Detailed Analysis of Washington State Banks via Seattle Times

The Seattle Times posted an interesting article yesterday about Washington State’s banks titled Some Washington banks are recovering, others see their options narrowing

According to The Seattle Times’ quarterly analysis of Washington banks and thrifts, most of the state’s financial institutions seem to be weathering the upheaval reasonably well. Others, while clearly struggling, probably can survive.

But a dozen or so banks are running out of options.

“Pretty much every bank that had a high concentration in real estate (lending) is just getting crushed,” said Joey Warmenhoven, a senior vice president and community-bank stock specialist at McAdams Wright Ragen.

“It’s survival of the fittest,” Warmenhoven added. “The strongest are getting stronger, and the weakest are dying.”

Banks are, in effect, racing against time: Can they clear the piles of soured loans and foreclosed real estate off their books before they run out of capital or are shut down by regulators?

The article includes a few great charts that rank our state’s banks by comprehensive risk ratio, nonperforming assets ratio, and tier 1 leverage capital ratio.

Furthermore, they’ve provided a handy table of all the data for every bank they analyzed. Definitely some interesting stuff to poke around in there.

As a complement to the Seattle Times’ detailed table, here’s the map I made earlier this month of Washington’s 23 “troubled banks” according to Calculated Risk’s unofficial problem bank list.


View Washington’s Troubled Banks in a larger map

(Drew DeSilver, Seattle Times, 11.29.2009)

  

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

21 comments:

  1. 1
    Ray Pepper says:

    “Nor, he said, are wobbly banks getting much interest from potential buyers.”

    The epitomy of chasing good money after bad. STSA @ .65……Good Night Irene!

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  2. 2

    RE: Ray Pepper @ 1 – I would guess the problem there is two-fold. First, they don’t really know what problems they’re buying. Second, the same bank might be a lot cheaper down the road once it’s taken over.

    Rate this comment: Thumb up 0

  3. 3
    hinten says:

    We can all do our little part in accelerating that trend:
    http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/11/29/REG81AP4K1.DTL&tsp=1#ixzz0YJDaBrNw

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  4. 4

    RE: hinten @ 3

    I Hear the Rich Do It All the Time

    Don’t get me wrong, you know SWE and his lament to stay debt free….but this extra morality they put on the American middle class that may be able to pay the payments anyway and conveniently doesn’t apply to the banksters or the poor who borrowed too much and can’t make the payments is a double standard.

    Its welfare to the rich and poor on the middle class’ dime.

    I say no welfare to anyone when it comes to bank contracts.

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  5. 5
    Ray Pepper says:

    RE: hinten @ 3

    Its just a matter of time. people are NOT stupid…Its not a question of if………………just when…………..

    They’re all coming back either by foreclosure or short sale. We are a mobile society, but its like beating a dead horse. I think I have stated this 50x.

    Many will go on paying like Steve Tytler’s Az broker friend who is upside down 200k+. Let him continue to pay. Some people just take ALOT longer to realize their financial dilemma.

    Rate this comment: Thumb up 0

  6. 6
    Lanny Poffo says:

    Abstract from the paper mentioned in the SF Gate article referenced is below. Looks like an interesting hypothesis, and I’d love to see how it is tested, but I don’t think I’m going to slog through 52 pages to get to it. I do notice that the SF Gate article does basically get a response from the mortgage industry insiders interviewed that is consistent with the abstract below. The primary defense by those interviewed is – it is shameful, immoral, & irresponsible to default on your mortgage. Well, that doesn’t answer the question though does it? What are the costs – legal & financial vs. what are the benfits – legal & financial should a homeowner choose to strategically default on their mortgage?

    Abstract:

    “Despite reports that homeowners are increasingly “walking away” from their mortgages, most homeowners continue to make their payments even when they are significantly underwater. This article suggests that most homeowners choose not to strategically default as a result of two emotional forces: 1) the desire to avoid the shame and guilt of foreclosure; and 2) exaggerated anxiety over foreclosure’s perceived consequences. Moreover, these emotional constraints are actively cultivated by the government and other social control agents in order to encourage homeowners to follow social and moral norms related to the honoring of financial obligations – and to ignore market and legal norms under which strategic default might be both viable and the wisest financial decision. Norms governing homeowner behavior stand in sharp contrast to norms governing lenders, who seek to maximize profits or minimize losses irrespective of concerns of morality or social responsibility. This norm asymmetry leads to distributional inequalities in which individual homeowners shoulder a disproportionate burden from the housing collapse.”

    Rate this comment: Thumb up 0

  7. 7

    RE: Lanny Poffo @ 6 – We’ve already been discussion that article over at the mid-week open thread, starting at post 24.

    http://seattlebubble.com/blog/2009/11/27/weekend-open-thread-2009-11-27/#comments

    The discussion paper, IMHO, is horribly written and contains a number of errors. It’s surprising to me it’s actually written by someone with connections to the legal profession.

    The summary of my position is you simply don’t know what the effects will be, because whatever the effects are today might be very different in 5, 10 or 20 years.

    Rate this comment: Thumb up 0

  8. 8
    Urban Artist says:

    The other day I saw a news story about an East Coast judge that got so fed up with the bank involved that he awarded the house to the people the bank tried to foreclose on. I wonder if that will set a trend. Apparently the home owners tried to redo the loan but the bank was not willing to work with them at all. If the banks want to get rid of the toxic loans I would think they would rather work with the homeowners to avoid a foreclosure. I still have mixed feelings about it, I have no love for the banks but I think if you took out a loan you really could not afford then losing the house is what happens. Then on the other hand I thought it was great that the judge let the bank have it.

