Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Bank Beat---First Billion Dollar Plus Banking Failure 2011



 

The eight branches of United Western Bank, Denver, Colorado were closed with First-Citizens Bank & Trust Company, Raleigh, North Carolina, to assume all of the deposits. Formed January 1, 1960, the bank had 161 full time employees. It is the first billion dollar plus banking failure of 2011. Aggregate losses to shareholders are estimated to total around $735 million with a zero chance of recovery.
 


 

This was the seventh bank to fail in the United States and the first in Colorado since October 2, 2009, when Southern Colorado National Bank, Pueblo, failed. Despite promises of raising sufficient capital and backing from Goldman Sachs, among others, there simply were too many bad loans involving real estate investments with climbing noncurrent loans and large charge offs. Bank equity had dropped from $226.6 million 2008 to $188.3 million 2009 to $140 million September 30, 2010, while noncurrent loans grew in the same period from $45.9 million to $62.9 million to $72.6 million September 30, 2009. The bank lost $33.4 million 2009 and $69.3 million year-end 2009 from charge offs of $11.43 million in construction and land development, $3.5 million in nonfarm nonresidential property, $1 million in commercial and industrial loans, $664,000 1-4 family residential properties, and $343,000 in multifamily residentia properties.

2010 year-end filings have not been posted, but the trend is obvious.

The latest FDIC numbers showed a $52.5 million loss September 30, 2010 following charge offs of $20.8 million in construction and land development, $7.4 million in nonfarm nonresidential properties, 2.1 million 1-4 family residential properties, $2 million multifamily residential properties, and $605,000 in commercial and industrial loans. Tier 1 risk-based capital ratio: 6.84%.

As of September 30, 2010, United Western Bank had approximately $2.05 billion in total assets and $1.65 billion in total deposits.
 

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $312.8 million.
http://www.fdic.gov/news/news/press/2011/pr11013.html
 


 

Enterprise Banking Company, McDonough, Georgia, was closed Friday, and assets and deposits were not purchased. The FDIC created the Deposit Insurance National Bank of McDonough (DINB), which will remain open until January 28, 2011, to allow depositors access to their insured deposits and time to open accounts at other insured institutions. It was the 53rd bank to fail in George since the middle of 2008.



 

The bank was established October 25, 1925 and had 18 full time employees. It was originally Dorsey State Bank of Abbeville, but was purchased March, 2005 and moved to McDonough where it specialized in real estate loans brought to it by its directors. Located in Henry County, 35 miles south of Atlanta, it was reportedly one of the fastest growing counties in the country and the statistics show when the real estate bubble burst, the bank couldn't handle it. In fact, there were no buyers and the FDIC is in the process of dissolving all the assets and paying off the liabilities as noted above until January 28, 2011.

Net equity 2008 was $5.6 million and 2009 $5.3 million following a $5.4 million loss 2008 and $5.66 million loss 2009 primarily after $2.9 million charge off in construction and land development, $821,000 secured by nonfarm nonresidential properties, $274,000 1-4 family residential properties plus $11.1 in noncurrent loans. These noncurrent loans climbed to $20.4 million September 30, 2010 seeing the bank equity drop to $1.65 million after a $3.7 million loss following a $1.4 million charge off in construction and land development, $708,000 in 1-4 family residential properties, and $1.37 million in commercial and industrial loans. Tier 1 risk-based capital ratio: 1.96%.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $39.6 million.

As of September 30, 2010, Enterprise Banking Company had $100.9 million in total assets and $95.5 million in total deposits
http://www.fdic.gov/news/news/press/2011/pr11010.html



 

The five branches of The Bank of Asheville, Asheville, North Carolina were closed with First Bank, Troy, North Carolina, to assume all of the deposits.
 


