t need those funds. We’re able to continue with business as usual.”

He said they have always maintained their capital and their underwriting standards have not changed during the years regardless of economic standing.

Kelly Brander, Arvest Bank president and CEO of Greater Oklahoma City, said they, for the most part, will continue to follow their strategic growth plans. Arvest Bank still will open three new branches in Oklahoma between now and February, including a fourth location in Edmond. Brander said they also will continue land acquisitions in 2009 to expand in other areas in 2010.

“A lot of the weaknesses you hear on the news are not applicable to Arvest,” Brander said.

For example, he said one common thing among banks is exposure to the sub prime real estate market, which Arvest has not participated in.

Jay Hannah, executive vice president of financial services for BancFirst, said they also are opting not to participate in the program.

“They are not inexpensive dollars,” Hannah said. “This money belongs to the taxpayers of the United States.”

He said they have been prudent lenders in past years, have no debts and have no brokered funds, which means they have not used depositors outside of their primary markets.

“We have no plans for retarding our branch projects under way,” Hannah said.

While Arvest Bank and BancFirst are declining participation in the purchase program, both are participating in the Temporary Account Guaranty Program. According to a press release issued by Arvest Bank, the program provides full FDIC deposit insurance protection, regardless of balance, for non-interest-bearing transaction accounts and for certain demand deposit accounts, which pay less than half a percent of interest.

Still other banks, including MidFirst Bank, have not yet made the decision about participation in the purchase program. According to an e-mailed statement, Daniel Adams, first vice president of MidFirst Bank, said that the bank’s ownership structure is a subchapter S corporation.

“The treasury department has not yet issued the terms of the program for S corporations,” Adams said. “Once those terms are released, MidFirst will review the opportunity and make a decision at that time.”



cbryce@edmondsun.com | 341-2121, ext. 112