Three Board of Directors Let Their Investors Down

The 40 branches of Community Banks of Colorado, Greenwood, Colorado were closed with Bank Midwest, National Association, Kansas City, Missouri, to assume all of the deposits. Founded June 26, 1973, the bank went from 387 full time employees in 2007 to 279 full time employees at their 5 offices in California (Placer, Sacramento, San Joaquin counties-gold country) and 37 in Colorado, June 30, 2011.

The bank web site (1) states the bank started in 1989 with the purchase of Rocky Ford National Bank in Pueblo, Colorado and then in 1997 expanded into Northern California. In 1997, the bank had a net equity of $4.1 million, according to FDIC record, as well as a profit of $452,000, compared to a June 30, 2011 Tier 1 risk-based capital ratio 2.49% and $27.4 million net equity (thier high $160.2 million in 200&) with losses of $33.2 million, 2009, $64.3 million, 2010, and $26.8 million June 30, 2011.

Again with the other failed banks tracked for the last three years, land and construction loans were the main culprit, as noted by these charges offs:

Perhaps the board of directors, especially the Woods, and their guidance of the bank, has let their investors down:

• Donald McG. Woods, Chairman of the Board, President and CEO, Community Bankshares, Inc.

• Mark R. Brown, Managing Partner, Brown & Tedstrom (Wealth Management)

• Katherine Cattanach, PhD, CFA, General Partner (retired) , INVESCO Private Capital

• Jeff Johnson, (Advisory Director) Managing Director, MBH Enterprises, Inc. (strategic planning, “At MBH, we leverage our collective experience in company-building to achieve remarkable profits and service standards for our subsidiaries.” prior co-founder/CEO full service contract for disaster recover firm. http://www.mbhe.com/our_team.html)

• Roger A. Parker, Manager – IEXCO, LLC. (Int. Exploration Consultants)

• Ken West, President and CEO, H.W. Houston Construction Company

• Edward (Ted) White 111, Partner, Moye White LLP (Law Firm)

• Michael Potts, CEO, Rocky Mountain Institute (innovations for energy and resource efficiency)

• Michael Van Gilder – (Advisory Director) CEO, Van Gilder Insurance Corporation

• John D. Woods, Sr. – (Advisory Director) Chairman Emeritus of Community Bankshares 1989-2006

For Questions about the Board
Ms. Kathy Woods, Executive Vice President

http://www.cobnks.com/cobanks/BoardofDirectors.aspx

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $224.9 million.

(in millions, unless otherwise)

Charge Offs
2006 $412,000 ($173,000 1-4 family, $89 construction/ land, $82,000 other consumer, $30, commercial)
2007 $880,000 ($324,000 commercial, $259,000 nonfarm nonresidential, $121,000 individual, $115,000 other loans, $27,000 agriculture products)
2008 $7.3 ($7 construction/land, $166,000 individuals, $78,000 commercial, $29,000 other, -$26,000 ag. prod.)
2009 $41.4 ($37.6 construction/land, $6.7 nonfarm nonres., $3.5 commercial/Ind., $1.2 1-4 family, $740,000 multifamily, $164,000 other)
2010 $41.2 ($23.2 construction/land, $6.9 commercial, $5.9 nonfarm nonresidential $2.3 1-4 family, $625,000 loans to individuals, $625,000 loans to individuals, $596,000 multifamily, $217,000 other loans)
6/31 $28.1 ($16.5 construction/land, $6.2 commercial/industrial, $2.9 1-4 family, $1.6 farmland, $715,000 nonfarm nonresidential, $46,000 other loans, $29,000 loans to individuals)

Construction and Land, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non-Residential loans.

As of June 30, 2011, Community Banks of Colorado had approximately $1.38 billion in total assets and $1.33 billion in total deposits. In addition to assuming all of the deposits of the failed bank, Bank Midwest, National Association agreed to purchase essentially all of the assets.

The FDIC and Bank Midwest, National Association entered into a loss-share transaction on $714.2 million of Community Banks of Colorado’s assets. Bank Midwest, National Association will share in the losses on the asset pools covered under the loss-share agreement.

