CEDAR VALLEY BUSINESS MONTHLY
Cedar Valley banks have money available to lend There have been comments in the media that banks are not lending money. This is not necessarily accurate. What have changed are the requirements needed to obtain ﬁnancing today. The economic climate in the Cedar Valley is fairly stable. Commodity Dave Deaver prices in the agriis president of First sector National Bank’s cultural Cedar Falls ofﬁces. provide positive earnings for many Contact him at (319) 268-7000. of the grain farmers in our state. This is a positive for the agricultural industry in our area and manufacturers like John Deere, whose performance provides a stable work environment, along with rising enrollment at Hawkeye Community College and the University of Northern Iowa. Housing prices have not plummeted, and we have not experienced the rash of foreclosures other parts of the country have endured. Housing starts are rela-
tively stable. A large segment of our market has good sources of income which they are depositing in banks for safety and security. Why all this savings activity? Because although many are not seeing changes in their income, they know others who have not been so fortunate. That knowledge coupled with high national unemployment and lower-thannormal growth creates an uncertain local atmosphere. What does this have to do with lending? These are the reasons money is available for lending. For banks money is inventory, and based on current savings practices there is plenty of inventory. So why do we hear stories of financial institutions unwilling to make loans? Prior to the 2007-2008 ﬁnancial crisis several factors occurred that created a relaxed lending environment. Congress passed laws to encourage access to loans whether it was prudent or not. Regulators took their cue from Congress and allowed financial institutions to take more risk and lend more
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money. Finally, undisciplined institutions took advantage of the lax regulations to increase proﬁts at excessive risk to their customer and themselves. In the end, customers began to fail and then the institutions. In response, Congress recognized too much risk was taken by institutions to obtain higher proﬁts. They blamed regulators for allowing that to happen. In response, regulators started looking for stricter lending requirements and asking that less risk be allowed for the borrower and the institution. This has created a less-favorable lending environment. We know savings are up, so money available to lend is up. We also know the Cedar Valley economy is stable. First National did not take excessive risk to obtain
higher proﬁts and thus maintained a safe and secure environment for our depositors. Because of this, First National is looking for customers who want to take advantage of low interest rates to accelerate the completion of their goals. We want to make the loan for you. But we want the loan decision to be prudent. We do not want to put you or your family or your business in an unacceptable risk position. To be sure that will not happen, be prepared to provide sufficient ﬁnancial information to allow us to guide you through the process. We will match your information against current guidelines. We will coach you on ways to make the loan request successful because we want to make the loan and make you successful.
For those of you in the home purchase or reﬁnance market, here are a few helpful tips: ■ Depending on the dollar amount of your existing mortgage, a half-percent reduction can save you money. Be prepared to know: ■ Your credit score. ■ Monthly income and payments. ■ Existing loan balance and interest rate. ■ Purchase price. ■ Property value. ■ Do you have any existing liens? ■ Where is your abstract? ■ Current mortgage statement. There are opportunities to identify options and make adjustments. We want to make the loan and help you be successful in your ﬁnances.