This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Community Banks Step In for CIT Group

CIT has rushed to reassure its current customers that business will continue as usual. "Our plan of reorganization is not a 'free-fall' filing or a liquidation of our assets," the company said in a statement to customers. "CIT is continuing its operations and is not going out of business."

But CIT will not be taking on new customers for the foreseeable future. That means countless small businesses have lost a major financing resource, even as large banks such as Citigroup (C - Get Report) or Bank of America (BAC - Get Report) have cut back dramatically on new loans.

But that doesn't mean small businesses that want to expand have no other options. According to the Small Business Administration, lending has increased dramatically in the second half of the year. Since the economic stimulus package went into effect in February, the average number of loans approved each week has grown by more than 50%. In September, almost $2 billion worth of loans were approved, the highest single-month dollar value since August 2007.

With large banks focused on paying back their TARP money or negotiating year-end bonuses for the executive suite, smaller independent banks have stepped in to meet small-business needs. According to an analysis of FDIC data by the Independent Community Bankers of America, community banks with less than $1 billion in assets were the only segment of the banking industry to show growth in net loans and leases in the second quarter of this year.

"The vast majority of community banks are well-capitalized and have plenty of liquidity," says Paul Merski, senior vice president and chief economist of the Independent Community Bankers of America, which represents about 5,000 of the estimated 8,000 community banks across the country. "We're transitioning back to the traditional model of local deposits funding local lending."

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
C $52.90 0.00%
BAC $15.66 -0.19%
CIT $48.01 0.00%
AAPL $132.20 2.00%
FB $81.55 -1.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs