Five banks were shuttered on Friday. It’s funny (sort of) that this has now become such a common Friday night occurrence that there is very little coverage of the events on Monday morning. A Google search this morning revealed fewer than a handful of reports on the closings and none with many details. I’m going to open this up as a new regular post until the banks aren’t failing anymore. Each week I’ll take a look at the failed banks and then use BankProspector to see what impact their real estate portfolios had on their demise. Maybe we can learn something.
I want to point out that 4th quarter 2009 reports are not due until the end of this month. That said, none of the 5 failed banks had filed updated numbers, so we are going off of previous reports. Knowing the speed at which most institutions move, I think it’s fair to say that the numbers that are available are a reasonable representation of the problems within… So here goes!
Failed banks for 1/22 are:
- Columbia River Bank
- Evergreen Bank
- Charter Bank
- Bank of Leeton
- Premier American Bank
Columbia River Bank
Columbia River Bank in The Dalles, Oregon had assets of just over $1 Billion dollars. Even a cursory glance at the bank record exposes the fact that real estate was a major problem for them. Starting with their vitals, they reported a Tier 1 capital ratio of only 3% (regulations call for 8%). With nonaccrual real estate loans at $93 Million and REO balances at just over $15 Million they were having serious portfolio performance issues.
Distressed construction loans were by far their biggest issue with a 37.43% non-current loan rate, net charge-offs of almost 16%. They had residential, multifamily, and commercial loan problems as well, but those figures pale in comparison. Where are they now? Columbia State Bank of Tacoma, WA now has the deposits. Columbia State Bank has its own share of construction trouble but is well capitalized. That could spell opportunity because better capitalized banks have an easier job of writing down troubled assets. Verdict?
Columbia River Bank Cause of Death: Construction Loans
Later this week I’ll report on the remaining four.