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By Stkphkn Dark ini; and Laira Ruby
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While the stock market tumbles one day and bounces buck the next, local bunk managers are quietly reassuring their customers that their position in this volatile financial market is 'Very safe and sound* in the words of Mike Leake, president of Rappahannock National Bunk i RNB)
"There are a lot of scare tactics being used.* stud Leake reterrtng to much of the reporting of the current financial crisis. "Some of it is valid, but a lot of it. is not."
First iuid (ivremost. Leake stressed, is the ditference between a coimtiercial bank - such as RNB — and an uivestment bank of the kind that are failing or have tailed and the tbcus of much of the bailout debate.
Leake stud that RNB and its parent. Union Biuikshares Corporation, were not involved in subprime lending: such as no documentation or stated income mortgages. and no loans with high loon to value ratios. Leake acknowledged that a lot of the larger bunks did do this and they are now having problems.
hi tact, this situation - tailing larger banks - is proving to be a huge advantage tor the smaller community oriented banks, according to Leake.
He stud that his btmk has hud a lot of inquiries from Wachovia customers, and that they are starting to get an influx of new deposits. Typically customers were drawn to the larger bunks and the stock market because of a greater return, but the days of double digit returns tire long over, said Leake.
“A tour and a half percent return is a lot better than a negative percent return." he said referring to the huge drop ui stuck prices on Monday.
'fhe strength of these local banks notwithstanding there still- weW be impacts «m fecal wamma wrcJthe ripple effects from the stock market will continue to afieefc everything from pensions to bank-to-bank lending, caretul lending practices have meant that some k*cal businesses - here mid iii surrounding counties - tire weathering the storm tlurly welL
Community banks art* .dso not uimiune to the upheavals on Wall Street mid a tepid real estate market. Leake said they have seen loan losses but that these losses wen* typical in this type of economy They have set>n mi increase m past due payments, but that overall their loss percentage was low mid that they
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