Allan Dennison, president and CEO of AmeriServ Financial, hasn’t seen his customers with as much interest in the business of banking for more than eight years.

In 1999, the curiosity and concern about financial institutions was generated by the Y2K phenomenon – a belief that computers throughout the world would crash when the calendar turned over from years beginning with 19 to those beginning with 20.

Today, the average banking customer is on alert because of the failure of several major Wall Street investment banks.

What the leaders of the region’s financial institutions are saying is that not all banks are created – nor operated – equally.

They noted again that their banks did not become involved with the types of subprime lending practices that have caused so many problems for so many major lenders.

In fact, as the third quarter comes to a close, most said they expected their financial disclosures, to be released this month, will prove their institutions’ strength.

Some couldn’t comment because of Securities and Exchange Commission regulations.

“We’re all making money,” Elmer Laslo said of the region’s banks.

Laslo, president and CEO of 1st Summit Bank of Richland Township, recently completed a one-year stint as president of the Pennsylvania Bankers Association.

“We’re not in the same boat as the other banks that have been hurt in the housing markets in Florida, California and other parts of the country,” Laslo said. “Part of the reason for that is Pennsylvania banks have historically been well run and have more conservative management styles than in other parts of the country.”

All regional bank leaders polled by The Tribune-Democrat expressed no immediate concerns about the problems on Wall Street and the impact on their institutions.

That lack of concern extended to the area of the developing credit crunch.

While lending between major investment companies has nearly come to a standstill, local bankers are expecting no problems.

“If your credit was good last year or six months ago and you’ve paid your bills, your credit is still good with me,” said Jeff Cook, executive vice president of Somerset Trust Co.

“Community banks exist by taking care of customers in their community,” Cook added. “If you come in looking for a home equity loan or mortgage and you have been a good customer, we’re still here for you today and we’re not going to close the doors on you tomorrow.”

In fact, all of the bankers responding to The Tribune-Democrat noted that deposits and loan generation were on the upswing this year.

They said their respective banks either were completely uninvolved with Freddie Mac and Fanny Mae or had minimal exposure to mortgage products issued by those organizations.

Therefore, none of the responding local banks reported being hurt by the downfall and ultimate government takeover of those groups.

Fewer loan options

Mike Price, president of First Commonwealth Bank in Indiana, said that while credit is readily available from his institution just as it is from the others, consumers are going to find their options are more limited than even a year ago.

“I do think that consumers might be concerned because some of the products that were out there two or three years ago aren’t there anymore,” Price said.

“They don’t have the same types of options they had two years ago.

“The garden-variety 10- or 20-percent down loan is still out there. All of us need to make a living, so we need to make those loans. The products that fueled a lot of higher-priced developments in bigger cities are gone.”

Other opportunities also may be available to the local banks because of their strength in this volatile time.

Bob New, president and CEO of First National Bank – FNB – based in Hermitage, Mercer County, noted that his company’s stock price increase by about $4 per share during the past month despite the chaos on Wall Street.

Healthy banks, such as FNB and others in western Pennsylvania, are positioned to potentially become buyers. New said where other banks falter, new business can be had for those in a position to capitalize.

“Does the current situation present opportunities for those of who are healthy enough to participate in introducing their franchise into markets where these difficult situations exist? Absolutely,” New said. “You have to decide where you want to go, where you want to be and make sure that it makes sense for your institution.”

More ‘questions’

In addition to seeking new opportunities as they become available, western Pennsylvania’s banks also are doing everything they can to use education to help stabilize their business.

Each of the region’s banking leaders polled said they have conducted special training with front-line staff to prepare them to answer the questions they expected customers would have.

They said they have seen an uptick in the number of concerned customers, but none have experienced mass withdrawals or any kinds of panic scenarios.

“We have given our staff refreshers on

FDIC insurance and how to help people to maximize their coverage,” Dennison said. “And we’re doing it more frequently than we would have if we were not faced with current environment.

“We have seen more questions from our customers – nothing overwhelming or threatening – but certainly a heightened level. And we have seen very few people adjusting their accounts.”

While the region’s banks are stable and the leaders of those banks assure their customers that they need not worry about their money, they do have some concerns about the current Wall Street crisis.

None of the bank leaders say their banks will be directly affected by Wall Street’s current problems. However, there are some who are worried about the indirect effects should the nation’s economy fall into a recession.

“If there’s sort of a traditional recession that lasts two, four or six quarters, then I would expect we would have a traditional response locally,” Dennison said. “I still don’t think we’re going to see the decline in housing values, though we may see some slowing in productivity and liquidity.

“The thing I fear the most – and maybe this bailout is the right thing to do – would be if Wall Street freezes up. That would make our downturn even worse.”

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