Coastway Community Bank Depositors Approve Formation of a Mutual Holding Company by Wide Margin
View Original ArticleWed, 23 May 2012 09:12:19 -0700 The Rhode Island Fast Ferry will add a new vessel to expand service to Martha?s Vineyard and sightseeing cruises on Narragansett Bay this summer.
TD Economics Forecasts Strength in U.S. Multifamily Housing Construction Over the Next Five Years
View Original ArticleTue, 29 May 2012 08:57:00 -0700 PORTLAND, Maine and CHERRY HILL, N.J., May 29, 2012 /PRNewswire/ -- TD Economics ( www.td.com/economics ), an affiliate of TD Bank, America's Most Convenient Bank ® , released today a new research report ...
The Zacks Analyst Blog Highlights: Equity Residential, Bank of America, Barclays Bank PLC, UDR and M
View Original ArticleWed, 30 May 2012 06:30:00 -0700 CHICAGO, May 30, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks ...
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Alternative Bank Formation
Banking Basics
The bank formation process starts by understanding how banks work. Most of the lending is done by non-bank financial institutions such as finance companies, International Savings & Loans, mortgage companies, insurance companies, pension funds, and investment banks. But they provide a variety of financial products and compete with banks and each other for lending opportunities.
Various bank formation strategies begin by forming a International Savings & Loan Companies which are ordinary intermediaries. They act as a conduit between those with funds to lend and those in need of funds. By pooling the funds of investors from whom they borrow, they can then lend in various amounts and periods. For their service they charge a fee, usually in the form of periodic interest payments. Their borrowing and lending increases the total credit market debt but has no direct effect on the money supply. Non-banks simply intermediate the transfer of funds from the bank accounts of the original investors to the bank accounts of the ultimate borrowers.
During the bank formation process, the institution will usually borrow short-term at lower rates to lend longer term at higher rates. That means a non-bank must be able to roll over its short-term debt at favorable rates. It must also be able to borrow on short notice to manage any cash flow problem. For that reason it must maintain an excellent credit rating, or it may not be able to borrow at all.