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  9. 9
    Ray Pepper says:

    http://www.cnbc.com/id/34207654

    Morally speaking do whats best for your family!

    Rate this comment: Thumb up 0

  10. 10
    Jillayne says:

    Has anyone else noticed the feverish pace of the Cascade Bank radio ads over the past few days?

    Rate this comment: Thumb up 0

  11. 11
    David Losh says:

    RE: Jillayne @ 10

    And Sterling Bank.

    Rate this comment: Thumb up 0

  12. 12
    Haybaler says:

    RE: Urban Artist @ 8
    This is the story you were referring to? It mentions that Indymac is facing similar sanctions in Ca. too.
    http://www.nypost.com/p/news/local/judge_blasts_bad_bank_erases_debt_28ZS1oW8Y58z6gu1AQbWMI?ref=patrick.net

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  13. 13
    AMS says:

    RE: David Losh @ 11
    RE: Jillayne @ 10

    Both are on the unofficial problem bank list.

    http://cr4re.com/PBLNov2709.html

    Hopefully that advertising pays off; otherwise, it’s likely to accelerate the FDIC takeover.

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  14. 14
    Haybaler says:

    RE: Jillayne @ 10
    I’ve noticed a bank advertising on TV.

    The pitch is Portable CD’s. “Take them anywhere/anytime you want”.

    It seems to me that the whole purpose of selling a CD is to build Capital/Cash/Reserves inside an institution. What good does it do to sell a CD that has no restrictions on it’s term of deposit?

    Sounds desperate. Raises red flags in my mind. Then again, if they aren’t going to pay you anything when you deposit your funds with them I suppose one way to compete would be to eliminate restrictions…..Still, why bother?

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  15. 15
    AMS says:

    RE: Haybaler @ 14 – The FDIC has limits on how much interest can be paid. They don’t like to see troubled banks simply attract more deposits by paying an above-market rate. This may just accelerate the death.

    I don’t give them long before the FDIC takeover.

    We should have a poll on how long they will last.

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  16. 16

    By Ray Pepper @ 9:

    http://www.cnbc.com/id/34207654

    Morally speaking do whats best for your family!

    So it’s morally okay to go out and steal from your neighbors, if that benefits your family?

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  17. 17
    anonymous says:

    RE: Kary L. Krismer @ 16 – Letting a property go to foreclosure isn’t exactly like stealing from your neighbors. As an ex bankruptcy lawyer I would think you would sympathize with people using legal means to reduce or get out of their debts.

    I think this is a lot more like someone who signs a 12 month lease which specifies a $1000 penalty for breaking the lease early, and the person decides to buy a house, or move to another state, breaks the lease, pays the $1000, and moves. It is also like someone who signs a 2 year agreement on a cell phone plan with a $300 cancellation fee, moves to a place with no reception for that carrier, cancels the plan and pays the fee.

    Is it immoral, breaking a contract and paying the penalty prescribed in the contract for breaking it? Any large corporation wouldn’t hesitate to break the contract if the penalty is cheaper than the price of sticking to it. So if an individual decides to stop paying the loan and give the collateral back to the bank, is that really immoral? Presumably the bank knew or should have known the risks when it signed the contract and released the money, as much so as the individual.

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  18. 18

    By anonymous @ 17:

    RE: Kary L. Krismer @ 16 – Letting a property go to foreclosure isn’t exactly like stealing from your neighbors. As an ex bankruptcy lawyer I would think you would sympathize with people using legal means to reduce or get out of their debts..

    Again, it gets down to whether they have the ability. In the bankruptcy area I would often suggest that people see the good folks at CCC to see if they could come up with a reasonable repayment plan. Sometimes it was obvious they wouldn’t be able to do that. At some point people are in so big of a hole that there is no way they could realistically dig themselves out.

    That said, I did find that people in general will say they’ll do more to repay their debts than what they actually are willing to do when push comes to shove.

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  19. 19
    anonymous says:

    By Kary L. Krismer @ 18:

    By anonymous @ 17:
    RE: Kary L. Krismer @ 16 – Letting a property go to foreclosure isn’t exactly like stealing from your neighbors. As an ex bankruptcy lawyer I would think you would sympathize with people using legal means to reduce or get out of their debts..

    Again, it gets down to whether they have the ability.

    So if they have the ability then it is just like stealing from neighbors? I respectfully disagree, for the reasons in comment 17.

    Rate this comment: Thumb up 0

  20. 20

    RE: anonymous @ 19 – I never said “just like.” My comment that we’re discussion was just pointing you you should not make decisions based solely on what is best for your family, as was claimed by Ray.

    Rate this comment: Thumb up 0

  21. 21
    anonymous says:

    By Kary L. Krismer @ 20:

    RE: anonymous @ 19 – I never said “just like.” My comment that we’re discussion was just pointing you you should not make decisions based solely on what is best for your family, as was claimed by Ray.

    Sorry, I said “exactly like”, and you responded it “gets down to whether they have the ability”.

    Ray was talking about letting a property go to foreclosure, and in this case I think you do what is best for your family.

    Think of it this way. Your family is kind of like your shareholders. If you knowingly make decisions that harm the shareholders instead of benefiting them in a legal, moral way, you aren’t really doing your job, are you?

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