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Christopher "Kit" Menkin is of editor LeasingNews.org (http://www.leasingnews.org/), an internet trade publication for the finance/leasing industry. He has 46 years experience in the finance/leasing industry as well as being a founder of a commercial regional bank and serving on several company... More
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  • Missouri, Two Banks Florida Closed---Why? 0 comments
    Oct 22, 2012 1:41 PM

    The third bank to fail in Missouri this year was Excel Bank, Sedalia, today a population of 21, 387, located 30 miles south of the Missouri River, known perhaps best for the destination of the cattle drives in the TV series "Rawhide" and as a rough and tumble wide open town in the West, which it had quite a reputation for drinking, gambling, and houses of ill repute.
    en.wikipedia.org/wiki/Sedalia,_Missouri

    The four branches of Excel Bank were closed with Simmons First National Bank, Pine Bluff, Arkansas, to assume all of the deposits.

    Founded July 30, 1964, the bank had 46 full time employees at its offices in Green Ridge, Kirkwood, Lees Summit, and Sedalia.

    Shaun Hayes, once president of Sun Security Bank, Ellington, Missouri, closed October 7, 2011, also had been a shareholder, Excel Bank in Sedalia, Mo., and ones of those suing Hayes for real estate fraud.

    Real estate loans, first and second mortgages, construction loans brought non-current loans up as charge off brought Sun Security's 27 branches down as well as the four at Excel:

    (in millions, unless otherwise)

    Non-Current Loans

    2006 $414,000
    2007 $1.7
    2008 $1.7
    2009 $5.2
    2010 $12.1
    2011 $31.9
    6/30 $31.5

    Charge Offs
    2006 -$4,000 ($17,000 commercial, $3,000 individual, -$19,000 1-4 family,
    -$3,000 nonfarm/nonres.)
    2007 $577,000 ($438,000 construction/land, $122,000 commercial, $13,000 indiv. $3,000 1-4 family)
    2008 $292,000 ($144,000 construction/land, $100,000 multifamily, $32,000 1-4 family, $8,000 commercial)
    2009 $165,000 ($86,000 construction/land, $85,000 1-4 family, $85,000 commercial,-$100,000 multifamily)
    2010 $10.1 ($4.8 1-4 family, $3.1 commercial/industrial, $794,000 multifamily, $47,000 individuals
    9/30 $5.6 ($1.8 commercial/industrial, $1.5 nonfarm/nonres. $938,000 multifamily, $768,000 1-4 family, $430,000 construction/land development).

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

    As the real estate loans were affecting other banks in Missouri, particularly those overextended, the ban hit the wall in 2010 and was under close scrutiny by the regulators:

    Profit

    2006 $1.4
    2007 $682,000
    2008 $1.2
    2009 $1.1
    2010 -$833,000
    2011 -$8.2
    9/30 -$6.4

    Net Equity

    2006 $11.7
    2007 $12.3
    2008 $13.2
    2009 $18.4
    2010 $18.0
    2011 $9.8
    9/30 $3.3

    Tier 1 risk based capital ratio 2.36%

    As of June 30, 2012, Excel Bank had approximately $200.6 million in total assets and $187.4 million in total deposits. In addition to assuming all of the deposits of the failed bank, Simmons First National Bank agreed to purchase essentially all of the assets.

    The FDIC and Simmons First National Bank entered into a loss-share transaction on $126.6 million of Excel Bank's assets. 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 $40.9 million

    http://www.fdic.gov/news/news/press/2012/pr12120.html

    The four branches of GulfSouth Private Bank, Destin, Florida closed with SmartBank, Pigeon Forge, Tennessee, to assume all of the deposits.

    Founded November 21, 2005, there were 27 full time employees at their offices in Destin, Fort Walton Beach, Pensacola, and Santa Rosa Beach.

    Tony Atkins, founding president and CEO, had big dreams opening of the bank at the building the bank owned at 305 Main Street. On what is known as the Emerald Coast, on the Gulf Coast, originally an island but became a peninsula due to the many hurricanes. It became a popular vacation sport with reportedly the largest fishing vessel fleet in the state of Florida. It was going to be a boom town for tourists.
    en.wikipedia.org/wiki/Destin,_Florida

    The 2010 BP oil spill affected tourism, but that was just the final straw to an area overbuilt as real estate loans were the demise of the bank, as seen in the drop in profits and charge offs.

    (in millions, unless otherwise)

    Profit

    2006 $1.4
    2007 $1.4
    2008 $628,000
    2009 -$4.9
    2010 -$4.1
    2011 -$8.7
    6/30 -$5.0

    Charge Offs
    2006 0
    2007 0
    2008 $344,000 ($255,000 construction/land development, $89,000 loans to individuals)
    2009 $3.1 ($1.4 construction/land, $1.0 nonfarm nonres., $500,000 1-4 family, $208,000 individuals)
    2010 $4.8 ($1.7 1-4 family, $1.0 individuals, $626,000 industrial, $605,000 nonfarm/nonres,
    2011 $3.0 ($877,000 nonfarm/nonres., $610,000 1-4 family, $614,000 individual, $520,000 commercial)
    6/30 $2.3 ($1.2 1-4 family, $803,000 nonfarm/nonres., $252,000 construction, $90,000 commercial, $21,000 individuals).

