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141-Year-Old Bank Fails In Maryland

Relatively High Non-Current Loans/Charges Offs

The five branches of NBRS Financial, Rising Sun, Maryland, were closed with Howard Bank, Ellicott City, Maryland, to assume all of the deposits.


(Historic Bank Building, Rising Sun, Maryland)

Founded in 1873 as The Evans and Wood Bank, it was chartered as a national bank in July 1, 1880 under the name The National Bank of Rising Sun. It became a state chartered bank in 2002, again changing its name to NBRS Financial (abbreviation of the bank's name), opening branches: : Aberdeen (12/28/2004), Elkton (6/3/2005), Havre De Grace (1/18/2000), Peach Bottom (10/3/1973), Rising Sun 7/1/1880), Street (7/18/2003).As of June 30, 2014, they had 54 full time employees at their six offices. During the bank's height, the FDIC reports they had 75 full time employees.

According to cecildaily.com, "On Jan. 28, 2010, the Bancorp entered into a written agreement with federal and state regulators to develop a plan to "strengthen board oversight of the management and operation of the bank," including actions the board would take to better control the bank's credit risk management. The agreement also ordered an assessment of bank management, especially senior executive officers.
www.leasingnews.org/PDF/Jan2010FedReserveAgreement.pdf

"The 2010 agreement also froze extensions, renewals or restructuring or any borrower's credit for a period and directed the bank to review all large loans.

"On Feb. 22, 2012, Greider, who had then served as executive vice president and chief financial officer for five years, replaced Jack Goldstein as bank president, after 10 years of his leadership.

"On April 2, 2013, the stock for Rising Sun Bancorp, the corporate holding company for NBRS, was deleted from the OTC Bulletin Board, a stock quotation medium available to subscribers that lists over-the-
counter equity securities not available on the NASDAQ or national stock exchange, due to its inactivity, according to Bloomberg. It has since apparently been re-listed."

2010 census shows population 2,781 Zillow shows 108 houses for sale, many built within the last ten years, in pre-foreclosure and foreclosure:
http://www.zillow.com/rising-sun-md/

The high non-current loans and charge offs doomed this bank:

(in millions, unless otherwise)

Non-Current Loans

2006 $2.0
2007 $2.6
2008 $3.2
2009 $4.6
2010 $10.3
2011 $17.5
2012 $9.9
2013 $5.5
6/30 $12.7

Charge Offs

2006 $609,000 ($444,000 commercial/industrial, $148,000
individuals loans, $17,000 1-4 family)
2007 $142,000 ($64,000 individual loans, $63,000 1-4 family,
$15,000 commercial/industrial)
2008 $502,000 ($432,000 nonfarm/nonresidential, $72,000 consumer, -$2,000 commercial/industrial)
2009 $3.1 ($1.3 construction/land, $942,000 commercial/industrial,
$439,000 1-4 family, $377,000 nonfarm/nonresidential, $45,000
individual)
2010 $3.9 ($1.4 commercial/industrial, $1.2 nonfarm/nonresidential,
$672,000 construction/land, $645,000 1-4 family, -$10,000 individual loans)
2011 $2.0 ($964,000 commercial/industrial, $607,000 1-4 family,
$564,000 construction/land, -$186,000 nonfarm/nonresidential, -
$26,000 individual)
2012 $4.0 ($1.2 nonfarm/nonresidential, $1.2 1-4 family, $985,000
commercial/industrial, $44,000 individuals)
2013 $2.9 ($1.1 1-4 family, $709,000 commercial/industrial,
$743,000 construction/land, $373,000 nonfarm/nonresidential,
$11,000 individual)
6/30 $465,000 ($327,000 1-4 family, $63,000 commercial/industrial, $90,000 farmland, -$14,000 nonfarm/nonresidential)

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

Profit

2006

$1.2

2007

$1.5

2008

$639,000

2009

-$3.8

2010

-$6.8

2011

-$3.8

2012

-$2.8

2013

-$3.6

3/31

-$1.6

Net Equity

2006

$16.7

2007

$18.8

2008

$20.6

2009

$21.9

2010

$14.8

2011

$13.4

2012

$10.9

2013

$6.2

6/30

$5.1

Tier 1 risk-based capital ratio 4.36%

As of June 30, 2014, NBRS Financial had approximately $188.2 million in total assets and $183.1 million in total deposits. Howard Bank will pay the FDIC a premium of 1.19 percent to assume all of the deposits
of NBRS Financial. In addition to assuming all of the deposits of the failed bank, Howard Bank agreed to purchase essentially all of the assets.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $24.3 million.

NBRS Financial is the 15th FDIC-insured institution to fail in the nation this year, and the second in Maryland. The last FDIC-insured institution closed in the state was Slavie Federal Savings Bank, Bel Air,
on May 30, 2014.

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

Leasing News Bank Beat:
http://www.leasingnews.org/Conscious-Top%20Stories/Bank_Beat.htm

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.