SOUTH BEND — Locally based banks and credit unions are seeing little direct impact from the ongoing turmoil in the financial markets, according to their CEOs. But there is an indirect impact when it comes to consumer confidence.

“They see this and say, 'Whoa, should I be buying a house, should I be buying a car, because what if the economy goes in the tank? Is there a chance I could lose my job? Is there a chance that if I'm on a commission that sales won't be as good?'” said Rick Rice, President and CEO of TCU.

In other ways, the turmoil in the markets can be good for local banks. Both TCU and 1st Source Bank have seen increased deposits in the first few months of the year.

“We have a lot of people coming to the bank, because we're a very safe place to put money, because of the FDIC backing and the kind of the strength we've always had in our equity,” said Chris Murphy, President and CEO of 1st Source Bank Corp.

But when the Federal Reserve lowers interest rates, the rate of return for banks and consumers drops too. That could hurt profits.

Both men are confident things will improve in time, but there will still be some turmoil while everything sorts itself out.

“The consumer sees this, the consumer stays out of the market,” Rice said. “And we see that this impact could be negative to our business on down the road.”

“The biggest worry is people overreact at a point like this,” Murphy said. “The commercial banking industry is extremely strong. There's strong reserves, there's strong capital structures in the commercial banking industry.”

Both men say the local economy did not have the boom other parts of the country had, so there is less of an impact here than in other places.