Northwest lender exposure to construction loans?

[sniglet]

Does anyone have any idea what kind of exposure northwest banks (and other lenders) have to construction loans? Would it be correct to assume that banks in our region have far fewer loans tied to construction (commercial or residential) since we didn't have the same massive building boom as elsewhere in the nation? Sure, plenty of regional banks are hurting in Florida and California, but both of those states saw massive building booms in recent years.

The articles (about local banks) Tim cited in his blog post don't seem to give any details on what the construction loan portfolios look like at individual banks, and just seems to imply that their stocks are down because of a general malaise across the country.

If northwest banks really don't have the same degree of exposure to construction as their peers across the nation, maybe they are far less vulnerable to a downturn.

[sniglet]

Unbelievable! The Wall Street Journal lists 2 Washington banks as being amongst the largest proportion of non-performing construction loans in the nation.

- Westsound Bank of Bremerton
- Sterling Savings Bank of Spokane

Just which projects were these banks lending money to? Considering how our region hasn't really experienced much of a downturn yet, these lenders must have really picked lemons to back. Or maybe they were somehow pouring money into hot markets like Florida or Arizona. I've heard of mid-Western lenders who fell into that trap.

[Ubersalad]

Look around all the custom homes in Bellevue...most of them were financed by a handful of same construction lenders.

[sniglet]

[Ubersalad]

Perhaps it is hard to imagine, but if you knew the terms of those construction loans, you would realize that you had to be stupid not to get a construction loan as a builder.

1.5 million loan x 100 = 150 million exposure. The lenders I knew, easily underwritten more than 150 million dollar worth of construction loan per month locally.

[Ubersalad]

Come to think of it, I might be exaggerating a bit. However, 100 millions per quarter isn't far fetched.

[mking]

crap. sterling is my bank. im just under FDIC limits based on joint account rules (i checked this issue carefully), but i moved all my 401k $ into a sterling CD plus cash from selling a house. anyone have any suggestions for a local bank that doesnt have the kind of problems WaMu, BofA, or Sterling have? How safe is Boeing's credit union? I think BECU has depostis insured by a different entity than the FDIC. is that other entity in better or worse shape than the FDIC?

[rose-colored-coolaid]

[Robroy]

[perfectfire]

My dad just told me that one of the banks he had money in (in a CD) went under in April. He said it took 4 weeks to get his money back.

[explorer]

mking: Sterling has been my main services bank for awhile too. Look up their annual report, and their 10K for their exposure to construction loans (some were in AZ!), and the huge "reserve" they took out of their dividends to cover just 10% if it.

I am moving to Homestreet Bank very soon.

[rose-colored-coolaid]

[Lake Hills Renter]

I don't supposed the FDIC pays interest during that time...

[jillayne]

I know I've posted this in other threads but when Barclays North went under, there was a big spread in the Everett Herald that named all the local lenders effected by Barclay's defaults: Frontier Bank, First Sound Bank, Banner Bank, Shoreline Bank, Cascade Bank.

Surprisingly, the one not named would have been the one I'd pick to go under first: City Bank in Lynnwood who held a high market share of builder and developer loans. I have heard that their stock price is very low right now.

There was also a nice article in Ethix magazine about Homestreet Bank and how they chose to stick with offering FHA loans and avoided originating all subprime. However, they also have a good reputation as being a new construction friendly bank.

[rose-colored-coolaid]