Ross A. Hill: Banking 101 - Part 1

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Tuesday, January 26, 2010

Banking 101 - Part 1

Capital and the availability of capital are critical to operate and build a successful business. Everyone that has been in business very long would not argue that point. In these difficult economic times the availability of capital is even more critical and more difficult to find. I have watched many of 24 hour news stations carry stories about the recession and I have seen business men like Donald Trump state that “the banks are not lending money”. REALLY???

I have been a banker for over 30 years. During my banking career I have come to understand one basic principal about banking. Interest income from loans is the number one source of income for the majority of banks in this country. I sit on two community bank boards I know that both banks are making loans everyday. Most banks are still making loans.

Are we more cautious? YES. Are the terms more difficult? SOMETIMES. Do we need more collateral or more collateral coverage? OFTEN. These are a reflection of the times...a reality. But, we are still making loans.

In 2009 Bank2 alone made 1,039 loans totalling $181,510,000. The next time you hear President Obama, Senator Dodd, Congressman Frank, Donald Trump, or others on TV say banks are not making loans you might want to remember they are using a very broad brush when they make those comments. They certainly can NOT be talking about Bank2.


  1. I think there is so much economic uncertainty caused by these times and this administration that many businesses are pulling in their horns until they feel more confident about the future. When businesses do that they don't borrow and that is why lending is down where it is down.

  2. One aspect that I think is overlooked is that businesses are reluctant to borrow money in times of uncertainty. The economy and this administration have certainly made this a time of uncertainty so it should come as no surprise that lending is down.

  3. the difference is, the people that are getting the loans are the people with good credit scores, the ones that dont file bankruptcy and the ones that are NOT living off of their credit card, the ones that are not buying things they cant afford. thats a big reason why this country is in so much debt. because people are spending money they dont have.