(1) http://www.cobnks.com/cobanks/BriefhistoryCBC.aspx

The seven branches of Old Harbor Bank, Clearwater, Florida were closed with 1st United Bank, Boca Raton, Florida, to assume all of the deposits. Founded July 14, 2003, the bank had 48 full-time employees at their three offices in Clearwater, and one each in Belleair Bluffs, Dunedin, New Port Richey, Palm Harbor, and Trinity. 1st United Bank previously acquired two other failed banks – The Bank of Miami in December 2010 and Republic Federal Bank in December 2009. This increases United Banks branches to 18 and reportedly their first foray into the Tampa Bay market.

Clearwater, Florida

Old Harbor Bank completed a public stock offering in June 2006, selling 800,000 shares of common stock at $17.oo per share.

It is interesting to note that while other banks in Florida were doing well, Old Harbor had lost money, $127,000. In raising the money for additional capital, the bank stated:

“The Bank faced many challenges during 2006. Among these challenges was an increase in competitive pressures from new community banks that have opened recently, larger regional banks that have entered the market as a result of acquisitions and credit unions. The downward pressure on interest margins experienced in 2005 due to the flat yield curve continued throughout 2006. In addition, the opening of two new offices significantly impacted our operating expenses. Despite these challenges we were able to meet or exceed the goals that we had set for ourselves. We originated over $80 million in loans during the year increasing our net loan balances to $131 million, a $45 million (52%) increase over the previous year…We think that these are quite impressive growth results. On the earnings front, as expected, we had a net loss for the year.”

http://problembanklist.com/old-harbor-bank-clearwater-fl-closed-by-regulators-0420/

The bank did make money in 2007, as seen below, but went down a spiral with its $80 million in loans. The bank president said he could cure the problem by raising more capital, but the numbers scared investors, as the original stockholders soon learned additional capital would not have saved this bank, as the June 30, 2011 Tier 2 risk-based capital ratio was -1.34%.Again, it was poorly chosen construction and land development loans that did the bank in.

(in millions, unless otherwise)

Charge Offs
2006 0
2007 $427,000 ($228,000 1-4 family residential, $199,000 commercial and industrial
2008 $4.4 ($2.9 construction/land, $524,000 commercial, $450,000 1-4 family, $233,000 multifamily) $129,000 nonfarm nonresidential)
2009 $3.5 ($2.5 construction/land, $300,000 multifamily, $279,000 nonfarm, $199,000 Commercial, $173,000 1-4 family)
2010 $7.1 ($2.4 construction/land, $1.8 commercial/industrial, $1.5 nonfarm/nonresidential, $937,000 multifamily, $469,000 1-4 family, $30,000 individuals)
6/31 $4.3 ($1.9 construction/land, $992,000 1-4 family, $844,000 commercial/industrial $323,000 nonfarm nonresidential, $244,000 multifamily Construction and Land, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non-Residential loans.

As of June 30, 2011, Old Harbor Bank had approximately $215.9 million in total assets and $217.8 million in total deposits. In addition to assuming all of the deposits of the failed bank, 1st United Bank agreed to purchase essentially all of the assets.

The FDIC and 1st United Bank entered into a loss-share transaction on $155.6 million of Old Harbor Bank’s assets. 1st United Bank will share in the losses on the asset pools covered under the loss-share agreement.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $39.3 million.

http://www.fdic.gov/news/news/press/2011/pr11169.html

Georgia accounts for 22 of the nation’s 84 banking failures as of October 21, 2011

The three branches of Community Capital Bank, Jonesboro, Georgia were closed with State Bank and Trust Company, Macon, Georgia, to assume all of the deposits. State Bank and Trust Company has now acquired a total of 12 failed banks in Georgia since 2009.

Community Capital Bank founded August 5, 2002, the bank went from a high of 90 full time employees December 31, 2010 to 35 full time employees at their two offices in Jonesboro and one in Fayetteville, June 30, 2011.

