When I make a speech at a convention, I like to ask bankers at the reception the night before: "What is the biggest problem you face today?"

At the recent convention of the Pennsylvania Association of Community Bankers, the answer I heard over and over again was "funding."

"We can't get the money we need," everybody said.

My first thought was that this is not altogether bad news. Obviously, the people in their communities are still coming to them for loans. Despite the competition from larger banks, dot-com lenders, brokerage firms, and other finance companies, community banks are still looked upon as the basic source of credit.

Be that as it may, a shortage of funds is a major concern.

I asked some bankers why they don't just raise the interest rates on the loans they write so they can bump up their CD yields to buy the money they want to lend. Their answer: "If our loan rates are one-eighth of a percent above the competition, borrowers will leave us in a heartbeat."

If that is no solution, what is?

One solution may be to boost savings account yields. Community bankers "complain that they can't get core deposits," one well-informed observer said, "but I'll bet most of them are still paying only 1% to 2% on demand deposit accounts."

The Federal Home Loan Bank System is another. Many at the conference blessed its advances. Some who had always thought they could survive without this government-sponsored enterprise admit that the advances now account for a substantial portion of their funds. Those who have not looked to the Home Loan banks before are realizing that they represent a real opportunity to solve a fund shortage.

(Others warn, however, that the Home Loan Bank System has occasionally turned off the spigot, so bankers should not rely too heavily on its advances.)

Securitization is also a way to beat the funding blues. More and more community bankers are going this route, which most larger banks have been using for decades.

Yet another approach is to give wealthy local people a stake in your bank's success - put them on your board, encourage them to buy your stock - and then persuade them to deposit more of their money in your bank. The CEO of a start-up bank that has grown to over $100 million in one year - a remarkable achievement - told me that this was the key.

Finally, some bankers said they will have to establish relationships with brokerage firms, or buy them, to retain the money that people are moving into brokerage accounts.

Most people I talked to at the convention agreed that if you cannot fund your loan demand from these sources, you'll just have to lend more selectively. Again, this need not be bad news. After all, you don't need more money to lend if you can't lend it profitably.

Mr. Nadler, an American Banker contributing editor, is professor of finance at Rutgers University Graduate School of Management.

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