Homestreet Bank
I switched over to Homestreet about a year and a half ago when I decided not to support the large, failing and decidedly insolvent (without tax dollars) bank that I had been using (BOA). A lot of my decision was based on reading their CEOs repudiation of risky loan making and guarantees that Homestreet had not engaged in any of that behavior.
Imagine my disappointment when this nonsense showed up in my mailbox.
http://www.homestreet.com/about/news/detail.aspx?id=164
Imagine my disappointment when this nonsense showed up in my mailbox.
http://www.homestreet.com/about/news/detail.aspx?id=164
May 15, 2009
HomeStreet Bank Reaches Agreement with Federal and State Regulators
SEATTLE -- HomeStreet Bank today announced that it has signed an agreement with the Federal Deposit Insurance Corporation (FDIC) and the Washington State Department of Financial Institutions (DFI). HomeStreet Bank's parent company, HomeStreet, Inc., has also reached a similar agreement with its regulator, the Office of Thrift Supervision.
The agreement, called a cease and desist order, provides for certain changes in operational policies, for reduction of problem loans and for increased capital levels to enhance the bank's ability to weather the current economic downturn. "We have been working closely with the FDIC and the DFI on these issues and had completed some of the items before the agreement was signed," said Bruce Williams, HomeStreet Bank Chairman and CEO. HomeStreet has been reducing exposure to commercial real estate, land development and acquisition, and construction loans; enhancing and expanding the bank's credit function; and preserving capital by reducing operating expenses, streamlining operations, freezing executive salaries and bonuses, and eliminating dividends to shareholders.
Comments
I think they do that on the first $500 you deposit and then it's like .03% after that or something...
Wouldn't be surprised if they all did. I specifically chose Homestreet because of their supposed commitment to making quality loans. What a bunch of carp. I should know better than to believe what a CEO says. It's like betting on Cramer.
Yes I only get paid the nice APY on the first $500 in my checking and savings accounts, so $1000 total gets that 7.5%. Still beats the 0% that WaMu offered. BTW, that 7.5% has been reduced to 6.25% since I opened my account.
I also was able to open a checking account at Verity Credit Union, where they paid 6.25% on the first $40,000 in your account as long as you use their debit card 12 times a month before they stopped offering that deal. The offer is now 3% on the first $10,000, but it still beats anything a for-profit bank offers.
Strings are attached (as is the case with Verity, too). For BECU and Watermark, you need to have one automatic electronic deposit every month and one electronic billpay every month. This is not hard to set up automatically. For instance, my Qwest bill is ca. $60 every month--every month on the 10th $60 is electronically transferred from my main checking to BECU, and every 15th I pay my phone bill through BECU billpay.
Kids' accounts also get the favorable treatment for the first $500 in savings and of course they don't need to do electronic banking.
With BECU and Watermark, and with accounts for me, my husband, and my kids, we've got several thousand dollars of our nest egg pulling in >6%.
Pndscm,
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Be advised, I received similar info about Westsound bank and about a month later it was shut down. It was taken over by Kitsap Bank. I was a bit surprised at how quickly it happened. No problems accessing my funds so far.
I got the generic account holder letter from Homestreet, and although the PSBJ article seemed more detailed and specific, I am actually not that worried about this--famous last words notwithstanding. I also opened an account in response to the Big Banks BS a year ago.
Lot's of banks made construction loans that imploded when the feces hit the fan. Sterling Savings actually made more of them, to the point that they were told to take 300 million in TARP money when they did not ask for it. The key here is how much they held in reserve to cover their commercial construction loan defaults. Sterling Savings was actually more overextended in that area than Homestreet. The Homestreet numbers reported were not that badly out of balance.
I note that Sterling Savings also did not get into subprimes or dervitives. They sure hit the HELOC's hard though.
I don't have all my eggs in one basket either. I have had an account at Group Health CU for years, and you cannot beat their car loan rates. Service at most CU's is not as good, but they are all basically no-frills operations. They do serve their purposes well, and the major banks should also have a 15% max. limit on loan/credit card interest rates, IMO.
I can agree with that about BECU. I went into one of their "neighborhood banking centers" once to get change for a $20 and they couldn't do it because they say they have no cash there. If you walk in and try to deposit money they will point you to the nearest atm.
