Swetman: Conservative Lending Makes MS Banks More Secure

BILOXI (WLOX) -- The IndyMac closure has resulted in quite a few calls for Peoples Bank President Chevis Swetman. But he believes those concerns will be short-lived and South Mississippi customers should not make comparisons to IndyMac.

Swetman said the bank's collapse was brought on by unstable lending practices involving sub-prime lending - a situation that hasn't really unfolded in Mississippi.

"We don't have those type of situations that would lend itself to the sub-prime crisis that has creeped up into other parts of the country," Swetman said.

"We have very strict underwriting guidelines on what we loan money on, and the people that we loan money to. But, generally, in Mississippi that's not a big issue."

Local bank officials say Mississippi banks tend to to take fewer risks when it comes to their lending practices. They say by taking a more conservative approach to lending, it provides more security for customers.

"Out in California, they might have been lending 98 to 103 percent of value. I doubt very seriously you would have had a Mississippi bank lend more than 80 to 85 percent of a loan's value," Swetman said.

Bank officials say the security for customers also lies in the FDIC.  It guarantees each depositor up to $100,000 and up to $250,00 for IRAs.

For more information on FDIC insurance, visit www.fdic.gov/deposit/deposits.