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Sign of the Times - Power Shift from Regional to Ultra-local Banking

By
Real Estate Agent with US Spaces, Inc.

One sign of our current financial times has been the shift of lending power (for real estate and other types of loans) from the too-big-to-fail national banks and financial companies to smaller regional lenders. In the Philadelphia area regional players such as Beneficial Bank and Susquehanna Bank have been actively picking up business left behind by the area's national players (Wachovia, Bank of America, PNC, etc.). The big national banks have been too busy struggling to maintain financial solvency, digest government-forced acquisitions, and deal with their public image to focus on increasing deposits and loans from local customers.

Now it seems the trend is continuing to trickle down and power may be shifting to even smaller, dare I say tiny, local banks. One report in today's Inquirer tells of a group of bankers leaving regional player National Penn Bank for the tiny neighborhood-focused Valley Green Bank of Northwest Philadelphia. This shift should be a boon for local real estate investors as small community banks are often their most willing lenders anyway. As these small banks pick up new staff and deposits from their larger regional and national competitors their lending capacity and sophistication should grow accordingly. Now may be a perfect time for real estate investors to establish relationships with these banks as they look to grow their book of business.

Comments (4)

Jason Romrell
Business Attorney and Success Advisor - Los Angeles, CA

The power of a local bank (when operated properly) is superior customer service, faster response times and more customer satisfaction.  Maybe they can't do every deal, but they can do deals better and garner repeat customers if they capitalize on quality that the "too big to fail" lenders can't offer.

Jan 06, 2010 02:36 AM
Ron Brown NMLS #270845
NMLS ID: 40831 - Federal Way, WA

It will be interesting to see how things continue to play out with all the new regulations for 2010.  Local banks will always have the ability to provide better customer service, but will they have the ability to sell their loans effectively like the big banks?

Jan 06, 2010 02:47 AM
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

  James,PNC globbed up one of our troubled local banks and I was initially excited. But after several months of unworkable holding of  out of area deposited checks, it became clear they weren't client centered. We're in the process now of closing out accounts with them and switching to a small local bank .

Jan 06, 2010 03:27 AM
Michelle McCormack
Bank of America Home Loans - Clarks Summit, PA

The small local banks are wonderful for depositors and those people looking for a portfolio type loan. 

However, their small size makes it next to impossible to handle the majority of mortgage loans like the large national players.  The new fed regs that require the small banks to have a sizeable deposit base, in reference to their loans, makes it more beneficial for you, as a professional realtor, to send your mortgages to the national players.

At least the national players don't make up the guidelines as they go along.  The guidelines are always consistent.

 

Jan 06, 2010 12:10 PM