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

    GulfSouth Private Bank President Tony Atkins was formally the President/Senior Lender of Corporate Banking for Colonial Bank's South Central Region. In this capacity Mr. Atkins managed over 1.5 Billion in loans and over 125 lenders in fifty plus branches. The region produced in excess of $600 million in loans annually. His responsibilities consisted of credit quality, loan production, profitability and the mortgage banking area.
    http://www.gulfsouthprivatebank.com/atkins.html

    Instead of growth, he saw the bank equity start to drop in 2009:

    (in millions)

    Net Equity

    2006 $17.9
    2007 $19.0
    2008 $19.2
    2009 $13.8
    2010 $16.5
    2011 $7.9
    6/30 $2.6

    Note Non-Current Loans large jump in 2009:

    (in millions)

    Non-Current Loans

    2006 0
    2007 0
    2008 $728,000
    2009 $13.8
    2010 $21.4
    2011 $22.9
    6/30 $27.9

    GulfSouth owed the U.S. Treasury $7.5 million under the TARP program. Under the terms of the Capital Purchase Program, the Bank made four payments to the U.S. Treasury totaling $681,300 and then defaulted on its payment obligations. The last payment made to the U.S. Treasury for the TARP funds was made during June 2010.

    As of September 30, 2012, the Tier 1 risk-based capital ratio was 2.59%.

    As of June 30, 2012, GulfSouth Private Bank had approximately $159.1 million in total assets and $151.1 million in total deposits. In addition to assuming all of the deposits of the failed bank, SmartBank agreed to purchase essentially all of the assets.

    The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $36.1 million.

    www.fdic.gov/news/news/press/2012/pr1211...

    First East Side Savings Bank, Tamarac, Florida, was closed with Stearns Bank National Association, St. Cloud, Minnesota, to assume all of the deposits. Founded January 1, 1920, the bank had 12 full time employees as of June 30, 2012. End of year December 31, 2006 they had 29 full time employees at two offices located in Chicago area (Joliet, Naperville), relocating to Florida in 2007 after selling off its Chicago operations and concentrating on Florida. Tamarac is about 13 miles northwest of Fort Lauderdale and 40 miles north of Miami. It has a high population of senior citizens as well as female share of the population.
    www.citytowninfo.com/places/florida/tamarac

    (click to enlarge)

    Bank Headquarters
    (Building of the bank Hq.)
    www.hezner.biz/projects/tamarac/tamarac.pdf

    According to the ABA Banking Journal, "Its (chairman), president and CEO is Diane Raddatz, age 70, whose father, William Raddatz, Jr., was CEO before her, and whose grandfather, William Raddatz, Sr., was a founder, and the first CEO, of the savings bank." (The building above shows the ego involved. CM). During this period, the ABA Banking Journal noted " ...Currently about 60% of First East Side's loan portfolio consists of single-family construction loans. (It does not make condo or pure commercial loans.)"
    www.ababj.com/top-performer-profiles/fir...

    Mortgage payments and new construction defaults overcame the bank as it fell quickly after its move from Chicago to what it thought would be warmer and more profitable climate as real estate in Florida was "hot" in 2007

    (in millions, unless otherwise)

    Net Equity

    2006 $12.1
    2007 $18.1
    2008 $15.5
    2009 $11.1
    2010 $6.0
    2011 $3.2
    6/30 $870,000

    Profit

    2006 $379,000
    2007 $6.1
    2008 -$2.0
    2009 -$5.0
    2010 -$5.4
    2011 -$3.0
    6-30 -$2.3

    Non-Current Loans

    2006 $1.7
    2007 $846,000
    2008 $5.7
    2009 $10.2
    2010 $13.4
    2011 $3.9
    6-30 $2.3

    Charge Offs
    2006 $48,000 ($48,000 commercial/industrial loans)
    2007 $163,000 ($144,000 construction/land, $19,000 commercial/industrial loans)
    2008 $1.1 ($1.1 construction/land, $56,000 1-4 family, -$29,000 commercial/industrial)
    2009 $3.8 ($2.8 construction/land, $683,000 1-4 family, $250,000 individuals, $56 commercial/Ind.)
    2010 $1.4 ($932,000 construction/land/$495,000 1-4 family, -$204,000 individual)
    2011 $1.0 ($786,000 1-4 family, $179,000 multifamily, $47,000 construction, -$7,000 individuals)
    6/30 $1.4 ($1.2 1-4 family, $154,000 commercial/industrial, $36,000 individuals)

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

    Tier 1 risk-based capital ratio 2.10%

    As of June 30, 2012, First East Side Savings Bank had approximately $67.2 million in total assets and $65.9 million in total deposits. In addition to assuming all of the deposits of the failed bank, Stearns Bank agreed to purchase essentially all of the assets.

    The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $9.1 million.

    Florida has now had a total of seven banking failures this year, representing 16% of total U.S. bank failures during 2012.

    www.fdic.gov/news/news/press/2012/pr1211...

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

    Bank Beat Collection:
    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.

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