By JIM BARON

Panic is gripping financial markets around the globe, but a select group of Rhode Island bankers say with nearly one voice that it is “business as usual” at their institutions.

The CEOs of three high-profile institutions in the Blackstone Valley — Merrill Sherman of BankRI, Gary Furtado of Navigant Credit Union and Karl Kozak of Pawtucket Credit Union — say their establishments and indeed most of the “local” banks and credit unions in the Ocean State did not take part in the subprime loan craze or some of the other risky lending schemes blamed for the current financial crisis and the subsequent loss of credit.
“We’re open for business and we’re still lending money,” Furtado said this week.
“We never did the real complicated, zero down, interest only mortgages. We never got involved in that. We are underwriting all our mortgages ourselves, we are funding them ourselves and keeping them in portfolio.” There are some foreclosures, he acknowledges, but no more than the usual course of business.
Referring to the financial chaos dominating the headlines, Furtado said, “I don’t want to say it doesn’t affect us, because it affects all of us, but institutionally it is not affecting us.”
Mortgages, car loans, home equity loans and student loans are all in play at PCU, Navigant and BankRI, the executives say.
“Even more importantly from our perspective, because we are predominantly a commercial bank, business lending is available to businesses that have the need and the financial strength to afford credit,” Sherman said.
“For people buying a house, people looking for a business loan, people looking to buy a new car, there is credit available, assuming of course you are credit-worthy,” she said.
But in these economic times, is buying a big-ticket item like a house a good idea, even if financing is accessible?
“This is an absolutely terrific time to buy a house,” Sherman answered. “Real estate values have softened up and interest rates are still pretty low.”
PCU’s Kozak boasts “we’re having an exceptionally good year in real estate. We’re still in the lending business full force. We have strong liquidity and we’re funding a lot of loans. There is a lot of demand in the real estate lending market. We’re doing our share of auto loans and personal loans, and a sizable business in equity loans.
“Our interest rates are low,” he said. “We are keeping rates affordable for most people.”
All three bankers say one provision in the $700 billion bailout bill passed by Congress last week is vital to buttressing consumer confidence: the increase in FDIC (Federal Deposit Insurance Corp.) and NCUA (National Credit Union Administration) insurance to $250,000 per account. That amount now covers the overwhelming majority of their depositors’ accounts.
Kozak notes that by arranging their accounts in a certain way, among spouses and children, depositors could get well over $1 million insured.
If all is going so well for Rhode Island financial institutions, what could conceivably come out of nowhere to bite us?
Sherman believes it is falling consumer confidence. Quoting FDR that “the only thing we have to fear is fear itself,” Sherman said, “a climate of negativism and fear can adversely and negatively affect the economy.
“That is why it is important that people feel comfortable where they bank,” she added. “They should feel free to sit down and look at the bank’s ratios and numbers and have a conversation with their banker. They need to feel comfortable and they can and should if they are banking in Rhode Island.”
The heads of all three institutions say they are receiving phone calls from jittery depositors, hoping to be reassured that their money is safe.
“Usually a conversation settles things down,” Sherman said.