Verity Credit Union, on the other hand, is better than any service I've ever seen at a bank. The first time I went in there I searched for 5 minutes for a deposit slip. When I finally went and asked a teller where they were they said they didn't use those. They just asked for my name, pulled up my info on their computer, verified some personal info and took my cash; no paper work needed. Also, I was recently cleaning out my closet and went there asking for some penny rolls (since every bank I've ever been to requires you to roll up your change before depositing it) and the teller just said "you know you can just go dump all your change right over there <points to a cash counting machine> and it will deposit it straight into your account without any fees." I was speechless.
Thanks for the tip... Not so worried about accessing funds in case of an FDIC takeover, I just didn't want to play any of those games. I guess it's time to go CU although I would really prefer a full-service community bank. I like Homestreet's service a LOT.
I suppose they would argue in the same manner the sub-prime lenders did: if they didn't lend or compete with similar loan products they would get trampled in the markets.
Likewise the local banks would probably say that if they didn't compete for developer and builder business with the likes of Banner, Sterling, CityBank, or others, they would lose significant market share. The fees some of these banks make on these development/builder loans are quite lucrative. As it turns out, the race for market share resulted in substantial losses for shareholders and placing their organizations in financial distress.
A response to S-Crow's post and a sad story that I fear may be repeated many times throughout the country -
How Westsound Became Not So Sound
......"The lessons learned are that any time an institution begins to emphasize growth and share price before loan administration and solid underwriting, you have a recipe for trouble," said Brad Williamson, Washington Department of Financial Institutions' director of banks. "And sadly, that appears to be what happened with Westsound Bank."......
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.....Golombek, the bank's first president and chief executive officer, left just 19 months (after he initiated the creation of Westsound Bank in 1998).
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The majority of the board wanted the bank to grow very fast, Golombek said recently. He preferred slow and steady.
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"I couldn't control them," he said. "I can sit there 'til I'm blue in the face and say, 'This isn't going to work.'".....
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.....Dave Johnson was hired to replace Golombek, and the coming years seemed great for Westsound and its customers......
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.....With home-appreciation rates rising 20 percent year after year, there seemed no end to the party. Westsound became a go-to bank for many local contractors like Becker. Many were overextended, but they were confident the economy would continue strong.
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"They would loan money to anybody," Becker said. Becker's son-in-law, Matt Templeton, said he was able to get $1.3 million in loans from Westsound when he was only making $35,000 a year.
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Westsound was confident, too. Its assets and deposits grew rapidly.
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In 2006, Johnson announced record growth for the first half of the year. Assets increased 63 percent to $301 million. Loans were up 76 percent to $275 million. Deposits increased 62 percent to $274 million, and net income rose 84 percent to $2 million.
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Westsound moved up Pacific to bigger quarters and had offices throughout western Puget Sound and in Federal Way.
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To fuel even more growth, Westsound leaders decided to take the company public. The bank's parent, WSB Financial Group, raised $41 million through an initial offering of common stock. Some 2.6 million shares were sold for between $16.50 and $19 apiece.
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The push was on.
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Westsound Hits the Wall
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But the next year, the inflated housing market that Westsound was so dependent on began to crumble.
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That provided a dangerous backdrop for what was about to happen.
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In an internal review, Westsound cut 33 of 40-plus employees from its mortgage marketing arm and terminated Brett Green, executive vice president of sales and lending, saying at the time it was going to outsource loan marketing.
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Soon after, the bank announced it was under investigation by the Federal Deposit Insurance Corp. and the state Department of Financial Institutions for possible fraud and violation of banking rules.
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Front and center in the probe were 146 risky high-end home construction loans worth $90 million.
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The result from the FDIC and DFI investigation remains out of reach of the public.
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But this is known - In a conference call to investors, Johnson said the bank had issued loans that didn't require full documentation of income, but merely stated income. But a secondary-market program by Countrywide Financial Corp., to which these loans were sold, required full documentation.
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Borrowers were making interest payments, but the bank could not demonstrate their ability to pay over the long haul.
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Countrywide pulled its program, leaving Westsound without an exit strategy.
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Most of the problem loans were made by one or two employees who were by then no longer with the bank. Many were made out of Westsound's branch in Federal Way for fancy houses in King and Pierce counties.......
Gee, I wonder where all the "profits" went...
I posted a link to this 60 Minutes feature once before awhile ago, but I think the story is becoming more relevant now as it becomes known that a number of small local banks are in trouble.
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Video and text -
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Your Bank Has Failed: What Happens Next?