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Contact: Robert Taylor, LBA Chief Executive Officer (225/387-3282)

Louisiana Banking: Safe & Strong

BATON ROUGE—FDIC (September 29, 2008) - insured banks and thrifts in Louisiana are safe and strong. The disturbing news in the media about Wall Street has nothing to do with Main Street FDIC insured Louisiana financial institutions. Louisiana banks and thrifts are highly regulated and have nothing in common with the mess we have seen unfold in other parts of the country.

"Anyone concerned about their local bank or thrift should talk to the bank's management to find out for themselves the condition. You can also visit the FDIC website, www.fdic.gov, for additional information. Louisiana banks and thrifts have strong capital, tested management and are ready to serve their communities," said Louisiana Bankers Association Chief Executive Officer Robert Taylor.

Louisiana banks and thrifts are FDIC insured; Wall Street investment banks are not; Louisiana banks and thrifts accept FDIC insured deposits and make loans to Louisiana customers, Wall Street investment banks deal in stock trades; FDIC insured Louisiana banks and thrifts are part of your local community, investment banks are part of Wall Street. FDIC insured Louisiana banks and thrifts are highly regulated. This current crisis will force regulations on those Wall Street firms that have not been similarly regulated in the past. While the national economy impacts Louisiana banks, we are safe in the knowledge that our banks are regularly monitored and examined, and that our banks are covered by FDIC—where you can insure deposits for $100,000. There are also legal and safe ways to get even more FDIC coverage depending on how you set up your accounts.

Here are some facts about FDIC insured Louisiana banks and thrifts as of June 30, 2008, the most recent available data. Louisiana has 166 FDIC insured banks and thrifts operating in the state. Domiciled in Louisiana are 135 state chartered banks, 26 national banks, 18 federal thrifts and eight state chartered thrifts for a total of 161 FDIC insured domiciled banks and thrifts in Louisiana. Additionally there are five FDIC insured banks with significant operations in Louisiana that are domiciled outside Louisiana. "The overall strength of these institutions is sound and strong. These institutions are not the cause of the current financial market unrest and are serving their communities with loans and a safe place to put money," said Taylor.

Return on average assets (ROAA) is a measure of bank and thrift profitability. As of June 30, 2008, ROAA of FDIC insured banks domiciled in Louisiana, was .95% while the national return on average assets for all FDIC insured banks was much lower at .35%. For Louisiana domiciled FDIC insured thrifts ROAA was .47%, while the national ROAA for all FDIC insured thrifts was <1.11>.

For Louisiana domiciled FDIC insured banks, loans grew by 3.73% during the second quarter with increases in all categories: real estate loans, commercial loans farm loans, consumer loans and other loans. Total loans also increased at Louisiana's FDIC insured thrifts—loans are being made in Louisiana.

Louisiana domiciled FDIC insured banks and thrifts also increased their total deposits as people continue to feel safe and secure with their money in FDIC insured Louisiana banks and thrifts.

A critical safety and soundness component for banks and thrifts is the Tier 1, or core capital, of the institution. Capital is the life blood of the bank and in the second quarter of 2008 Louisiana domiciled FDIC insured banks had an overall increase in Tier 1 capital to 8.88%. For all FDIC insured banks in the U.S. the Tier 1 capital was 7.58%. Louisiana FDIC insured thrifts had Tier 1 capital of 12.78% as of June 30, 2008, while all FDIC insured U.S thrifts had 9.77%. Thus Louisiana banks and thrifts had a stronger capital ratio compared to the overall ratios nationally.

The information provided here confirms that Louisiana banking is strong and ready to serve your community.

Understanding the Difference: Money Market Mutual Funds vs. Money Market Deposit Accounts

Editors: Recently, the U.S. Treasury Department established an unprecedented, voluntary one-year guaranty program insuring U.S. money market funds in order to stem losses resulting from global financial market turmoil. Many consumers are confused between money market deposit accounts (MMDAs) and money market mutual funds (MMMFs). Understanding key differences is imperative so we thought your readers would find the following explanations helpful. Readers who are still unsure which type of account they own should consult their statements or their banker.

A money market mutual fund is a short-term mutual fund that invests in government securities, certificates of deposit, asset-backed commercial paper and other highly liquid securities. Money market funds sell shares to investors and earn interest based on performance. However, if the fund suffers a major loss, the shareholder has no guarantee that the investment will be repaid. Until last week, these investments carried no insurance. However, the new guaranty program applies only to those money market funds that pay a fee to join it, and would only protect assets invested prior to September 20, 2008 for a period of one year.

A money market deposit account is an interest-bearing savings account that typically earns more than a regular savings account, but less than a money market fund. MMDAs are also less risky than MMMFs: they are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $100,000 per depositor per insured bank and up to $250,000 for some retirement accounts.

Louisiana Bankers Association is the professional trade organization for commercial banks and thrifts in Louisiana. Founded in 1900, the LBA works to provide advocacy, communication, education and other services to its member institutions, and to provide banking information to the general public. For more information, go to www.lba.org.

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Convenient Louisiana Banking Locations:
Alexandria · Ball · Baton Rouge · Bossier City · Forest Hill · Lecompte · Marksville · Pineville · Shreveport