From today’s Everett Herald: Housing slump hits local banks hard
Low interest rates, the loss of the home construction boom and investor pessimism all are weighing down on bank stocks, dealing a big blow to all three of the local banks traded on Wall Street.
Lynnwood’s City Bank, along with Frontier Financial and Cascade Financial — both Everett-based banking firms — have seen their share prices decline by more than half in the past year.
They’re not alone. The nation’s biggest banks and thrifts also are suffering. Shares of Seattle-based Washington Mutual, one of the hardest hit by the mortgage meltdown, have plummeted 90 percent from their peak in 2007. The Standard & Poor’s Bank Index, which includes such national names as US Bancorp, Keycorp and Wells Fargo, has tumbled 50 percent in the past year.
Note that unlike Washington Mutual, the difficulties these local banks are experiencing can’t be blamed on making subprime loans in California. It’s all local.
Sara Hasan, banking analyst at Seattle’s McAdams Wright Ragen Inc., said the local banks are seen as vulnerable to the downturn in housing, as a substantial number of their loans have been to the construction industry.
“In the Northwest especially, it seems like we’re seeing the first wave of difficulties with the housing market,” Hasan said. “Bankers are nervous, and their investors are nervous, too.”
It seems to me that they have good reason to be nervous.
In related news, WaMu replaces president of branch network.
Washington Mutual said today it has replaced James Corcoran, president of its vast retail branch network.
Stephen Rotella, WaMu’s president and CEO, will assume Corcoran’s duties until a permanent successor is named.
(Eric Fetters, Everett Herald, 06.30.2008)
(Times Staff, Seattle Times, 06.30.2008)