How The First Bank Of Alabama And Bank Of Wedowee Merger Will Narrow The Alabama Loan Market

The First Bank of Alabama and Bank of Wedowee merging. The move is expected to affect the Alabama loan market a lot and most likely it will narrow it.The move is a huge financial step which will expand the horizons of The Bank of Alabama. In addition to this, it will add three bank branches which are situated in Randolph County on the hands of the First Bank of Alabama.

This means that this bank will be controlling three service branches which are located in Lincoln, Roanoke, Talladega, Munford, Woodland, and Wedowee. The First Bank of Alabama and the Bank of Wedowee board of directors have both approved this transaction. However, more terms of the merger are yet to be discussed by both parties.

What The Merger Means

1. The partnership will make the Alabama loan market smaller.
2. First Bank of Alabama seeks to gain almost 530 million dollars in overall assets. In addition to this, the bank will also get 270 million dollars in overall loans and 445 million dollars in deposits.
3. The merger will broaden the presence of First Bank of Alabama in the Eastern Alabama region.
4. The acquisition will strategically place The Bank of Alabama near their target market region.
5. The Bank of Alabama will become one of the strongest independently owned community bank in the Alabama region.

Effect Of The Merger On The Alabama Loan Market

Perhaps the most salient feature of the merger of The First Bank of Alabama and Bank of Wedowee is the fact that it will narrow the Alabama loan market. Most Alabama dwellers depend on payday loans and loan sharks to control their financial spending and to finance random expenses. However, with the merger of The Bank of Alabama and Bank of Wedowee, this state of affairs is likely changing as the loan margin will be narrowed.

Most Americans are trying to survive in the tough economic situation that is being experienced all over the world. Nonetheless, a highly controlled temporary credit and loans market is needed to manage the budgets of every household.
All payday lenders in Alabama belong to The Community Financial Services Association Center makes it easier to regulate their activities.

However, when the partnership of the two strong banks in area is complete it means that The First Bank of Alabama will be able to offer loans with the best terms. This will make it easier for most people to acquire reliable loans and in turn the loan market will narrow down to more reliable sources. This will effectively cut back on the rate of ineffective loaners who want to take advantage of borrowers. In addition to this, instances of expensive internet loans and overdrafts are expected to subside.

The First Bank of Alabama CEO and President, Chad Jones was elated during the merger as he emphasized that the acquisition will geographically place the bank on its demographic region. In addition to this, he further pointed out that his team was proud to be associated with the Bank of Wedowee group. He also revealed that the merger will mean that the bank will get the principal market share in Randolph and Talladega regions.

He further pointed out that the combination of his tough management team and the local society; the merger will propel The First Bank of Alabama further. To sum it all up, the CEO was pleased with the acquisition which will place it in the best platform to offer excellent services to its customers. In addition to this he also looked forward to the working harmony of the employees and shareholders from both sides of the divide.

First Bank of Alabama plans to expand its services and offer additional services to not only its customers but also the Bank of Wedowee clients. Some of these services include a mobile app which will handle an Online Financial Wellness center and card management. Other services that the clients from both banks will enjoy include Internet Banking. The CEO OF The Bank of Alabama assured the bank of Wedowee clients that after the merger they will continue enjoying the same excellent service which they have been accustomed to but with another face.

Mitch Key who is the CEO, President and chairman of The Bank of Wedowee is also excited at the move of the merger with the First Bank of Alabama. During a candid speech the CEO also revealed that The Bank of Wedowee respects The Bank of Alabama and that they both share the same values. In addition to this, he promised his clients that they will continue to enjoy the same services and even more once the partnership is complete. Mitch Key will still work as an executive of the establishment even after the merger. He will be stationed at Randolph County.During the merger The First Bank of Alabama legal counsel was Jones Walker and the financial adviser was Stephens Inc. On the other hand, The Bank of Wedowee was financially advised by Porter White and Company and represented legally by Reynolds, Reynolds & Little LLC.

About The First Bank Of Alabama

The First Bank of Alabama was started in 1848 by Major James Isbell in Talladega County. Therefore, this makes the bank one of the oldest in the Alabama region. During its 170 years of existence it has managed to acquire 400 million dollars in acquisitions 202 million dollars in loans and 336 million dollars in deposits. The First Bank of Alabama is a subsidiary of The FirstBanc of Alabama Inc which is a bank holding company. The Alabama-based bank has branches in Munford, Talladega and Lincoln.

About The Bank Of Wedowee

The Bank of Wedowee was started in 1906 by Dr. J.C Swann. The Alabama-based bank has managed to accrue 132 million dollars in assets, 66 million in loans and 111 million dollars over the years which it has existed. The Bank of Wedowee operates under the Swann Bancshares Inc. as a subsidiary. The bank was placed under the company in October 2002. It has branches in Roanoke, Woodland and Wedowee.

