By The Tim on November 11th, 2009 at 6:00 AM · 19 Comments
With the news in September that Seattle is #1 for delinquent construction loans, it probably comes as not much of a surprise that Washington State also happens to rank #1 in the nation for troubled banks, according to Calculated Risk’s unofficial problem bank list.
| State |
Percent |
| Washington |
26.3% |
| Utah |
25.0% |
| Arizona |
21.3% |
| Nevada |
20.0% |
| Oregon |
19.5% |
| Georgia |
19.2% |
| California |
17.8% |
| Florida |
16.3% |
| Michigan |
13.2% |
| Maryland |
10.8% |
| Colorado |
10.6% |
This week we looked over the numbers to determine which states have the most stress in their banking sector. For the ranking, we added together the number of institutions that are on the Unofficial Problem Bank List and failures since 2008 and divided by the number of institutions headquartered in the state and failures since 2008. Interestingly, Georgia is not the top ranked state. Here is the top 10 list; actually top 11 as Maryland and Colorado are in a virtual tie. Please note that we only ranked states with at least 15 institutions headquartered within their borders, as we did not want the ranking influenced by a small banking market.
Washington State leads the way with more than 26 percent of its banking industry either under formal enforcement action or having failed. No wonder the esteemed governor wrote a letter to the state’s congressional delegation complaining about bank regulators (see Wall Street Journal article).
Here’s a map of Washington’s 23 troubled banks, according to Calculated Risk’s unofficial list, as well as Washington’s three recently-failed banks (via the FDIC), and WaMu, which the FDIC lists as a Nevada bank.
View Washington’s Troubled Banks in a larger map
Hat tip: Puget Sound Business Journal
Categories: News
Tags: banks, Business Journal, Calculated_Risk, commercial, lending, troubled-banks
By The Tim on September 15th, 2009 at 10:30 AM · 47 Comments
Interesting follow-up to Friday’s failure of Venture Bank via the Tacoma News Tribune: Some banks in state risk failure
The best news to derive from Friday’s announced failure and sale of DuPont-based Venture Bank came in the form of a report from a Seattle TV and radio station.
But the news – that no other banks in Washington were in trouble and facing closure – was very wrong.
I believe that the remark above is referring to this report from KOMO news, which contained the (false) claim that “as of right now, there are no other banks in financial trouble in the state.”
Yes, Venture did fail.
But yes again, in fact, there are other banks in the state that might also fail.
Scott Jarvis, director of the state Department of Financial Institutions, said Monday that he thinks he knows how that incorrect information was relayed to the public.
“The consumer reporter called Brad,” Jarvis said. (That would be Brad Williamson, head of banks at DFI.)
The reporter asked if any other banks were in trouble. Williamson – on Friday evening – answered, “We are not closing any more banks this week.”
“Somehow that got translated for the 11 o’clock news that there are no other banks in trouble,” Jarvis said.
“The truth is that we did not close any more banks on Friday,” he said.
And he continued, “There is considerable strain on our banking system attributable to the expansion we had in commercial real estate growth.”
With Ben Bernanke out there claiming that “the recession is very likely over,” it will be interesting to see how many more local banks continue to fail under the continued financial stress of non-performing construction loans.
(C.R. Roberts, Tacoma News Tribune, 09.15.2009)
Categories: News
Tags: banks, KOMO, lending, Local Economy, Tacoma_Tribune, Venture
By The Tim on September 11th, 2009 at 6:00 AM · 55 Comments
I posted about this earlier this week on the official Seattle Bubble Twitter account, but I thought it would be worth a post of its own. Via The New York Times: Construction Loans Falter, a Bad Omen for Banks
Even as the economy may be starting to recover, banks across the country are confronting a worsening outlook for their construction loans, an area that boomed for much of the decade.
Reports filed by banks with the Federal Deposit Insurance Corporation indicate that at the end of June about one-sixth of all construction loans were in trouble. With more than half a trillion dollars in such loans outstanding, that represents a source of major losses for banks.
…
Foresight’s estimates of the proportion of problem construction loans in the 20 largest metropolitan areas has one surprise: the one with the largest proportion of troubled loans is Seattle, where the recession has started to pinch.
According to the graphic attached to the story, over 30% of construction loans in Seattle are currently in delinquency. Yikes.
