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Christopher Menkin
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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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  • Central Arizona Bank Fails In Middle Of Week 0 comments
    May 15, 2013 12:10 PM

    Western Equipment Finance Parent
    Takes over Central Arizona Bank

    Central Arizona Bank, Scottsdale, Arizona, was closed with Western State Bank, Devils Lake, North Dakota, to assume all of the deposits.

    "Western Equipment Finance, a subsidiary of Western State Bank, began financing commercial equipment nationwide in 1990. The company is headquartered in Devils Lake and currently has over $165 million in equipment finance transactions outstanding."
    www.westernbanks.com/about-us-our-history.htm

    The bank is the 13th to fail this year and the second in Arizona: was Gold Canyon Bank, Gold Canyon, on April 5, 2013.

    It is interesting as normally the FDIC closes banks the end of the week, not in the middle. It is also interesting that Western State Bank, Devils Lake, North Dakota, which has eight branches in North Dakota, but one in Chandler, Arizona, originally established January 01, 1899 which they grew from a loan production facility, then acquired and made a banking facility in 2009 (their web site states) and then Casa Grande, evidently from Centra Arizona Bank in 2012.

    The bank had 9 full time employees as of December 31, 2012. Year-end 2010 they had 19 full time employees. In 2008 the bank changed its name from Valley First Community Bank to Central Arizona Bank, planning to open an office in Casa Grande in 2012 (which Western State Bank acquired in 2012)---and the net equity was up to $10.5 million in 2009---but in 2009 it dropped to $4.6, hitting the problems of many other Arizona banks as evidenced by the numbers below.

    Tier 1 risk-based capital ratio .0287 3/31/2013

    (in millions, unless otherwise noted)

    Net Equity
    2006 $7.7
    2007 $8.1
    2008 $10.5
    2009 $4.6
    2010 $1.7
    2011 $922,000
    2012 $716,000
    3/31 $671,000

    Profit
    2006 $717,000
    2007 $327,000
    2008 -$1.0
    2009 -$6.1
    2010 -$5.6
    2011 -$1.8
    2012 -$1.4
    3/31 -$52,000

    Non-Current Loans
    2006 0
    2007 0
    2008 $1.9
    2009 $3.1
    2010 $5.1
    2011 $4.07
    2012 $2.8

    Charge Offs
    2006 0
    2007 0
    2008 $940,000 ($608,000 commercial/industrial, $324,000
    nonfarm/nonres.)
    2009 $1.9 ( $993,000 construction/land,$489,000 nonfarm/nonresidential, $41,000 1-4 family_
    2010 $3.0 ( $1.4 nonfarm/nonres.,$697,000 1-4 family, $611,000 commercial/industrial, $129,000 construction/land,$109,000 individuals)
    2011 $1.3 ($669,000 1-4 family, $601,000 nonfarm/nonres.,$65,000 construction/land, $13,000 commercials
    2012 $426,000 ( $295,000 nonfarm/nonres.,$189,000 commercial/ind., $29,000 individuals, -$90,000 construction/land) 3/31 $5,000 ($3,000 commercial/industrial, $2,000 construction/land)

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

    3/31/2013
    Tier 1 risk-based capital ratio .0287

    As of March 31, 2013, Central Arizona Bank had approximately $31.6 million in total assets and $30.8 million in total deposits. In addition to assuming all of the deposits of the failed bank, Western State Bank agreed to purchase essentially all of the failed bank's assets.

    The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $8.6 million
    www.fdic.gov/news/news/press/2013/pr13040.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

    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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