The Fed Continuously Raises the Benchmark Interest Rate, yet rates remain low.

After meeting for two days, the Federal Reserve went through with an expected increase in the benchmark interest rate, which has now gone up 0.25 percent. Perhaps more surprising was how it mentioned its plans to decrease its balance sheet. Here’s what you need to know about the latest headlines coming out of the Federal Reserve.

A Background on the Benchmark Interest Rate

The Federal Reserve sets the benchmark interest rate to keep the economy strong. It likes to have that interest rate in the 2 to 5 percent range whenever possible, as that’s what’s best for economic growth. At that range, the gross domestic product (GDP) grows, the unemployment rate is low and while prices increase, they do so around the Federal Reserve’s desired inflation rate of 2 percent.

However, it hasn’t always been possible for the Federal Reserve to keep the benchmark interest rate between 2 and 5 percent. In 1979 and 1980, the Federal Reserve raised the benchmark interest rate to a historic high of 20 percent because inflation numbers had been in the double digits for most of the decade.

The benchmark interest rate fluctuated from then on but lowered considerably from that high point. It started dropping more in late 2007, and by 2008, it plummeted because of the Recession. The target rate by December 2008 was 0 to 0.25 percent, which is as low as it gets. The reason that this rate was a range instead of one percentage was because a rate of 0 percent could cause financial issues, such as money market funds with fees that cost more than what they yield.

The benchmark interest rate stayed in that range a full seven years, finally increasing again in December 2015. It went to the 0.25 to 0.5-percent range. One year later, it increased again, hitting 0.5 to 0.75 percent. The Federal Reserve chairperson, Janet Yellen, called this increase a vote of confidence in the U.S. economy. The Federal Reserve also mentioned at this time that it saw the rate increasing three times in 2017.

So far, the Federal Reserve has stayed on pace to hit those marks. An earlier increase this year brought the benchmark interest rate up to 0.75 to 1 percent, and this latest increase on June 14, 2017 brought it up to 1 to 1.25 percent.

What This Says About the Economy

Obviously, the fact that the Federal Reserve is consistently increasing the benchmark interest rate shows that the economy is gradually improving. The jobless rate has gone down quite a bit, and it’s now at 4.3 percent, but it should also continue to decrease. Inflation hit 2 percent early in 2017, although it then dropped back down a bit below that mark. The Federal Reserve isn’t particularly worried about this, though, as they believe that it will bounce back. One factor that has kept inflation down a bit is energy prices going down, and that may be temporary.

Now, for consumers, a higher benchmark interest rate means an increase in credit card and loan interest rates. While the increase hasn’t been anything huge, it does mean people can expect to start paying a bit more if they take out any loans. Just with the increases since December 2015, car loan and home equity rates have gone up about 1 percent.

The Federal Reserve’s Plan to Decrease Its Balance Sheet

This recent announcement was also when the Federal Reserve mentioned how it planned to reduce its balance sheet. During the Recession, the Federal Reserve purchased a large number of bonds, with the cost hitting the trillions of dollars. This was in response to the financial crisis. Bank lending had slowed down significantly, and by purchasing these bonds, the Federal Reserve was able to drive down the cost of borrowing.

This helped protect the economy to an extent, but it also obviously caused a huge increase in the Federal Reserve’s balance sheet. While that balance sheet was below the $1-trillion mark before the Recession, it ended up hitting about $4.5 trillion. Now that the economy is making a recovery, it’s time for the Federal Reserve to cut back on that, and it plan to do so to the tune of up to $600 million per year.

What Effect These Rate Increases Will Have

There have been some arguments regarding whether it’s a good idea to raise the benchmark interest rate. Those against it have mentioned that since the U.S. economy is still fragile while it recovers, making big moves or moving too quickly could each jeopardize the progress that has been made. There’s also the unstable global climate to consider, with Britain deciding to exit the European Union and China’s economy slowing down.

The Federal Reserve carefully monitors the economy, though, and to this point it has only made small increases in the benchmark interest rate. And the numbers are moving in the right direction. At the end of 2016, the unemployment rate was at 4.6 percent so it has gone down 0.3 percent in the last six months or so.

The Federal Reserve now has another six months to raise the benchmark interest rate again and hit its target of three increases in 2017. Most likely, another rate hike would bring it to 1.25 to 1.5 percent, since the Federal Reserve is playing it safe and avoid anything too significant at one time.

On the one hand, consumers who have gotten used to these rock-bottom interest rates will need to pay a bit more when they borrow because of these increases. But the good news is that this is all a positive sign regarding the economy and where it’s going. Ideally, over the next couple years the benchmark interest rate will gradually go back up until it returns to that 2 to 5 percent sweet spot. So, while it may cost a bit more to borrow, the stronger economy means people will have more money in the first place.