Bankers gauge market's effect on local economy

Local bankers still believe Springfield is pretty well insulated from the general downturn in the national eco-nomy.

However, attitudes and strategies of homeowners, businessmen and investors have changed.

Mark Harrington, executive vice president and co-founder of Old Missouri National Bank, said he believes that the economy doesn't affect Springfield as much as other cities.

He said local investors are somewhat protected from the changes in the economy because they're "pretty conservative."

"They don't go out on a limb," Harring-ton said.

"When things are prosperous, they're patient, and they're also prudent through adversity."

Harrington said that a number of customers are interested in insured bank investments, which includes CDs and money markets. "They're a safe haven from the stock market turmoil. A 5 or 6 percent return on your bank investment is pretty exciting compared to what the NASDAQ is doing."

Long-term loans

Old Missouri began offering fixed-rate mortgage loans in February and has since seen a rise in residential loans.

"Long-term loans are pretty good right now because of the decline in the interest rate," Harrington said. "It's at approximately 7.25 percent right now. That's an attractive rate by historical standards. Real estate developers are fairly optimistic because of the good mortgage rates. We're seeing people buy homes or trade up for another one."

Bruce Swenty, associate vice president at A.G. Edwards & Sons, has an explanation for developments in the stock market.

"It's been beaten up pretty heavily primarily because of the technology selloff led by the dot-com phenomenon," Swenty said. "It got ahead of itself and came tumbling down as quickly as it rose. But the lowering of the interest rates that the Federal Reserve is doing should help the banking industry considerably.

"It will cost banks less to borrow from each other and from the Federal Reserve. Hopefully, it will spur the economy, but it can take four to six months before that's accomplished."

Customers' calls

Tom Fowler, president and chief executive officer of the State Bank of Southwest Missouri, said customers aren't calling because they're in a panic over the economy. "They want to know what will happen to the interest rate, because they want to refinance their home."

As of April 2, State Bank was offering a 30-year fixed rate of 7.125 percent, but that rate can change daily. Fowler said that while national conditions play a part in the local economy, Springfield doesn't feel the swings, either up or down, as much as other cities. "There are a lot of small businesses here and the owners are industrious and find ways of keeping their business profitable and operating," he said. "They're finding alternate ways of doing business to compensate for the downturn in the economy. There aren't a lot of big plants here, like General Motors, that are susceptible to shutdowns and layoffs,."

The philosophy of the State Bank of Southwest Missouri is considered to be fairly conservative, he said. "It's that investors have to be investors for the long run," Fowler said.

"The economy is cyclical. This is not a time for people to panic."

Conservative borrowers

While residential borrowing is up at Old Missouri, commercial lending isn't.

"We've seen our commercial borrowers become conservative in their capital expenditures such as equipment," Harrington said. "They're taking a wait-and-see attitude because of the uncertainty in the national economy. If they can put off purchasing something, they will."

Kirk Bossert, senior vice president of Signature Bank, said he's seeing more demand for loans now than at the beginning of the year.

"The rates are lower right now," he said. "A 30-year fixed residential loan is 7 1/4 percent and the commercial prime lending rate is 8 percent. It was 9 1/2 percent at the beginning of the year."

Bossert said people aren't saying they're worried, but they are acting cautiously, "The change in the market is causing them to rethink how and where they're going to reinvest their money. Their appetite for risk has diminished."