in search of that perfect match.
The Community Bankers Association of Illinois recently launched a section on its Web site (www.cbai.com) that pairs banks interested in buying participation in loans with those looking to sell.
Though loan sharing is hardly a new concept, the Internet service offers trade group members an even broader list of potential partners.
"Like any business, bankers tend to know more of their colleagues in their own region, but they probably prefer to sell loans to noncompeting banks," said Mike Kelley, executive manager of Community BancService Corp., which maintains the site and is a subsidiary of the Illinois association. By selling loans over greater distances, bankers avoid giving away free information on their customers to geographic competitors who might try to lure away those customers' other accounts.
The Illinois association is believed to be the first trade group to actively encourage loan sharing on its Web site. Financial institutions cannot buy or sell loans on the site itself, but they can use it as a lead to contact interested banks and thrifts.
Already, 70 of the association's 552 member banks and thrifts have registered on the site, which acts similarly to a newspaper's classified section.
Banks typically seek loan partners if a customer's credit needs exceed its own lending limits or if it is having trouble finding suitable loans in its market.
"There are some banks that have loaned to their capacity that might want to use the listing service to reduce their loan-to-deposit ratio," said Robert J. Wingert, the association's executive director. "In other markets, loan demand might not be as great, and there could be some interested buyers.
Loan sharing also helps diversify a bank's portfolio. For instance, a Peoria bank with a heavy industrial concentration might sell some of its own loans but buy agricultural loans from other banks.
"In certain markets, there's not a lot of opportunities," said James T. Ashworth, president of Carlinville (Ill.) National Bank.
Carlinville is one of those markets. "Almost everyone we finance is at least somewhat dependent on the farm economy," said Mr. Ashworth, who was among the first registrants on the Web site. "When the farmers are having a downturn, they don't buy a new family automobile, and that's just one example of how it affects us."
