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Suresh
Joined: 16 Sep 2005
Posts: 8391
Location: Maryland
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Subject: FDIC slaps bank for responsible lending practices
 Posted: Tue Mar 17, 2009 12:42 pm |
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Boston Business Journal: Community bank finds paranoid a smart bet
http://boston.bizjournals.com/boston/stories/2009/03/16/story3.html?b=1237176000^1793570
...
FDIC examiners also faulted East Bridgewater for not advertising and marketing its loan products enough. The bank, which does not have a Web site, offers fixed-rate mortgages.
...
Bad or delinquent loans?
Zero.
Foreclosures?
None.
Money set aside in 2008 for anticipated loan losses?
Nothing.
“We’re paranoid about credit quality,” Petrucelli said. The 62-year-old chief executive has run the bank since 1992.
The negative CRA rating, he said, caught him by surprise. The bank received “satisfactory” CRA ratings from the FDIC in 2003 and from the Massachusetts Division of Banks in early 2006.
East Bridgewater Savings ended 2008 with $135 million in assets and deposits of $84 million.
The bank even squeaked out a profit of $87,000. And its Tier 1 risk-based capital ratio was 31.6 percent, or more than three times higher than many community banks in Massachusetts.
But in the eyes of regulators, East Bridgewater Savings looks stingy. Its net loans and leases equaled 21 percent of assets. That compared with 72 percent among 385 savings banks across the country with assets between $100 million and $300 million.
_________________
Suresh
Please feel free to agree with or critique the article excerpts and our comments. Also, please post excerpts from current articles that you've read and which may help all of us get a more complete macroeconomic big picture. |
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Suresh
Joined: 16 Sep 2005
Posts: 8391
Location: Maryland
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Subject: FDIC's failed bank resolution encourages prudent banks to wait on lending
Posted: Wed Jan 27, 2010 6:55 pm |
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Mish's Global Economic Trend Analysis: FDIC Friday Lotto: Another Reason Why Banks Are Not Lending
In case you need another reason why banks are not lending, please consider the following email from a Senior Vice President at a small California Bank.
"A California Banker" writes ...
| Quote: | Hello Mish
After our phone conversation last week, I thought of one more important banking tidbit you might want to share with your readers.
If you’re a bank with a relatively healthy balance sheet with adequate capital, (like us)you want to maintain surplus capital in order to stay on the FDIC’s list of banks they can transfer the loans and deposits from a failed institution into.
This is a home run for the acquiring bank and far more of an instant benefit than any new lending. |
Bankruptcy Lotto
Here's how the process works: On "bank failure Friday", the FDIC matches banks with sufficient capital to failing banks, taking into consideration size, location, and assets.
By spreading out the number of bank failures over many months, the FDIC gives that small percentage of well capitalized banks a further reason not to lend for as long as the weekly lotto continues.
_________________
Suresh
Please feel free to agree with or critique the article excerpts and our comments. Also, please post excerpts from current articles that you've read and which may help all of us get a more complete macroeconomic big picture. |
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