Men's Breakfast, January 10, 2015

The Men’s Breakfast Group met Saturday, January 10th with Robert Perryman, President of First State Bank, as featured guest.  Robert was born and raised in Freeport.  He and some of the members of the group reminisced over mutual friends and escapades from growing up in Freeport.  Robert went off to college and got a degree in finance.  He came back and decided to put the degree to use by becoming a realtor.  He took a job as a teller in a bank to pay bills while he studied for his Realtor license and while he got started.  This was in the late seventies when interest rates were very high and no one was willing to buy a house.  After several months of no realtor income, his boss at the bank suggested that he become a full time banker.  He did and went on to do all the jobs at a bank, including repossessions.  A few years ago, Gene Pell, then president of First State Bank of Clute, hired him as a manager at his bank and Robert took over as president when Gene retired. 

First State Bank is a community bank with local ownership.  It has expanded from the Clute bank to have branches in Lake Jackson and Manville in the last few years.  Since the financial crisis of 2008 the number of banks in the United States has fallen by more than half because of consolidation.  Robert said that they bought the bank in Manville because the expected growth in the Houston suburbs and figured that Manville would be part of it.  However, the Houston sprawl has not yet reached that area. 

The First State Bank specializes in loans to small businesses.  They even loan to starting small businesses in partnership with the Federal Small Business Administration.  Most banks avoid these loans in spite of the Federal guarantee.  The guarantee does not cover the whole loan so the bank does take a risk.  Robert said that about 75% of small businesses fail in the first two years, so the risk is significant.  The First State Bank reduces its risk by requiring new businesses to go through a small business development program at Brazosport College.  There the prospective business owner writes a business plan and gets advice that will, hopefully, allow him or her to succeed. 

There was discussion of macroeconomic policies.  The question is why there has been so little inflation since the Federal Reserve Board has been doing so much quantitative easing.  This involves the Fed buying bonds in the open market with money that the Fed has essentially printed.  This increases the money supply and lowers interest rates.  Standard economic theory, especially monetarism, says that this should speed up the economy and cause inflation.  The question is, where has all this money gone?  Robert said that the money has gone into the balance sheet of corporations.  They are sitting on it because they do not have a lot of good investment opportunities and inflation is so low. 

The men had an interesting discussion and a good breakfast.  The next meeting will be Saturday February 14th with Cathy Sbrusch, director of the Brazoria County Health Department.