It’s business as usual at banks, credit unions

Area banks and credit unions are reporting hearing from anxious customers about the safety of their investments, and they say not to panic. And one financial adviser is telling his customers to hold firm and ride out the storm.

Officials from area banks and credit unions told the Sun-Gazette that their community financial institutions have not gotten involved with subprime lending tactics and haven't made risky investments, which means they are not facing the type of peril as has been reported on Wall Street.

Officials at Jersey Shore State Bank, 300 Market St., said many people do not understand how the Federal Deposit Insurance Corp. works, but the bank offers their customers brochures and will sit down with them if they need a more thorough explanation.

Officials at both the Jersey Shore operation and Service First Credit Union said they have had calls from concerned customers.

"Once we explain to them that their accounts are federally insured, they usually feel better," Bill Lavage, chief executive officer of Service First said. "We are getting more people calling with questions, but that is a sign of the trends in the economy right now."

Brian Knepp, chief financial officer for Jersey Shore State Bank, said that callers are not in "panic mode" but they just want confirmation that everything is fine.

Knepp said that some people are calling to switch back to financial institutions such as community banks.

And there has not been many changes when it comes to the availability of credit for Jersey Shore State Bank.

"It's business as usual," Knepp said. "We pride ourselves on doing the right thing (when it comes to lending) and we are going to continue to do that."

"There is a great unknown," he added. But he said credit isn't tightening like in some areas of the country.

"There is a storm out there but it's more national and it's not really affecting us," Knepp said.

By law, credit unions can't even invest in the stock market by law and usually lend very conservatively, according to Lavage.

"There are no stockholders or outside investors in credit unions, nor are they listed on Wall Street," Lavage said.

"Credit unions are democratically controlled, so the owners and decision makers are the members, or depositors. Deposits are locally held and loans are made only to those in the credit union's membership."

Credit unions also cannot be bought or sold. They can merge with other credit unions, but there is no transaction involved and no one makes money off of a merger, Lavage said.

And area residents may be concerned about their retirement savings, but should just ride through the storm, according to Bob Thompson, registered representative for Diversified Asset Planners in Lock Haven.

"I've had several phone calls from clients, looking for reassurance of where they should go from here and what will happen," Thompson said. "Nobody really knows what will happen next."

Those hurt the most by the country's financial crisis, he said, are people who use their investments as income because they will have to take money out of their principal, meaning less money will be there in the future.

However, Thompson said for people with long-term investments, their losses now are only "paper losses" and he's telling his clients it's all right to keep the investments intact.

"People get scared and run off and that's the worst thing they can do right now, but it's human nature buying stocks higher when things are doing well and selling low. The result is they're not making money."

Scott Johnson of The Express in Lock Haven contributed to this report.