Tiny Banks Lending Large

The bank has taken out large ads in the Boston Globe announcing "We have money to lend."

"We're vigorously pushing that money," said William Morrissey, the bank's chief operating officer. "We want to make mortgages. We have the money to invest."

It is a similar story in Maryland where three small bank brands owned by Shore Bancshares took TARP money, but didn't need it to shore up its finances. The banks -- Felton Bank of Delaware, The Centreville National Bank of Maryland and The Talbot Bank of Easton -- are all lending as vigorously as they did in the past, according to CEO Moorhead Vermilye.

"We have continued to loan money and support the community," he said.

Local Banks More Willing to Give Money

Other regional banks in his market "have pulled their horns in" and Vermilye's banks have swooped in to fill the void.

The loans are going to small businesses and homeowners.

"The residents of Talbot County are looking toward us to keep them viable," Vermilye said. "It indicates to the community that we are the lender of choice in this area.

"We've done exactly what the Treasury wanted us to do," he added. "It is important that we get out the picture that all of this isn't bailout money. It's also not being used inappropriately."

C.R. "Rusty" Cloutier, president and CEO of MidSouth Bancorp, is taking things one step further. He's on a road trip though Louisiana and Texas holding "town hall"-style meetings, telling the public that his bank has money and is loaning it out.

"Most people are unwilling to borrow money right now," Cloutier said. "They are not interested in borrowing. They are very nervous.

"Most of our customers and the new people are very nervous about taking on any new debt," he added.

He said it's almost like getting a 1-year-old to eat his peas. His customers just don't want to take on any new risk.

"We've got plenty of money to lend, we'd love to lend," he said.

There are some large banks that have received TARP funds and increased their lending, but not many.

SunTrust, which received $4.9 billion in TARP funds, is one bank that did increase lending.

"We have said consistently and publicly that we are in business to make good loans to creditworthy borrowers. We are out there every day in the marketplace, in a very difficult economic environment, seeking opportunities to do that; the loan growth reported in our fourth quarter results reflects those efforts," Barry Koling, a spokesman for SunTrust, said in an e-mail.

BB&T has also increased lending.

"In the spirit of TARP, our aim has been to target areas with liquidity and funding challenges that are beyond our banking network," spokesman Bob Denham said in an e-mail. "BB&T has been able to provide commercial and industrial loans, auto finance for consumers, insurance premium finance for small businesses, and commercial and small business equipment finance."

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