Subprime Fallout on Regional Banks [Housing Tracker]

Subprime and Regional Banks

 

Housing Woes Hit Community Banks.  California: "When developer Empire Land sought protection in U.S. Bankruptcy Court in Riverside in April, its biggest debt by far -- $5.1 million -- was to PFF Bank & Trust. Southern California's oldest bank, PFF had doubled its loan portfolio to $4 billion over the last decade, in large part by financing residential developers and builders of affordable housing in the Inland Empire. But the bank's losses on such lending has soared, sending the stock price of its parent company, PFF Bancorp, down 90% this year. Desperate for fresh capital, PFF agreed Monday to be acquired for $30.5M in cash.” (LA Times, June 17^th)

 

Provident Hurt Even Without Subprime Loans. “Provident Bankshares Corp.’s stock rebounded Monday, after falling to a 15-year low Friday… Along with many other small and midsize banks, Maryland-based Provident has suffered through the aftermath of the subprime mortgage crisis, because of a portfolio heavily weighted with housing-related loans. Provident shied away from offering subprime loans, but… Investors [have been] afraid of putting their money into a bank so tied to the industry. Locally, shares of First Mariner Bancorp have fallen from a 52-week high of $14.20 to $3.85 Monday, and shares of Sandy Spring Bancorp’s stock have dropped to $21.57 from a high of $33.51.” (Maryland Daily Record, June 16^th)

 

Oceanfirst Financial Corp., Stung By Subprime Loans, Is Profitable Again. New Jersey: “OceanFirst acquired NY-based Columbia Home Loans LLC in 2000… In March 2007 OceanFirst discovered… Columbia loans that were defaulting at a high rate… OceanFirst had to set aside millions to cover the defaults [and restate] Q4’06 earnings from a $4.6M profit to a $1.6M loss. It lost another $5.4M during Q1’07. They discontinued the subprime mortgage operation in March 2007 and closed Columbia two months later… OceanFirst returned to its community bank model, making mortgage and business loans to local residents... OceanFirst is profitable again. And its stock is up more than 25% since January, rebounding to its early 2007 level.” (Trading Markets, June 16^th)

 

M&T Sues Deutsche Bank Over Subprime Mortgage Deal.  NY: “M&T Bank Corp. sued German banking giant Deutsche Bank AG, accusing the global investment banking powerhouse of knowingly selling M&T unsafe mortgage investments. M&T is seeking to recover $182 million in losses and damages. The legal action represents an attempt by Buffalo-based M&T to recoup most of the damage it suffered on a trio of mortgage-backed securities in Q4’07. That's when mortgage delinquencies and foreclosures were soaring nationwide, causing vast losses not only for lenders but also for the holders of such investments.” (Buffalo News, June 16^th)

 

Battered U.S. Banks, RBC May Be A Timely Match. “One recent WSJ rumour is that Royal Bank of Canada might be a potential suitor for Lehman Brothers Holdings (LEH)… But a look at RBC's strategic goals suggests it's unlikely Canada's largest bank would take a risk on an acquisition of Lehman… More plausible are suggestions that RBC might be shopping around U.S. regional banks… The bank signaled in April that it was increasingly looking for growth outside of Canada… CIBC World Markets analyst Darko Mihelic cited Alabama-based Regions Financial Corp. and North Carolina-based BB&T Corp. among the banks that RBC could profitably swallow.” (Globe and Mail, June 14^th)

 

 

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Comments

[helplessobserver]

Judy,
You don't get many comments, but your info is very useful. Keep up the good work.

[Judy Weil,SA Editor]

Thanks!

Judy