Christopher Menkin's  Instablog

by Christopher Menkin

The two branches of Gold Canyon Bank, Gold Canyon, Arizona, were closed with First Scottsdale Bank, National Association, Scottsdale, Arizona, to assume all of the deposits. Founded April 26, 2006, the bank had 12 full time employees at year-end 2012 at their office in Gold Canyon and Peoria.

Gold Canyon is located 40 minutes east of the Phoenix Skyharbor airport, the 2010 census counted a population of 10,064, according to Wikipedia. In reality, the bank was doomed when it first opened and was never profitable. They opened the Peoria branch in 2007, which had a population of 108,364 in the 2000 Census, where the high has gone from 103 degrees in April to 95 in November.

Here are 117 homes that Gold Canyon Bank foreclosure sale had for sale in Gold Canyon, Arizona:
http://www.foreclosurerepos.com/listings/AZ/PINAL/GOLD%20CANYON.html

(relatively small homes, little landscaping, mostly Arizona country, small, $119,000, $133,900, $159,000, several over $200,000)

At the time of closing, Gold Canyon still owed the U.S. Treasury $1.55 million for monies received under the TARP bailout program in June 2009. After making three dividend payments to the U.S. Treasury, Gold Canyon stopped making payments on the loan in February 2010.

Tier 1 risk-based capital ratio 2.92%, end of year 2012, the latest numbers available from the FDIC.

The bank was doomed when it opened, as it not only opened at the wrong time, but by those interested in real estate promotion, and moving into Peoria in their second year was just a dumb mistake. Gold Canyon Bank never profitable from day one:

(in millions, unless otherwise)

Profit
2006 -$758,000
2007 -$1.3
2008 -$1.9
2009 -$2.4
2010 -$1.7
2011 -$1.0
2012 -$1.4

Non-Current Loans
2006 0
2007 0
2008 $636,000
2009 $17,000
2010 $993,000
2011 $2.0
2012 $3.5

Net Equity
2006 $8.9
2007 $7.6
2008 $5.9
2009 $4.8
2010 $2.6
2011 $2.4
2012 $959,000

December 23 2011 signed an agreement with Federal Reserve Bank of San Francisco and Arizona Department of Financial Institutions to improve their lending practices as well as increase capital, as well as plans for loans over $100,000 and 90 days past due. federalreserve.gov/newsevents/press/enforcement/enf20120110a1.pdf

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Gold Canyon Golf Resort

The Cease and Desist had:
Carlo Karim, Chairman of the Board, managing partner Gold Canyon Golf Resort since 2001, previously executive director of catering, Hilton New York. Dan Govinsky, Director, President & CEO since January, 2005. Previously president/CEO Valley Bank of Arizona (April, 1997- December, 2003, president/ CE), Bank of Scottsdale (November, 1991-September, 1995)

(Photo from LinkedIn web site of Aaron Saunders
www.linkedin.com/in/aaronsaunders7 )

When the bank opened, chairman of the board was Aaron Saunders, Broker/Owner of the MacArthur Reality Group, who February, 2011 was noted on Linkedin.com as senior vice-president of sales and marketing for Fairway Commercial Lending.
linkedin.com/in/aaronsaunders7/

The Gold Canyon Bank board also had a mortgage broker firm, a real estate management and investment firm. Heavily run by real estate promoters.

Press Release re: Opening of Bank and personnel:
http://www.leasingnews.org/PDF/Gold-Canyon-42013.pdf

December 23 2011 the bank signed an agreement with Federal Reserve Bank of San Francisco and Arizona Department of Financial Institutions to improve their lending practices as well as increase capital, as well as plans for loans over $100,000 and 90 days past due.

By the time the year-end came out, it was too late to attract more capital, whether possible earlier or not, it was just too late as non-current loans for this small bank reached $2 million and the bank equity had gone from $8.9 million in 2006 to $2.4 million in 2011. federalreserve.gov/newsevents/press/enforcement/enf20120110a1.pdf

Charge Offs
2006 0
2007 0
2008 $233,000 ($126,000 nonfarm-nonres., $107,000 construction-land
development)
2009 $615,000 ($326,000 construction/land.,$289,000 commercial
industrial)
2010 $1.0 ($430,000 construct.land, $344,000 commercial-ind.,$217,000 1
4 family,$19,000 indiv.)
2011 $225,000 ($130,000 commercial-industrial,$117,0000 construction
land, $8,000 individuals)
2012 $247,000 ($302,000 nonfarm-nonres.,-$39,000 constr.land, -$16,000commercial-industrial.)

Construction and Land, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non-Residential loans.

As of December 31, 2012, Gold Canyon Bank had approximately $45.2 million in total assets and $44.2 million in total deposits. In addition to assuming all of the deposits of the failed bank, First Scottsdale Bank, National Association agreed to purchase essentially all of the assets.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $11.2 million.
www.fdic.gov/news/news/press/2013/pr13026.html

Bank Failure Map--2013 Bank Closed Count:
http://leasingnews.org/archives/Mar2013/3_28.htm#failed

List of Bank Failures:
http://www.fdic.gov/bank/individual/failed/banklist.html

Bank Beat:
http://www.leasingnews.org/Conscious-Top%20Stories/Bank_Beat.htm

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

By Aarti Kanjani and Robert Clark, SNL Financial

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Regulators closed no banks Friday, March 22, leaving the year's total number of failures at four. In 2012, regulators had closed 15 banks through March 23.

