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Banks adapting, too

POSTED: February 4, 2010 9:04 p.m.
Photo by Rick Lott/

Michael Lee, president of Citizens Bank of Effingham, said the economic conditions have been difficult for banks, as well as for the customers.

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The economy has been hard on just about everyone and local bankers are no exception. In fact, in many ways, a local bank’s fate follows that of the community it serves. Just ask Michael Lee, president of Citizens Bank.

“It’s not easy,” Lee said in a candid interview. “We’re navigating through the toughest economy in our lifetime.”

Lee seemed very cognizant of his institution’s role in the community.

“We’ve always taken it very seriously that we’re a community bank,” he said. “The difference is, we know our customers in a way maybe that other banks don’t know their customers. They’re our friends, and sometimes family — we go to church with them. So from that perspective, when the community hurts, the bank hurts right along with them because we’re part of the community.

“It’s not been a whole lot of fun being in the banking business here lately. We enjoy being a catalyst for growth and prosperity and seeing individuals and businesses find success. And that’s the enjoyable part about being a community banker. And recently, we haven’t experienced a whole lot of that.”

Lee acknowledged that community banks face a lot more pressures as compared to just a few years ago.

“The limitations being placed on us are by the economy,” he said, “and I don’t know of a community bank in our immediate area that did not tap into the construction and development market and we did. And that’s where the big issues lie for community banks in our region. The regulations are the regulations and they have been the regulations for sometime. Are they enforced differently in times like this? Yes they are.

“However, the circumstances do warrant that. And even though sometimes we may not agree with some of the things that they put in place, for the most part, the FDIC is interested in making banks healthy, and keeping the community in a position of stability.

“Are they looking closer? Yes, and the thing that drives that is the real estate market,” Lee continued. “In simple terms, land that was worth ‘X’ yesterday is worth less than ‘X’ today. And maybe in cases, less than we loaned, even if we were properly margined at the time. So that’s very difficult to manage through. I think in some cases there’s enforcement of things that were there that’s not been in the past, but there are some new things too — things that have changed. And they are enforcing those as well. Does it make life as a community banker more difficult? Without a doubt.”

There are some bright signs on the horizon, though and Lee agreed that all is not gloomy in Effingham County.

“From a big picture perspective, when you look at Effingham County, there are many, many positive things going on,” he said. “EFACEC is a huge shot in the arm for Effingham County. It’s going to take some time to see the full effect of that, but I understand they’re already moving to Phase II. So that’s positive. I hear positive things out of the ports, which employs many people in Effingham County. It seems that Gulfstream is stabilized. I’m hearing murmurings of other industrial prospects; all of that is very positive for our community. We don’t know when, but the slump that we’re in will pass and we will see more activity, and all that will get related in the real estate market.”

He said that one of the things that has clamped down on demand for a bank’s services has been that it’s more difficult today to qualify for a mortgage because of what has happened in the mortgage industry.

“We originate mortgages, but we don’t fund mortgages here,” Lee said, “so we are dependent upon mortgage underwriting to see houses and lots sell. The inventory of lots, building lots in Effingham County, is greater than it needs to be. And it’s going to take some time to work through that inventory. However, the inventory of houses is coming down. And we’re seeing consistent numbers of houses selling each month, but it’s the lower end, $225,000 and below. But it’s tough — there’s got to be sunshine around the corner.”

Lee said that, just like everybody else in the county, the bank hopes the recovery is beginning and will take effect sooner rather than later.

“It’s our objective to serve the community with honesty and integrity. We have, at the core of everything we do, to have the best interests of Effingham County in mind,” he said. “We are hopeful that we’re all going to pull out of the current situation that we’re in and be able to see the day when we can experience those successes we like to be a part of and be the catalyst for growth and success with both individuals and businesses’ lives. When the community shines, the bank shines. When the community hurts, the bank hurts.”

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