Donde Estas The Funny Money?
"Sonoma County banks are battling for deposits like never before, the result of declining personal savings, low population growth and rising competition from investment firms and online banks."
'"It is not a good trend. Deposit growth is really our bread-and-butter. That's how ultimately we need to grow the bank," said Greg Jahn, chief investment officer for Exchange Bank."
'"They're having to work harder at it. People have too many alternatives," said Fred Ptucha, an investment broker at Brookstreet Securities in Santa Rosa who tracks the performance of Sonoma County banks."
"Deposits are a bank's lifeblood. Banks attract money by offering checking accounts and paying interest on savings accounts, certificates of deposits and money market accounts that pay guaranteed rates of return."
"Banks then use the cash to make loans and invest in government securities and other vehicles to boost bank assets. A bank's profitability is in large part dependent on paying less for deposits than it charges for loans."
"To make up for sluggish growth in deposits, banks will borrow from the Federal Home Loan Banks and other sources. But these funds are limited and more expensive than the cost of core deposits."
'"We have tapped that more in the last couple of years," Jahn said. "It kind of fills the void when there's a mismatch between the supply of deposits and demand for loans."'
umm... something tells me the real problem might be making loans to people who can't repay them. It used to be that banks made loans to people who had money in the bank... but in the past five years all you needed was a pulse. Would you want to deposit your money with banks that didn't bother performing to the expectations of their profession?
"The competition for deposits is increasingly intense, particularly with Americans saving at the lowest levels since the Great Depression. For nearly two years, Americans have spent more than they earn, dipping into savings and running up credit cards."
'"It's a very serious problem. Americans simply don't save enough money, and it's getting worse," said George Mancini, president and chief executive officer at Luther Burbank Savings."
"At the same time, competition for deposits has increased in Sonoma County. First Community Bank and Atlantic Pacific Bank, both based in Santa Rosa, have opened up operations in recent years. Today, there are 23 banks in Sonoma County, up from 20 six years ago."As you have new banks coming in, you have more players chasing fewer customers," Nelson said."
"Also hindering deposit growth in Sonoma County is the region's low population growth rate. The county's population has grown by less than 1 percent each of the past five years. Only nine of California's 58 counties had lower growth rates last year."
What? I thought everyone wants to live here? They aren't making any more land, and we don't have enough housing for a growing population? Could the REIC be wrong?