 

The town is perhaps best known for the Biltmore Estate, built by George Washington Vanderbilt III with 250 rooms. Over a million visit the historic US landmark each year. http://en.wikipedia.org/wiki/Biltmore_Estate
 

Founded December 1, 1997 the bank had 58 full time employees with four offices in Asheville and one in Candler. Bank equity in 2008 was $20.6 million and $19.5 million 2009 with $25 million in noncurrent loans and while it had made $825,000 profit the year before was showing a $33,000 loss following $1.1 charge offs in real estate, primarily construction and land development of $1.18 million and $995,000 in commercial and industrial loans.

September 29, 2010 found noncurrent loans at $30.4 million with bank equity dropping to $1.58 million from $20.6 million September 29, 2009. The bank had also lost $18.6 million following charge offs of $8.3 million in construction and land development, $4 million in commercial and industrial loans, $1 million in nonfarm nonresidential property, $342,000 in 1-4 family multiply properties, $194,000 in other loans and $109,000 in loans to individuals. Tier 1 risk-based capital ratio: 0.82%.

As of September 30, 2010, The Bank of Asheville had approximately $195.1 million in total assets and $188.3 million in total deposits. The FDIC and First Bank entered into a loss-share transaction on $166.3 million of The Bank of Asheville's assets.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $56.2 million.

News ABC 13 TV News on Closing:
http://wlos.com/shared/newsroom/top_stories/videos/wlos_vid_3739.shtml?wap=
 

http://www.fdic.gov/news/news/press/2011/pr11012.html


 


 

The six branches of CommunitySouth Bank and Trust, Easley, South Carolina were closed Friday. To protect the depositors, the FDIC entered into a purchase and assumption agreement with CertusBank, National Association, Easley, South Carolina, a newly-chartered bank subsidiary of Blue Ridge Holdings, Inc., Charlotte, North Carolina, to assume all of the deposits of CommunitySouth Bank and Trust.
 

Milton H. Jones, Jr. is CEO and President of CertusBank (meaning "certain."). He was with BofA for 32 years. Other directors include the CEO of Hendrick Automotive Group, who retired in 2004 after 32 years with BofA. Walter L. Davis as chief credit officer, formerly Exec. VP of Wachovia direct retail credit. COO is Charles M. Williams, formerly in global and investment bank with BofA. Robert J. Brown, Chairman/CEO of management firm he established in 1960. Dr. Robert L. Wright, "40 years of experience in government, business management, and finance. J. Veronica with government and 20 years experience with Nations Bank (now BofA). Howard C. Bluver, Founder of JDS Financial Group, Port Washington, NY; he is also a member of the Board of Directors, and is Chairman of the Audit Committee, at Bank of Georgetown, Washington, D.C.

CommunitySouth formed January 18, 2005, had 87 full time employees with two offices in Easley, one each in Anderson, Greenville, Greer, Mauldin, and Spartanburg.

As of September 30, 2010, CommunitySouth Bank and Trust had approximately $440.6 million in total assets and $402.4 million in total deposits. The bank equity had dropped from $29.1 million 2008, $12.5 million 2009 to $5.99 million September 30, 2009. . The bank lost $2.6 million 2008 and $17.6 million 2009 following charges offs of $6.5 million in construction and land development, $2.58 million in nonfarm nonresidential property, $1.4 million in commercial and industrial loans, $1.4 million in 1-4 family residential properties, and $214,000 to individuals.
 

September 30, 2009 the bank had lost $8.4 million following charge offs of $4.5 million in construction and land development, $1 million in 1-4 family residential properties, $642,000 in commercial and industrial loans, 4348,000 in nonfarm nonresidential properties. Noncurrent loans September 2009 were $16.7 million and September 2010 $32.6 million. Tier 1 risk-based capital ratio: 2.18%

The FDIC and CertusBank, N.A. entered into a loss-share transaction on $211.3 million of CommunitySouth Bank and Trust's assets.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $46.3 million. Compared to other alternatives
http://www.fdic.gov/news/news/press/2011/pr11011.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