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The economy right now is kind of like a bad pile up on the freeway, said President Steve Wells of Los Alamos National Bank. How bad it is depends on where you are.
If you’re in that 100-car pile up it’s bad, he said. For drivers towards the rear of all the backed-up traffic, they’re probably complaining like heck. But for those drivers closer up, they can actually see what happened and understand it a little better.
Others watch the pile up all day on TV, Wells said, and the news these days is like watching every pile up in the world.
“I think New Mexico has not been hit as badly but there are chain reactions,” Wells said. “Sometimes those secondary reactions can be difficult. It could just be a fender bender, but it’s still going to hurt.”
The good news, he said, is that New Mexico is not a part of that initial pile up and Los Alamos has not been hit as badly.
“But it’s being cautious and actually that’s intelligent,” said Wells who’s been with LANB for 24 years. “It’s what brings a stronger market.”
This economy does hurt the local retail and the housing market has been slow because of it, he said, but that will change and people will get back to living their lives.
There were 174 homes sold in Los Alamos last year, Wells said, compared to 192 in 2007 and 338 in 2006.
But 2006 was at a peak, a high water mark, he said. Currently there are 181 homes on the market with an average of 350 during peak times.
“We’ve maintained kind of a 1-1 ratio,” Wells said. “You can’t watch wrecks on the freeway all day and not be cautious. People are less apt to spend money until they know what’s in the future.”
The median price of homes here got as high as $299,000 and last year the average was $263,000, he said.
That’s a 13-percent reduction of the homes that have sold. In that number were distress sales caused by events like divorce and illness.
The current marketing period is about one year to sell a house, he said, and fortunately in Los Alamos, there isn’t the pent-up inventory found in other parts of the country. There aren’t 400 homes on the market with only 100 selling.
“I think our home prices, while I wouldn’t say stable, are holding up well,” he said.
The Santa Fe market is 10-15 percent down with sales in some pockets of the city actually up, he said. Albuquerque inventory levels were so rapidly increasing that now there’s a lot higher inventory of homes, vacant lots and spec homes for sale. The good news is that Albuquerque has stronger growth, Wells said.
LANB is participating in the Home Affordable Modification program (HMP).
“We’ve had about 30 customers who’ve looked at this throughout the state. Fanny Mae has always had a modification program and HMP expands it for customers in ‘eminent danger’ of not making their mortgage payments, which could lead to foreclosure,” Wells said.
There are tests homeowners must meet to qualify for the HMP program and Wells welcomes LANB customers to contact the bank for details.
“I’m actually very encouraged in New Mexico across the board,” Wells said. “We have 5 percent unemployment whereas nationally it’s at 7-8 percent. But for the 651,000 people who don’t have a job, unemployment is 100 percent, just like if you are in that freeway pile up.”
Wells said the job of LANB as a financial institution is to help that 5 percent, as well as its regular customers. Blaming isn’t the answer, he said, rather the argument is how to fix what’s been messed up.
“What you have is intelligent trial and error,” Wells said. “You have to try some things with a level of experienced intelligence to find solutions that will help people. When you see a wreck, you instantly drive more carefully. I’m not telling people not to react. It’s actually a smart thing to do. Just don’t overreact, don’t pull back too much. As I get older I’m not going to not get on the road, we need to be prudent, but we need to live our lives.”
Dodging the bullet
Wells spoke of LANB and where it sits in the present economic climate.
“We didn’t get involved in sub-prime, irresponsible lending where you’re really not doing what’s right for the customer, where you profit but it hurts your customer,” he said. “Mutual benefit to our customers and to us is what’s important or we don’t do it. We weren’t in the pile up. However, we are in the economy and we are paying close attention to how the economy, this chain reaction, affects our borrowers and our customers.”
The government has encouraged LANB and other healthy banks to apply for TARP (troubled assets relief program) funds.
“We’ve applied but we have yet to decide to accept those funds because the terms and rules and regulations are still being determined,” Wells said. “The government is trying to put money in healthy banks like ours to stimulate the economy. They want the healthy banks to help clear the economic wreckage off the freeway and get things moving again.”
Money to loan
On Tuesday LANB purchased $6.2 million of General Obligation bonds from Santa Fe County. The bonds will mature between 2010-2017.
“We are strong supporters of the communities we do business in,” Wells said. “We know Santa Fe County is a good investment just like we know Los Alamos Public Schools is a good investment. In November we bought $3 million in Los Alamos school bonds. We provided the lowest cost to the schools and the lowest cost to the County of Santa Fe because this is an investment for us.”
LAPS school board members agreed Tuesday to sell $25 million in bonds on April 14 and Wells said LANB definitely plans to participate in that sale.
“People say banks aren’t lending – people aren’t borrowing,” he said. “I’ve got $65 million of liquidity to lend. Last month we made about $55 million in loans. This is what we do. If I can’t find borrowers I find investments and that’s why we bid in Santa Fe County.”
Regulators assess banks on a regular basis and Wells said the last time LANB was assessed it received an outstanding CRA (Community Reinvestment Act), which is the highest possible rating for the investment LANB makes in the communities it serves.
LANB was established in June of 1963 by a group of local investors. It has grown into one of the largest and strongest banks in New Mexico. It continues to be locally owned and operated by Trinity Capital Corporation, a one-bank holding company for the bank.
For information about mortgage programs, contact LANB’s mortgage department at 662-5171.