Christopher Menkin's  Instablog

The September housing numbers were a bit better than expected with total starts up 0.3% to 610,000 (SAAR), driven by the 4.4% increase in the all important single family activity ( 452,000 SAAR). Multi family activity was down almost 10%. Permits also reflected the divergence with multi family permits down 20% while single family was up 0.5%.

Regionally, there was an even split: the NE and South ere up 2.9% and 4.8% respectively, while the MW and West were off 8.2% and 3.6% respectively.



 

The vacant housing inventory, both year round vacant, plus seasonal vacant keeps growing. Today, there are 14 million year round vacant units and another 5 million seasonal units that are vacant. That's almost 20 million vacant units, or 15% of the housing stock the highest in history I believe.
 

The message is that demand for housing depends on our ability and desire to form households. Household formation accounts for about 65% of demand for shelter — e.g., when we form a household, we need a place to live — buy or rent - either way, a house/apartment is needed. Household formation depends on demographics/population (People moving into house buying age cohorts); and immigration.

The poor economy has negatively impacted both over the past 3 — 5 years.
 

by Jeffrey Taylor
jeffreytaylorgroup.com/

Small businesses are getting a little bigger, thanks to new size standards from the Small Business Administration.

Effective Nov. 5, 2010, the change will make nearly 18,000 more businesses across 70 industries eligible for SBA programs which include loans and bidding on federal contracts.
 

SBA size standards vary by industry, and caps are typically set based on the number of employees or average annual receipts -- criteria that have been in place since 1984. The new size standards will increase the cap on average annual receipts, taking them from $7 million to as much as $35.5 million.

The change will benefit car dealers as they represent nearly one-third of the 18,000 newly deemed small businesses. Whereas the cap for car dealers used to be revenue-based, the new rule hinges on the number of employees: 200 is the limit. About 90 percent of all car dealerships will now be considered small businesses, some with revenues up to $120 million.

The new size guidelines are aligned with current economic and industry indicators and are meant to ensure that small businesses have the tools they need to grow and create jobs, since small businesses have created 65 percent of all the new jobs in the past 17 years and employ half of America's private-sector workforce.

The 132nd bank to fail this year, the sixth in Missouri, was Premier Bank, Jefferson City, who had nine branches that were closed with Providence Bank, Columbia, Missouri, to assume all of the deposits of Premier Bank, except certain brokered deposits. Founded May 15, 1995, they had three branches in Jefferson City, with six in four other counties, in the cities of Chesterfield, Grapevine, Lake Saint Louis, Osage Beach, Saint Charles, Saint Peters.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $406.9 million. This is approximately 35% of Premier Bank's assets.

problembanklist believes the FDIC waited too long: “Premier was hopelessly insolvent with almost a third of its loan portfolio worthless, as indicated by the FDIC’s loss calculation. The huge losses on Premier Bank’s loan portfolio would have been obvious by early 2009 as residential and commercial real estate values crashed, yet Premier, though obviously insolvent, was allowed to remain open until today.

"As regulators come to the conclusion that many small and midsized banks cannot raise additional capital nor depend on rising assets values to offset defaulting loans, the pace of small and mid sized banking failures is likely to increase."

http://problembanklist.com/premier-bank-jefferson-city-mo-closed-by-regulators-0218/

The Missourian newspaper noted Premier Bancshares Inc., was placed under the supervision of the Federal Reserve in March 2009.

"The demise of this bank is the result of aggressive lending decisions made by management,” Richard J. Weaver, commissioner of the Division of Finance said in a written statement. “Many of the loans were in commercial real estate and development projects which proved unsuccessful. These loans became uncollectible. Losses are more than the bank can support, and management acknowledges that failure of the bank is inevitable.”

http://www.columbiamissourian.com/stories/2010/10/16/columbia-based-providence-bank-acquires-premier-bank/

Net equity took a larger a major hit from $90.7 million to $19 million the same period; non-current loans increased from $102 million to $166.4 million. Premier had a loss of $33.2 million June 30, 2009 to a $25.1 million loss June 30, 2010 after $33.4 million in charge offs ($21.9 million in construction and land development, $6.5 million secured by nonfarm nonresidential property, $2 million in commercial and industrial loans, $1.9 million secured by 1-4 multifamily property, and $1 million secured by residential property.

In an effort to stay alive, full-time employees had dropped from 244 June 30, 2009 to 193 June 30, 2010 and other strict measure were taken, but it was too late. Investors lost everything.

