2/9/2009
An article in BusinessWeek, Small Banks Say 'No Thanks', discusses how community and mid-tier banks are turning down federal bailout aid, citing overly restrictive conditions on the handout money. Significantly, many of these same banks increased their lending in Q3 2008 over the year before. Unlike the biggest banks, averaging $9 of capital for every $100 in assets, "small and regional players have more than $13 in capital for every $100 in assets."
SEDONA's take: This is a prime opportunity for community and mid-tier banks. Specifically:
- Use lending as a way to cement the loyalty of your top customers. Boosting customer retention of the top 10% of your customers who supply 150% of your profits can only strengthen the bottom line.
- Use lending as a customer acquisition strategy. Attract new and profitable commercial accounts at a time when companies are having trouble obtaining credit from your largest rivals.
