Northwest Arkansas Banks Should be ‘A-OK’ Despite Y2K

Jan. 3, 2000, should be business as usual, officials from most area banks and savings institutions say.

As the first weekday of the new year, that could be the day that problems might be detected with computers having difficulty with the date change, the so-called Y2K (for Year 2000) problem.

But, like the majority of their fellow bankers across the country, local executives say things should be just fine.

“We have everything in place to handle this issue,” says Joe S. Mills, president of Simmons First of Northwest Arkansas. Mills says computer-related issues are going “exceptionally well.”

Customers, he adds, “ought to have a great deal of confidence with us.”

Regulators have been working for years with the institutions they oversee to prevent serious problems when the year changes. The problem, as most people know by now, may occur when the year changes. Programmers sometimes use only the last two digits to indicate the year, and the fear is that computers will interpret “00” as 1900 instead of 2000.

The Federal Deposit Insurance Corp. has required institutions it insures to complete rigorous testing procedures. At year’s end in 1998, the FDIC reports, 97 percent of its institutions had “satisfactory” test results. Those with less than satisfactory ratings were to receive “intensified supervision,” the FDIC says.

Approaches differ

While the intense testing is designed to identify any problems in advance so they can be corrected, some institutions are taking extra precautions, perhaps as a way to alleviate any customer concerns.

Bank of Fayetteville, for example, is putting its records on papers. Bryan Vowels, the bank’s Y2K coordinator, told shareholders recently that hard copies are a major part of the bank’s contingency plans.

“We are going to have hard copy paper printouts of everyone’s account information,” Vowels says. In other comments to shareholders, however, he stressed that bank officials don’t believe the contingency plans will be needed.

First Federal Bank of Arkansas is also planning to have paper records.

Ross Mallioux, executive vice president for the bank, says internal testing with the institution’s major providers has been completed. After more than 1 million test transactions using various dates in the year 2000, Mallioux says, bank executives believe they’re prepared.

Just a “very, very few” of the million-plus test transactions showed up as “exceptions,” Mallioux says. “We are comfortable that we’re in good shape and that those few exceptions and can be resolved way ahead of Jan. 1, 2000.”

He adds, “We don’t anticipate any major issues because we will have paper records to back everything up.”

Additionally, the bank has installed a generator, Mallioux says, but that’s to provide electricity in case of other problems – ice storms, for example. (First Federal’s headquarters are in Harrison, where a severe ice storm in January caused power outages for several days.)

Bank of Arkansas, which is part of Bank of Oklahoma, has asked that key personnel not schedule vacation time around the end or beginning of the year.

Jeff Dunn, CEO and president of Bank of Arkansas, says key personnel have been asked to “be available” during the last week of the year.

“We don’t anticipate any problems,” he says. “We’ve been working 18 months” to ensure that no difficulties occur.

Dunn says he expects business to carry on as usual when the new year rolls around.

“Our goal is to make Y2K a non-event,” Dunn says.

Some banks have been working to fix any anticipated problems for years.

First National Bank of Springdale and its parent company, First Tennessee Corp., began their quest to avoid any problems in 1995. As of Jan. 1 this year, First Tennessee was ranked No. 1 in to-date preparedness compared to 33 of the nation’s largest bank holding companies.

Banks in the Arvest Bank Group Inc. have mailed customers a list of personal “to-do” items. The recommendations, which originated with the FDIC, include:

-Keeping good records of all financial transactions, including deposits, investments, ATM withdrawals, loan payments, bank statements and transaction receipts;

-Checking transaction receipts against periodic statements; and

-Being cautious about offers to sell products or services guaranteed to fix or prevent Y2K problems.

For customers who are interested in learning more, Arvest has a longer check list. Many of those suggestions are wise under any circumstances.

For example, the list suggests keeping deposit limits within the federal insurance limits (that’s $100,000 for any one insured institution); asking for a printed history of mortgage and other loan payments; and periodically checking their own credit reports.