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Sub-prime meltdown… good news (and bad) for banks and credit unions.

My community bank and credit union clients ‘did not go there’ when it came to sub-prime loans. In fact, in some ways they are benefiting because some of the alternatives for mortgage loans are gone or going, and they are gaining back market share. That is good.

And that does not shield the community banks and credit unions from the fall-out. We know intuitively that in an area hit hard by foreclosures challenges in the business sector will follow. Here is a statistic that brings it home.

The April 2008 RMA Journal cites a study by Dan Immergluck, associate professor of city and regional planning at Georgia Tech: Every home that forecloses in a neighborhood results in about a 1% decline in the value of all properties within about an eighth of a mile.

Add to that the impact on small and medium size business when their workforce and customer base is struggling and it is easy to see why community banks and credit unions are front and center in  tightening up their credit policies on all fronts,  taking a closer look at the business borrower’s to see how they are doing, reaching out with resources, and making sure their credit training is up to speed.

We are seeing an expectation that regulators will be looking harder at consistency and training, and a need (more than ever) to say “yes” to the good loans and “no” to the bad. In talking to a community bank CEO about our Lenders Online Library, he pointed out a benefit I had not stumbled on…the ability to show, through the Learning Management System, that his bankers are getting the credit analysis training they need.

Is your company allocating more resources to training?

Or is it an area you are seeing cut back as a cost saving measure?

About the Author
Linda Keith CPA is an expert in credit risk readiness and credit analysis. She trains banks and credit unions throughout the United States, both in-house and in open-enrollment sessions, on Tax Return and Financial Statement Analysis. She is in the trenches with lenders, analysts and underwriters helping them say "yes" to good loans. Creator of the Tax Return Analysis Virtual Classroom at, she speaks at banking associations on risk management, lending and director finance topics.