Summit Bank Burlington, WA
If you’ve read some of my posts you know I point to Capital Adequacy Ratios as the indicator to determine whether or not a bank is fit to sell or if they’re merely zombies roaming the country side waiting to be closed. Summit Bank in WA was holding out with a Tier 1 of 2.08% and a Total of 3.34%. Minimum standards for these are 4% and 8% respectively.
Summit Bank had roughly $13 Million in imminent real estate problems including a big bump in residential loans in the process of foreclosure. See the charts below that show pretty clearly what was going on. We can’t say for sure that it was the real estate that brought them down without further investigation but with only $3.2 million in loss reserves and $13 million in distressed real estate or loans it seems likely.
Click on any of the bank charts below for a larger view. Notice the towering red column on the right. That shows residential loans in the process of foreclosure.
First Georgia Banking Franklin, GA
First Georgia was limping along with a Tier 1 and a Total Risk Based CAR of 1.37% and 2.64% respectively (very low).
First Georgia left behind over $73 million in late or non performing real estate loans and REO including $16MM in commercial, $4.1MM in multifamily, $27.2MM in construction and $25.5MM in residential.
First Georgia had sold no non accrual assets last quarter and their charge-offs were almost non existent, all are indicators that this bank really wasn’t being honest with itself about the value of their assets and probably a number of other things. They were likely hanging on to their jobs as long as possible and have now bequeathed this real estate gift which will no doubt show up as loss share balances on CertusBank’s balance sheet, the acquiring institution.
Atlantic Southern Bank Macon, GA
Atlantic Southern Bank which was also consumed by CertusBank reported Tier 1 and Total CARs at only 1.2% and 2.4%. They sold no non accrual assets last quarter, they lost more than $1.2MM on the REO they booked in.
Atlantic Southern Bank was home to nearly $120MM in distressed, late and non performing real estate and REO with the bulk of their problems in the form of $51MM in bad construction loans and REO and commercial real estate problems clocking in at $33.9MM.
As you look at these banks I think the lesson to take from this is that you should qualify the institutions you’re prospecting. If I lived in Georgia and the word on the street was that First Georgia Bank and Atlantic Southern had boku product in the form of REO and non performing loans, without all of the information I might be inclined to pursue that ‘opportunity’. I’d probably take people out to lunch and follow up regularly. I’d now doubt get some addresses and drive halfway across the state to provide auction estimates or maybe a BPO and at the end of the day it would be for not because with numbers like this they’re going nowhere, they’re literally just waiting to die.
More information on the individual agreements with the acquiring banks can be found at the FDIC website. All of the data and charts for this report were gathered from BankProspector by distressedpro.com