Contrary to the reports of some media outlets last week, Citizens Bank is in solid and sound condition - that's the message that C. Steven Lewis, president and CEO wants to send to the community.
In an interview on Friday, Jan. 18, Lewis addressed the rumors caused by a cease and desist order issued by the Federal Deposit Insurance Corporation in October of last year.
"It does sound very ominous, but the simple facts are that...there are very simple answers to all of those issues and they all have been addressed," he said.
When asked, Lewis said at no time has the bank ever been in danger of failing and at no time were any deposits ever in danger.
"And it will not be as long as I'm here," he said.
Specifically, the order issued by the FDIC ordered the bank to stop the following:
Lewis pointed out that the order issued was based on an examination for 2006 and corrective measures were taken before the cease and desist order was even drafted. What has not been mentioned until now is that the order did not deal with any of their banks in Tennessee. The order specifically dealt with a bank Citizens operated - and has since closed - in Greenville, S.C. The lack of earnings was not due to credit losses, but due to operating losses in their start up attempts with a mortgage operation, Lewis said. While they were aggressive in marketing the program, he noted that they were conservative in underwriting the effort and failed to reach the volumes needed to sustain profitability; earnings were lower than the FDIC would have liked.
"The core bank - outside of our venture into that particular line of mortgage business - has always been profitable. When we closed that office [in South Carolina], our income came right back," Lewis said.
It is not unusual for the FDIC to issue order of this nature - roughly 19 such orders are issued monthly to banks around the country and should not be a cause for undue concern, Lewis said. In 2007, the bank enjoyed a profitable year with a 5.7 percent Return on Equity and a .50 percent Return on Assets. In 2006, Lewis said that Citizens compared very favorably with other banks in the county.
In the third quarter of 2007, the Net Interest Margin for Citizens Bank was 5.01 percent, which placed them in the top 16 percent of all banks and thrifts in the nation, according to Kevin Morgan, senior bank strategist of BancIntelligence.com. He added that the five-year projected Total Market Growth for Citizens markets is 3.77 percent, compared to 3.74 percent for the state of Tennessee and 3.66 percent for the U.S. The five-year projected Household Growth for Citizens markets is 1.03, compared to .98 percent for the state of Tennessee and .96 percent for the U.S.
"If there are those that would be concerned legitimately about their money or think they should be, they're all insured [by FDIC]; plus we're [Citizens Bank] not going anywhere. Their money is safe here," Lewis said.
When asked about why there was a sudden interest about the cease and desist order, Lewis said part of the reason could be that the information was late in being released online.
"I don't know with any certainty that anyone was intentionally stirring this [controversy], but I can tell you that an organization that's been around since 1912 is going to eventually find themselves being the subject of gossip and criticism," he said.
Citizens has banks in Tazewell, New Tazewell, Harrogate, Morristown, and Bean Station.
"Currently, we're working on a strategic plan and we'll be looking at growing and prospering into other communities at some time in the future," said Lewis.
Richard Evans is Editor of the Claiborne Progress. He can be reached via e-mail at revans@claiborneprogress.net.
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