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Community Banks Not Tied To Wall Street Failures

Sonora, CA — Chuck Milazzo, the president and CEO of Mother Lode Bank, is one of the first to admit that the national media has given a black eye to the entire banking industry.

"The industry as a whole has really received a black eye in some cases and probably because of a handfull of lending institutions we’re all getting painted with that same broad brush and that’s unfortunate."

"Community banking is just a far different animal from what we are all seeing and hearing about what is going on on Wall Street. We as a bank did not involve ourselves with sub prime lending, we did not sell derivitives. In fact we didn’t even purchase mortgage back securities when that was the "in" thing to do so as a result we didn’t suffer from that type of lending."

Umpqua Bank CEO Ray Davis in Portland, Oregon maintains the majority of community banks should not be considered to be in the same arena as so many Wall Street giants.

To quote Davis, "The community banks are lending money and have not stopped lending money. When the federal government talks about the credit market being frozen what they’re really talking about is the 67 percent of all lending in America that is done by non-banks, the auto dealers and the financial companies. It’s really remarkable when you stop and think about it that only a third of all lending in America is done by banks. Community banks are lending money. In just the last quarter of 2008 Umpqua Bank authored loans totaling $400 million."

While 63 percent of Tuolumne County Umpqua loans were designated for residential mortgages, Davis maintains that small business loans are the "bread and butter" of Umpqua’s operation in the Foothills.

Milazzo agrees, "Of course the applicant has to qualify and we continue to apply prudent lending practices but we welcome small businesses and the day community banks start looking the other way will be the day they will cease to exist."

Mother Lode Bank committed $3.5 million in term business credit including SBA loans for all types of business purposes. As far as mortgage lending is concerned, Milazzo says, "The phones are ringing off the hook because of the extremely low rates."

Last year according to a Tuolumne County Chamber of Commerce report, the Sonora branch of Umpqua Bank was responsible for lending $3,226,000 in the areas of consumer lending ($163,000), small business (1,017,000) and residential morthgages ($2,046,000) … that’s an 11 percent increase over the previous year.

Written by bill.johnson@mlode.com