Amid banking worries, N.C. banks are strong

The North Carolina Bankers Association says the state's banking industry is exceptionally strong, but not foolproof.

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In the nearly steady stream of bad news about banks, many consumers are likely wondering if any bank is safe.

Financial institutions of all sizes are facing problems with souring debt in a weak economy, even if they haven't been hit hard like Wachovia Corp., or like IndyMac Bank F.S.B., which the government took over Friday.

Even so, earnings reports and an analyst's assessment of Wachovia on Tuesday showed that financial companies are still suffering credit losses – and portended more bad news as more banks' second-quarter results come out.

"I would not anticipate that any of North Carolina's institutions are really at the worst end of what's going on, but that's speculation," said Paul Stock, executive vice president of the North Carolina Bankers Association.

The association says that although individual institutions might struggle, the state's banking system is strong and will remain strong.

"I think the message is, one, not to panic; and two, the banking industry is exceptionally strong in North Carolina," Stock said.

The Federal Deposit Insurance Corp. insures consumers’ deposits up to $100,000 per depositor per bank and up to $250,000 for retirement accounts, the Bankers Association said.

Across the nation, analysts say they don't see consumers fleeing en masse from their current banks in search of safety elsewhere. IndyMac customers were lining up for their money despite government assurances it was safe, but so far, that seems to be an isolated case.

"Yes, there was a bank failure. Yes, there [were] a lot of people wanting to get their money. But I don't think there is any sort of distrust in our banking system," said Keefe Bruyette & Woods analyst Jefferson Harralson. "Some banks, as it is right now, are just more risky than others."

Bart Narter, senior analyst at Celent, a Boston-based financial research and consulting firm said, "If people pull out their money [from] one bank, they will put it in another bank."

"The FDIC works," Narter said. "I think that consumers can rest easy that their deposits are insured."


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