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As of March 15, the four bank failures thus far in 2013 did not involve a loss-share agreement. In 2012, the FDIC entered loss-share agreements with the buyers of 20 of the 51 closed banks. In 2011, the FDIC entered loss-share agreements with the buyers of 58 of the 92 closed banks.

The median cost to the deposit insurance fund at the time of announcement as a percentage of the failed banks' assets was 22% in 2013, 21% in 2012 and 23% in 2011.

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LaGrange, Ga.-based Frontier Bank (258.8 million)

The bank was established in 1946 and had nine branches. The FDIC issued Frontier Bank a consent order on Feb. 15, 2012. Four months later, The Federal Reserve Bank of Atlanta entered into a written agreement with the bank's parent, Frontier National Corp. From 2009 to 2012, the bank lost $31.4 million. At the end of 2012, its Tier 1 ratio had fallen to 0.65%.

It's Alabama, Not Georgia Bank Failure
http://leasingnews.org/archives/Mar2013/3_11.htm#bank_beat

Chicago-based Covenant Bank ($58.4 million)

The bank was established in 1977 and had its sole branch in Chicago. n November 2012, Covenant Bank disclosed the need for an immediate capital infusion. Also that month, the bank was issued a prompt corrective action directive by the FDIC. It had been issued a consent order by the FDIC in June 2011. As of Dec. 31, 2012, the bank's Tier 1 ratio was 2.19%, and its Texas ratio was 397.27%.

African-American Religious Bank Fails in Chicago
leasingnews.org/archives/Feb2013/2_19.htm#bank_beat

Andover, Minn.-based 1st Regents Bank ($49.6 million)

The bank was established in 2001 and had its sole branch in Minnesota. The FDIC issued the bank a consent order in March 2010. As of Sept. 30, 2012, its equity capital fell to $924,000 and its Texas ratio was 612.51%.

Mortgage Bubble Burst Takes Another Bank Down
http://leasingnews.org/archives/Jan2013/1_22.htm#bank_beat

University Place, Wash.-based Westside Community Bank ($91.9 million)

Westside Community operated two branches in the Tacoma, Wash., area. The bank had previously agreed to sell the company to a group of investors for $5.7 million in August 2012. The FDIC issued a prompt corrective action directive to Westside Community in June 2012. As of Sept. 30, 2012, 32.50% of the bank's assets were nonperforming.

Bank in Washington State First to Fail in 2012
http://leasingnews.org/archives/Jan2013/1_15.htm#beat

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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.

By Harish Mali and Robert Clark, SNL Financial

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Total Commercial Real Estate (CRE) loans at commercial banks grew by $9.09 billion, or 0.94%, during the fourth quarter of 2012, amounting to $971.27 billion at Dec. 31, 2012. All of the components of CRE loans, except construction and land development loans, had positive growth during the quarter. Loans not secured by real estate and multifamily loans grew by 3.35% and 2.83%, respectively, during the quarter, whereas the construction and land development segment continued to skid, down by 3.22%.

SNL studied CRE trends at top-tier banks and thrifts of varying asset size and found that companies with $10 billion to $50 billion recorded the highest median loan growth of 7.38% during 2012. That category had a median delinquency rate of 2.76%. Companies with greater than $50 billion of assets saw a median decline of 3.29% in their CRE portfolio. These big banks also had the highest median delinquency rate of 3.65%.

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Commercial real estate asset quality at U.S. commercial banks continues to heal, as the aggregate delinquency rate is at the lowest level in the last 16 quarters. The CRE delinquency rate stood at 4.29% at the end of 2012, significantly down relative to a recent peak of 10.76% at March 31, 2010, and the lowest level since 3.1% at the end of 2007. As a point of comparison, the pace of recovery has been less than stellar for closed-end one- to four-family loans. The aggregate delinquency rate is still in double digits at 12.30%, down 245 basis points from the recent quarterly peak at March 31, 2010.

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SNL also created a list of CRE lenders with the highest growth rate in the fourth quarter of 2012. Banks and thrifts with less than $1 billion in total assets and 10% CRE composition were excluded from the analysis.

San Juan, Puerto Rico-based Oriental Financial Group Inc. topped the list, nearly tripling its CRE portfolio during the 2012 fourth quarter. Most of that growth came from non-owner-occupied CRE, acquired from Banco Bilbao Vizcaya Argentaria SA. During the quarter, Oriental Financial bought BBVA's Puerto Rico operations in a deal valued at $500 million. The delinquency rate of Oriental Financial's CRE portfolio was 15.85% as of Dec. 31, 2012, the highest among all companies on the list.

Jacksonville, Fla.-based EverBank Financial Corp was the other company to more than double its CRE portfolio in the quarter ended Dec. 31, 2012. Like Oriental Financial, the non-owner-occupied category represented most of the CRE portfolio and the growth was fueled by a significant deal. EverBank completed an acquisition of Business Property Lending Inc. from General Electric Capital Corp. in October 2012.

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SNL analyzed the 2012 median CRE growth rate for U.S. states based on all commercial banks with a CRE composition greater than 10% that were based in each state. More than two-thirds of the 50 states saw an increase in CRE loans during 2012. In fact, there were six states with a double-digit growth rate. Massachusetts recorded the most growth, with a rate of 19.47%, followed by Rhode Island and Alaska at 17.89% and 12.96%, respectively. New Hampshire and the Dakotas are the other three states with growth in excess of 10%.

Sixteen states saw a decline in their CRE portfolio during the year ended Dec. 31, 2012. Idaho and North Carolina witnessed the most attrition, with respective median declines of 7.50% and 6.72% in their CRE lending during the year.

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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.