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Potential impact of the subprime lending crisis on community banks: both good and bad possibilities loom if the credit cycle takes a downturn.(COMMUNITY BANKING)
As this article was being written, the subprime mortgage lending crisis was in the news every day. The bad news was coming from mortgage banking firms, large banks with investment banking losses from subprime mortgage-backed securities and companies involved in the housing industry, which took a hit as the easy-credit era ended for prospective home buyers. Large banks are also more likely to be involved in syndicated lending and exotic investments.
A sample of the bad news:
* Washington Mutual (Wamu) announced a 75-percent drop in third-quarter net income on October 5, 2007. Wamu joined Citigroup, UBS and Merrill Lynch in reporting write-downs reflecting, among other issues, declining values in mortgage loans and securities. (1)
* The FINANCIAL TIMES reported that U.S. mortgage companies are experiencing a subprime "traffic jam" as borrowers flood servicers with pleas to avoid foreclosure. The servicers are reported to be having trouble coping with the number of delinquencies and defaults. Moody's, the rating agency, was quoted as stating that few subprime loans are being renegotiated as servicers struggle with the volume of problems. (2)
* Among the companies blaming the subprime crisis, housing slowdown and/or credit crunch for weak earnings were Bear Stearns, CarMax, FedEx, General Electric, KB Home, Lennar, Lowe's and several investment banks. (3)
* In the NEW YORK TIMES the question was asked in August, "Will this spill over into the broader economy?" (4)
* On a number of days, losses in the stock market have been attributed to concern over the subprime crisis or credit quality in general.
- Community banks in New York offering reverse loans endorsed by trade group....
- Magazine article from: American Banker Ratner, Juliana December 8, 1994 700+ words
Some small banks in New York are pushing reverse mortgages...Bankers Association of New York State endorsed Transamerica...Transamerica. The other New York banks offering the loans...reverse mortgages through community banks is fairly new. Community...
- COMMUNITY BANKS UPBEAT IN NEW YORK.(Business)
- Newspaper article from: Albany Times Union (Albany, NY) March 19, 1991 700+ words
...Abbey Business writer New York's community banks are singing an upbeat...banks of the state of New York," said J. William...some bigger banks, community banks get thrown into the...independent banks in New York earned a 1.1 percent...
- Community Banks in Upstate New York Plan to Capitalize on Errors of...
- Newspaper article from: Knight Ridder/Tribune Business News Johnston, Jo-Ann April 20, 2000 700+ words
...customer service from larger banks "continues to deteriorate," Hoy said, without further elaboration. So both of Arrow's community banks, Saratoga and Glens Falls National Bank and Trust Co., are poised to attract the disenchanted, he said. Saratoga and...
- Branch sales creating a growth opportunity in upstate New York.(community banks)
- Magazine article from: American Banker O'Hara, Terence March 27, 1997 700+ words
...Dozens of branch sales in New York are fueling dramatic growth at a handful of community banks in the state. Boston...branches in upstate New York. That follows on the...The buyers were two community banks and a midsize thrift...
- THE BANK OF NEW YORK TO ACQUIRE NATIONAL COMMUNITY BANKS
- Press release article from: PR Newswire January 29, 1993 700+ words
...Margaret Southerland, AVP of Bank of New York, 212-495-1725/ (BK NCBR) CO: The Bank of New York Company, Inc.; National Community Banks, Inc. ST: New York, New Jersey IN: FIN SU: TNM SH...
- Bank of N.Y. acquires National Community. (Bank of New York Company Inc.;...
- Magazine article from: American Banker August 13, 1993 700+ words
NEW YORK - Bank of New York Co. has completed the acquisition of National Community Banks Inc. The buyer said each outstanding...converted into 0.96 share of Bank of New York common. National Community's Series...
- Bank of N.Y. enters N.J. with $543 million deal. (Bank of New York Co. purchase...
- Magazine article from: American Banker Vogelstein, Fred February 1, 1993 700+ words
Bank of New York Co. on Friday said it will buy National Community Banks Inc., a $4.2 billion...The move represents Bank of New York's first excursion into neighboring...bank consolidation. Bank of New York, whose branch network dominates...
- N.Y. banks go on the attack against credit union exemption.(New York State...
- Magazine article from: American Banker Arndorfer, James B. September 21, 1995 700+ words
New York community bankers are trying to whittle away...by the Independent Bankers Association of New York State. "The genesis of this is a year old...said Chris Langley, a spokesman for the New York State Credit Union League.