On the “Texas Ratio” scale, July 13, 2011, Community Capital Bank was 1.51 with 36 other Georgia banks rated lower. In the list, only one bank, First Commerce Community Bank, Douglasville, Georgia was above five, and the rest below. Below 1 is trouble and there were 9.

http://georgiaconsumerbanking.com/2010/07/13/is-your-georgia-bank-in-danger-of-failing.html

Community Capital Bank June 30, 2011 Tier 1 risk-based capital ratio 2.38%. The charge off of $6.2 million in construction and land development did them in, with very little chance of recovering, or raising additional capital, particularly in the state of Georgia.

(in millions, unless otherwise)

Charge Offs
2006 $260,000 ($260,000 nonfarm nonresidential properties)
2007 $65,000 ($65,000 construction and land development)
2008 $609,000 ($497,000 construction/land, $$102,000 1-4 family, $10,000 commercial/ind.)
2009 $587,000 ($308 1-4 family, $178,000 construction/land, $90,000 nonfarm/$11,000 consumer)
2010 $6.2 ($5.9 construction/land, $300,000 1-4 family)
6/31 $529,000 ($$356,000 construction and land, $148,000 nonfarm, -$118,000 multifamily)

Construction and Land, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non-Residential loans.

As of June 30, 2011, Community Capital Bank had approximately $181.2 million in total assets and $166.2 million in total deposits. In addition to assuming all of the deposits of the failed bank, State Bank and Trust Company agreed to purchase essentially all of the assets.

The FDIC and State Bank and Trust Company entered into a loss-share transaction on $141.3 million of Community Capital Bank’s assets. State Bank and Trust Company will share in the losses on the asset pools covered under the loss-share agreement.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $62.0 million.

http://www.fdic.gov/news/news/press/2011/pr11171.html

The five branches of Decatur First Bank, Decatur, Georgia were closed with Fidelity Bank, Atlanta, Georgia, Assuming all of the Deposits. of Decatur First Bank, Decatur, Georgia. Founded September 2, 1997, the bank had 36 full time employees at their three offices in Decatur and one each in Greensboro and Madison. Year-end the bank had lost $8 million and by June 30, 2011 it was a loss of $4.4 million. September 30, 2011 numbers were not available at this time, but the trend was obvious as net equity had gone from a high of $15.5 in 2008 to $1.6 million by the middle of this year.

Land and construction loans again were the demise of another Georgia bank, making it the 21st to fail this year in the state.

June 30, 2011 Tier 1 risk-based capital ratio 1.24%

(in millions, unless otherwise)

Charge Offs
2006 $40,000 ($39,000 consumer, $1,000 other loans)
2007 $56,000 ($47,000 1-4 family, $10,000 commercial)
2008 $2.0 ($1.3 land/construction, $$305,000 1-4 family, $54,000 commercial, $50,000 individuals)
2009 $3.6 ($2.4 land/construction, $604,000 nonfarm nonresidential, $188,000 commercial, industrial, $44,000 other loans
2010 $4.1 ($2.3 land/construction, $1 1-4 family, $669,000 commercial/industrial, $162,000 nonfarm)
6/31 $2.2 ($1.1 nonfarm/nonindustrial, $$553,000 land/construction, $200,000 1-4 family, $347,000 commercial/industrial)

Construction and Land, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non-Residential loans.

As of June 30, 2011, Decatur First Bank had approximately $191.5 million in total assets and $179.2 million in total deposits. In addition to assuming all of the deposits of the failed bank, Fidelity Bank agreed to purchase essentially all of the assets.

The FDIC and Fidelity Bank entered into a loss-share transaction on $111.5 million of Decatur First Bank’s assets.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $32.6 million.

http://www.fdic.gov/news/news/press/2011/pr11170.html

List of Bank Failures:
http://www.fdic.gov/bank/individual/failed/banklist.html

Bank Beat:
http://www.leasingnews.org/Conscious-Top%20Stories/Bank_Beat.htm