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Community Banks Still Under Stress

Stocks in this article: UCBI FBNC FRAF VCBI SNV

Construction and development loans are down $411.5 billion since the end of 2007, or 65.4%. Back between the 1988 and 1992 crisis, C&D Loans declined 54.7%, and thus the "Great Credit Crunch" has exceeded that percentage. This is the loan category where community banks remain reluctant to lend and it remains a drag on the homebuilders, who want to rebuild inventories.

As the graph below from the FDIC shows, the noncurrent rate on C&D loans peaked in early 2009, but remains significantly elevated. This indicates that continued write-offs are necessary and implies that the FDIC will continue the bank failure process to whittle down their List of Problem Banks from the current total of 732 FDIC-insured financial institutions.

Courtesy FDIC

The above table shows data from the FDIC and covering 29 community banks that have overexposures to real estate loans. This is just a sampling.

Click here for a larger version of the bank chart.

Reading the Table:

FDIC Assets: The assets shown in FDIC data. Synovus (SNV) is the largest in the table with $26.04 billion in assets.

C&D Loans: The dollar amount of the exposure. SNV has the largest size exposure at $2.7 billion.

Cons/RBC: The percent exposure vs. risk-based capital. Banc Trust Financial has the highest risk at 154% of risk-based capital vs. the 100.0% regulatory guidelines.

CRE/RBC: The percent exposure vs. risk-based capital. Pacific Premier Banc has the highest risk at 585% of risk-based capital vs. the 400.0% regulatory guidelines.

Pipeline: The percentage of CRE loans outstanding versus loan commitments. At 100% all commitments are fully funded which is a negative sign as a healthy pipeline is around 60%. Franklin Financial (FRAF) and Virginia Commerce (VCBI) have their CRE loan commitments fully funded.

OV/UN Valued: The stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.

VE Rating: A "1-Engine rating" is a Strong Sell, a "2-Engine rating" is a Sell, a "3-Engine rating" is a Hold, a "4-Engine rating" is a Buy and a "5-Engine rating" is a Strong Buy.

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