In related news, the Mastro bankruptcy is progressing, with the situation becoming seemingly more complicated with each update.
And, speaking of the commercial real estate market, Russell Investments just purchased the 42-story former WaMu Center for close to two thirds off what it cost to build just three years ago. Yowza.
It’s certainly an interesting time in the real estate and financing scene here in Seattle. How far we have come from just a year or two ago when everyone seemed to think that Seattle was bulletproof.
Categories: News
Tags: banks, commercial, construction, New York Times
By The Tim on August 23rd, 2009 at 7:00 PM · 67 Comments
This is a few weeks old, but it’s definitely worth watching if you haven’t yet. Elizabeth Warren, chair of the Congressional Oversight Panel (which was created to oversee TARP), has some frank words about the current state of the banks:
Here are a few transcribed excerpts.
Scarborough: “Are we out of the woods when it comes to toxic assets?”
Warren: “No.”
Scarborough: “How bad is it still?”
Warren: “…by and large, the toxic assets that brought us to this point are still on the books of the banks.”
Buchanan: “Are you saying that if they mark to market, and these assets were priced at what they’re really worth now, these banks would still be under water?”
Warren: “…once the folks changed the accounting rules… that means you can carry them on your books at a higher level than the market would treat them. And now the problem is the banks say: ‘In fact, why do I want to sell them? Because if I sell them, I can’t sell them at that value, I’m gonna have to sell them down at the lower market value. That means I have to recognize the loss.’ Recognize enough losses, and some of them are going to be gone.
Buchanan: “If all these banks, or an awful lot of these great big banks are under water if you price their assets what they’re worth, you could have a second big hit here, couldn’t you?”
Warren: “You could have real trouble.”
Warren: “If the idea behind rebuilding the economy is: ‘let’s use a lot of the bad practices we’ve used over the last five years, and see if maybe we get a little bubble going…’ I have to say, much of what is wrong and needs to be fixed is not rocket science.”
The blunt truth is that the policies that have been enacted in response to this financial crisis to date are nothing more than “extend and pretend,” where we hope that the banks can just fake it until the economy somehow magically rebounds.
Categories: News
Tags: banks, economy, link_roundup, MSNBC, video, Warren
By The Tim on August 15th, 2009 at 5:14 PM · 17 Comments
Kristen Grind over at the Puget Sound Business Journal had another great article about the unfolding mess with local developer Mike Mastro: Rival banks battle over Mastro bankruptcy
A legal battle between rival creditor banks over developer Michael Mastro Sr.’s real estate holdings is breaking out in federal bankruptcy court — a dispute that affects creditors’ ability to recoup their loans and sheds light on the extensive amount of property Mastro had amassed in the years before his financial trouble began.
Cascade Bank, Sterling Savings Bank, Golf Savings Bank and Washington Trust Bank, together owed more than $40 million by Mastro, have asked the court for permission to pursue their claims against him outside the bankruptcy proceeding. That would allow them to pluck their properties out of bankruptcy, foreclose on them and sell the properties to possibly recoup some of their losses.
But other creditors that are petitioning to force Mastro into involuntary Chapter 7 bankruptcy argue that a single proceeding would put all creditors, including individuals, on equal footing.
The banks — Columbia State Bank, Venture Bank and First Sound Bank — filed to put Mastro into liquidation in July, and Mastro has challenged the move. Until the court decides on whether Mastro can be forced into involuntary bankruptcy and whether some creditors can opt out, all legal proceedings are frozen.
The article also includes a list of some of Mastro’s multi-million dollar debts on various major projects around the area. One notable exclusion from the list was Northshore Townhomes, an 86-unit townhome complex in Kenmore featured on these pages last month. Mastro’s company owes $24 million to HomeStreet bank on that project.
Categories: News
Tags: bankruptcy, banks, Business Journal, developers, Grind, Mastro
Comment of the Week: Impulsive Behavior Disorder
By The Tim on August 28th, 2009 at 7:14 AM · 198 Comments
This comment of the week is brought to you by Jonness:
So what’s the cure for impulsive behavior disorder? Is there one? Surely there must be a way out of this self-destructive cycle, right?
→ 198 CommentsCategories: Features
Tags: affordability, bailout, banks, comments