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Arizona Real Estate Failures Take Bank Down---Board Of Directors At Fault

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

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.