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Local banks say they have plenty of money for qualified borrowers

Sharon Caskey Hayes • Sep 30, 2008 at 12:00 AM

KINGSPORT — The nation’s financial crisis may have created a credit crunch on the national level, but local bankers say they have plenty of money to lend — if you’re a qualified borrower.

“We have money to loan and are actually seeking out loans,” said Bank of Tennessee Chief Executive Officer Roy Harmon. “Our capital position is strong. We have good liquidity and no serious loan problems. We don’t have any issues at Bank of Tennessee that we’re worried about.”

But concerns have been on the rise this week, escalating Monday when lawmakers rejected a proposed $700 billion bank rescue, which sent stocks tumbling a record 777 points.

The crisis stems from the mortgage meltdown and subsequent large bank failures, and some experts predict the crisis will spread from Wall Street to Main Street, freezing money transfers from bank to bank and causing job losses and recession across the country.

At Citizens Bank in Kingsport, President Bill Dudney said the average consumer who wants to buy a house in this area should have no problem if they have good credit and a job to support payments.

However, lending for commercial development — particularly for the acquisition of land and the development of new residential subdivisions — has slowed in recent months as the housing market struggles nationwide, and as inventory of homes up for sale increases.

“It takes time to work through that inventory, so that type of lending has slowed down,” said Dudney. “Now is not the time to be out there with a large inventory of unsold homes.”

Dudney said basic commercial lending for projects such as strip shopping centers has also experienced a slowdown.

Still, large commercial investments continue to be strong in the region, said First Tennessee Bank President Larry Estep.

“You always tweak your credit policies based on what’s going on in your local market, and of course we look at what’s going on nationally. We’re looking at credit a little closer, making sure we’re not missing anything. But that’s just prudent business,” Estep said.

Still, he said money is available to borrowers with good credit.

“Anytime you go through these cycles, credit may tighten up a little bit. But people who have good credit should be able to get a loan,” Estep said.

Dudney agreed. “If you’re a qualified borrower, I don’t think you’ll have a problem. But the key word here is ‘qualified.’ Banks have to show you are qualified.”

Harmon said people should understand their personal financial situation now more than ever.

“There are a lot of people out there who are overextended, so they need to look at that,” he said.

And while the financial crisis has already claimed some of the large banks and investment firms, other financial institutions are sound, local bankers said.

“When it’s all over, we’re going to be standing tall,” said Harmon, who was on a bike trip in North Carolina on Tuesday.

“If I was really worried, I wouldn’t be over here riding my bicycle through North Carolina.”

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