Nevada County Picayune and Gurdon Times Newspaper Archive

Local Bank Is Y2K Ready

For many, the so-called Y2K bug is a relatively recent occurrence.

However, for the Bank of Prescott it poses no problems whatsoever. Those with accounts there can rest assured their money will remain safe when Jan. 1, 2000 arrives.

Jim Franks, vice president of the Bank of Prescott, said they've been working on this problem since July 1996, even before the FDIC got involved.

Of course, he said, once the FDIC entered the picture, it became adamant about banks being prepared for the year 2000, which is what Y2K means.

Franks said the Bank of Prescott began its Y2K compliancy work by assessing its position in relation to any possible problems the change of the millennium would create.

The bank did an inventory of its electronic equipment, even going as far as to check the vault, though it's not electronic, to see what could be affected when Jan. 1, 2000 rolled around. This included checking the telephone systems and postage machines as well as the computer system.

"We were in excellent shape," Franks said of the bank's findings. "There were some minor issues easily and inexpensively remedied."

However, as the bank's computer system was six years old at the beginning of 1998, it was decided to go ahead and upgrade it and start using personal computers (PCs), instead of a mainframe and slaves.

This computer upgrade also increased the productivity as it worked much faster than the old system, still, the FDIC required the bank to test it and make sure it was Y2K compliant  even though the manufacturer gave its assurance it was.

"We had to prove it wouldn't crash on Jan. 1, 2000," Franks said. So, in November 1998, the Bank of Prescott created a separate bank using the new computer equipment.

This bank, though fictional, had the same kinds of transactions ran through it any other bank would have. Checking accounts were created, loans made, loans were paid off, certificates of deposits were handled, along with other banking transactions being done, as they would be otherwise.

This "bank" was operational until Dec. 31, 2001 and had no problems at any time.

"We had to prove to ourselves and the FDIC everything worked, and we did," Franks said.

The FDIC acknowledged the bank's efforts, but still required it to have a contingency plan, just in case something unexpected comes up.

This, too, has been done and tested to show the contingency plan will work, should the unforeseen occur. This plan has also been monitored by the FDIC and bank examiners.

"I'm not worried about banks," Franks said. "The financial industry is in good shape."

He did voice concern about utility companies being able to provide their services when Jan. 1, 2000 hits, but said after contacting GT&E, Prescott Power and Light and Entergy, there is no need to worry.

In addition, the Bank of Prescott's equipment was tested with the U.S. Federal Reserve equipment in St. Louis, Mo, again with no problems occurring.

Franks said no money in a federally insured bank has ever been lost. "The safest place to keep your money is in an FDIC bank."

However, there is a dark side to the Y2K problem, Franks said. There are unscrupulous people preying on the fears of others, telling them to take their money out of banks and find other means of protecting it. Converting bank accounts to cash, he said, is not a good idea.

"People need to be aware of these scam artists, and be skeptical when approached by them. This bank is ready and anxious to get it on (with Y2K)."

Nationally, Franks said, there may be some minor inconveniences with date sequencing, but there shouldn't be any major problems. "They'll be manageable."

So, those with accounts at the Bank of Prescott should rest assured their money will be safe and secure when Jan. 1, 2000 arrives in three months.