Monday, February 16, 2009

Local bank failure # 3 within a few weeks

From the Portland Business Journal:

Columbia River Bank has received a cease-and-desist order from the Federal Deposit Insurance Corp. and the Oregon Division of Finance and Corporate Securities that requires the bank to maintain higher capital levels, among other measures to improve its safety and soundness.
Among other meaures, regulators are requiring Columbia to:
• Maintain higher capital levels than normally required. Columbia must maintain a Tier 1 leverage ratio of at least 10 percent, starting in early May, which is double the normal level for a bank to be considered well capitalized. This rato was 6.29 percent at the end of December.
• Boost its total capital ratio to at least the 10 percent regulators require for a bank to be considered well-capitalized. This ratio was 8.75 percent at the end of December, and 8.5 percent at the end of September.
• Increase its allowance for loan losses by $25 million. This was done during the third quarter. The bank must also reduce commercial real estate loans and address its delinquent loans.
• Inform The FDIC before paying cash dividends. Columbia suspended cash dividends in the third quarter of last year.

The bank also sold its $7 million credit card portfolio for $7.8 million to Elan Financial Services of Pittsburgh, adding cash to Columbia’s balance sheet while removing some risk. The bank will still offer credit cards under its own name.



Investors also have doubt about the banks ability to continue as a going concern, the stock price is just above $1.00 per share
Here are a few other local banks with stock price problems:

West Coast Bank
Last quarter results: loss of 8.2 million
Current stock price: $2.05

Bank of the Cascades
Last quarter results: loss of 24.2 million
Current stock price: $1.49


PremierWest Bank
Last quarter results: loss of 3.1 million
Current stock price: $3.91


UPDATE: There is a little confusion around the title of this post. The bank has not failed…yet but it most likely will within the next few months. All of the banks on this list are in desperate need of capital and cash, with stock prices around $1.00 a secondary offer isn’t a viable option. Some are selling off portfolios in an attempt to get more cash (which is good because they are shrinking their balance sheet and expanding their ‘equity ratios’) but it probably will not be enough especially when most of your portfolios are real estate related.


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