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To Dodge Recession, Move to Huntsville

Mid-size cities do better in crunch, have seen lending increase

By Clay Dillow, Newser Staff

Posted Mar 30, 2009 12:42 PM CDT

(Newser) – While big cities and rural areas have taken a beating as the financial crisis unfolds, many mid-size cities have seen consumer lending increase, indicating an economic resilience that other areas lack, the Wall Street Journal reports. In cities with populations around 400,000—like Huntsville, Ala.; McAllen, Texas; and Provo, Utah—banks are lending as usual, pushing consumer loan balances up 10% or more from last year.

The increased lending could reflect reckless borrowing, but credit experts say that's unlikely. “Anyone that is getting a new loan, the bank deems a pretty low risk,” one Equifax executive said. More disciplined economic development strategies, diverse employment, and lower costs of doing business are likely behind the lending patterns. Many mid-size cities didn’t experience a housing bubble, and local banks hold fewer non-performing loans.

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This is a view of a Capital One Bank branch on Jan. 10, 2008, in Austin, Texas. Banks in mid-sized cities are finding it easier to lend, as fewer bad loans clutter their books. (AP Photo/Harry Cabluck)

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The large metro areas are definitely hit by the finance or housing problems. The smallest are often going nowhere. Many midsize metros in the country's midsection should come out of this all right.
- Steve Cochrane, Moody's Economy.com

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To Dodge Recession, Move to Huntsville