Tier 1 risk-based capital ratio 1.90%.

As of June 30, 2010, Premier Bank had approximately $1.18 billion in total assets and $1.03 billion in total deposits. The FDIC and Providence Bank entered into a loss-share transaction on $408.7 million of Premier Bank's assets.
http://www.fdic.gov/news/news/press/2010/pr10227.html

WestBridge Bank and Trust Company, Chesterfield, Missouri, was closed with Midland States Bank, Effingham, Illinois, to assume all of the deposits. Founded February 7, 2006 they had one branch in St. Louis County with 12 full time employees.
 

225 investors who provided $12.5 million in capital approved their board to sell the bank for $480,246 to a new corporation owned by Paul Melnuk and Tom Hillman, owners of FTL Finance, to keep it alive. After looking it over, they turned the deal down. Hillman is chairman of FindStuff.com, an Internet comparison shopping company.

He and Melnuk owned FTL Finance, who reportedly specialize in lease financing HVAC equipment and is a division of FTL Capital Partners, a merchant bank based in St. Louis.

Many of the directors of the bank were involved in real estate and its environs.

http://www.westbridgebank.com/2655/mirror/partners/directors.htm
 

Net equity had dropped from $5.1 million in June 30, 2009 to $1.3 million June 30, 2010. The bank had a loss of $2.9 million the same period in 2009 and $2.1 million June 30, 2010 with $7.1 million in non-current loans after a $1.1 million charge off ($446,000 in commercial and industrial loans, $340,000 in construction and land development, $170,000 secured by non-farm non-residential property, and $126,000 in loans secured by 1-4 family multi-residential property.)Tier 1 risk-based capital ratio 1.88%.

As of June 30, 2010, WestBridge Bank and Trust Company had approximately $91.5 million in total assets and $72.5 million in total deposits. The FDIC and Midland States Bank entered into a loss-share transaction on $72.6 million of WestBridge Bank and Trust Company's assets. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $18.7 million.
http://www.fdic.gov/news/news/press/2010/pr10227.html

The nine branches of Security Savings Bank, F.S.B., Olathe, Kansas, were closed with Simmons First National Bank, Pine Bluff, Arkansas, to assume all of the deposits. Olathe is the fourth largest city in the state, according to the city's web site. It is located just 20 miles southwest of downtown Kansas City.

Security Savings Bank was founded January 1, 1956. They had 148 full time employees June 30, 2009 and 108 full time employees June 30, 2010. During the same time period, the net equity had gone from $2.5 million to $1.9 million, non-current loans from $17.4 million to $32.8 million. June 30, 2009 saw a loss of $12.7 million; June30, 2010 a loss of $14 million after $7.7 million charge off to construction and land development, $776,000 in multifamily residential property, $442,000 in commercial loans, $262,000 in loans secured by 1-4 family residential properties. Tier 1 risk-based capital ratio 4.13% .

The Kansas City Star reported: “Regulators’ seizure of Security ended the divinely inspired two-decade banking career of Kansas City area homebuilder and developer Donald H. Bell. Bell and his family owned Security Savings through a holding company called Brittany Savings Corp. that faces its own financial bind.

"God had told Bell during a 'divine revelation' in 1988 to buy a bank, according to a 2004 history of Security Savings that the family produced.

"Don Bell Homes already had become one of the most active homebuilders in the Kansas City area, and the history said Bell had cold feet about his vision until his wife, Faith, said they should follow it.

"The couple borrowed $1.6 million and acquired a small thrift in Garden City, Kan., the next year, and a Salina, Kan., thrift in 1992. Security moved its headquarters to Olathe a few years ago.

"Problem loans have dogged Security Savings since early 2006. It also felt the weight of an increasing collection of foreclosed real estate, including an aborted $8 million golf course development in Greenwood called the Wilds, on which only a few houses sprouted."

http://www.kansascity.com/2010/10/15/2319197/federal-regulators-seize-security.html
 

As of June 30, 2010, Security Savings Bank, F.S.B. had approximately $508.4 million in total assets and $397.0 million in total deposits. Simmons First National Bank will share in the losses on the asset pools covered under the loss-share agreement. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $82.2 million.
http://www.fdic.gov/news/news/press/2010/pr10226.html
 

Tracking Bank Failures Map:
http://graphicsweb.wsj.com/documents/Failed-US-Banks.html

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