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While the formation of new and community banks has fallen, so has investor confidence in larger banks. Here is the first billion dollar plus bank failure of 2011, costing shareholders an estimated $735 investment with a zero chance of recovery. There is also very little tax write-off. So it is a double whammy, reverberating in communty bank investments throughout the United States as more bank failures occur. Here is the latest group:

The eight branches of United Western Bank, Denver, Colorado were closed with First-Citizens Bank & Trust Company, Raleigh, North Carolina, to assume all of the deposits. Formed January 1, 1960, the bank had 161 full time employees.

This was the seventh bank to fail in the United States and the first in Colorado since October 2, 2009, when Southern Colorado National Bank, Pueblo, failed. Despite promises of raising sufficient capital and backing from Goldman Sachs (NYSE:GS), among others, there simply were too many bad loans involving real estate investments with climbing noncurrent loans and large charge offs. Bank equity had dropped from $226.6 million in 2008 to $188.3 million in 2009 to $140 million in September 30, 2010, while noncurrent loans grew in the same period from $45.9 million to $62.9 million to $72.6 million as of September 30, 2009. The bank lost $33.4 million in 2009 and $69.3 million by year-end 2009 from charge offs of $11.43 million in construction and land development, $3.5 million in nonfarm nonresidential property, $1 million in commercial and industrial loans, $664,000 1-4 family residential properties, and $343,000 in multifamily residential properties.

2010 year-end filings have not been posted, but the trend is obvious.

The latest FDIC numbers showed a $52.5 million loss in September 30, 2010 following charge offs of $20.8 million in construction and land development, $7.4 million in nonfarm nonresidential properties, $2.1 million in 1-4 family residential properties, $2 million multifamily residential properties, and $605,000 in commercial and industrial loans. Tier 1 risk-based capital ratio: 6.84%.

As of September 30, 2010, United Western Bank had approximately $2.05 billion in total assets and $1.65 billion in total deposits.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $312.8 million.

Enterprise Banking Company, McDonough, Georgia, was closed Friday, and assets and deposits were not purchased. The FDIC created the Deposit Insurance National Bank of McDonough (DINB), which will remain open until January 28, 2011, to allow depositors access to their insured deposits and time to open accounts at other insured institutions. It was the 53rd bank to fail in George since the middle of 2008.

The bank was established October 25, 1925 and had 18 full time employees. It was originally Dorsey State Bank of Abbeville, but was purchased in March, 2005 and moved to McDonough where it specialized in real estate loans brought to it by its directors. Located in Henry County, 35 miles south of Atlanta, it was reportedly one of the fastest growing counties in the country and the statistics show when the real estate bubble burst, the bank couldn't handle it. In fact, there were no buyers and the FDIC is in the process of dissolving all the assets and paying off the liabilities as noted above until January 28, 2011.

Net equity for 2008 was $5.6 million and 2009 $5.3 million following a $5.4 million loss in 2008 and a $5.66 million loss in 2009, primarily after a $2.9 million charge off in construction and land development, $821,000 secured by nonfarm nonresidential properties, $274,000 1-4 family residential properties plus $11.1 in noncurrent loans. These noncurrent loans climbed to $20.4 million by September 30, 2010. This saw the bank's equity drop to $1.65 million after a $3.7 million loss following a $1.4 million charge off in construction and land development, $708,000 in 1-4 family residential properties, and $1.37 million in commercial and industrial loans. Tier 1 risk-based capital ratio: 1.96%.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $39.6 million. As of September 30, 2010, Enterprise Banking Company had $100.9 million in total assets and $95.5 million in total deposits.

The five branches of The Bank of Asheville, Asheville, North Carolina were closed with First Bank, Troy, North Carolina, to assume all of the deposits.

The town is perhaps best known for the Biltmore Estate, built by George Washington Vanderbilt III with 250 rooms. Over a million visit the historic U.S. landmark each year.

Founded December 1, 1997, the bank had 58 full time employees, with four offices in Asheville and one in Candler. Bank equity in 2008 was $20.6 million and $19.5 million in 2009 with $25 million in noncurrent loans. And while it had made $825,000 profit the year before, it was showing a $33,000 loss following $1.1 charge offs in real estate, primarily construction and land development of $1.18 million and $995,000 in commercial and industrial loans.

September 29, 2010 found noncurrent loans at $30.4 million with bank equity dropping to $1.58 million from $20.6 million as of September 29, 2009. The bank had also lost $18.6 million following charge offs of $8.3 million in construction and land development, $4 million in commercial and industrial loans, $1 million in nonfarm nonresidential property, $342,000 in 1-4 family multiply properties, $194,000 in other loans and $109,000 in loans to individuals. Tier 1 risk-based capital ratio: 0.82%.

As of September 30, 2010, The Bank of Asheville had approximately $195.1 million in total assets and $188.3 million in total deposits. The FDIC and First Bank entered into a loss-share transaction on $166.3 million of The Bank of Asheville's assets.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $56.2 million.

News ABC 13 TV News on closing here.

The six branches of CommunitySouth Bank and Trust, Easley, South Carolina were closed Friday. To protect the depositors, the FDIC entered into a purchase and assumption agreement with CertusBank, National Association, Easley, South Carolina, a newly-chartered bank subsidiary of Blue Ridge Holdings, Inc., Charlotte, North Carolina, to assume all of the deposits of CommunitySouth Bank and Trust.

Milton H. Jones, Jr. is CEO and President of CertusBank (meaning "certain."). He was with BofA (NYSE:BAC) for 32 years. Other directors include the CEO of Hendrick Automotive Group, who retired in 2004 after 32 years with BofA. Walter L. Davis as chief credit officer, formerly Exec. VP of Wachovia direct retail credit. COO is Charles M. Williams, formerly in global and investment banking with BofA. Robert J. Brown, Chairman/CEO of the management firm he established in 1960. Dr. Robert L. Wright has "40 years of experience in government, business management, and finance". J. Veronica, with government and 20 years experience with Nations Bank (now BofA). Howard C. Bluver, Founder of JDS Financial Group, Port Washington, NY; he is also a member of the Board of Directors and is Chairman of the Audit Committee at Bank of Georgetown, Washington, D.C.

CommunitySouth formed January 18, 2005, had 87 full time employees with two offices in Easley, one each in Anderson, Greenville, Greer, Mauldin, and Spartanburg.

As of September 30, 2010, CommunitySouth Bank and Trust had approximately $440.6 million in total assets and $402.4 million in total deposits. The bank's equity had dropped from $29.1 million in 2008, $12.5 million in 2009 to $5.99 million as of September 30, 2009. The bank lost $2.6 million in 2008 and $17.6 million in 2009 following charge-offs of $6.5 million in construction and land development, $2.58 million in nonfarm nonresidential property, $1.4 million in commercial and industrial loans, $1.4 million in 1-4 family residential properties, and $214,000 to individuals.

As of September 30, 2009, the bank had lost $8.4 million following charge offs of $4.5 million in construction and land development, $1 million in 1-4 family residential properties, $642,000 in commercial and industrial loans, $348,000 in nonfarm nonresidential properties. Noncurrent loans as of September 2009 were $16.7 million and as of September 2010, $32.6 million. Tier 1 risk-based capital ratio: 2.18%

The FDIC and CertusBank, N.A. entered into a loss-share transaction on $211.3 million of CommunitySouth Bank and Trust's assets.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $46.3 million. Compared to other alternatives.

Tracking Bank Failures Map

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: The First Billion Dollar Plus Banking Failure of 2011