NEW YORK (
) -- Banks increased their sales of problem loans during the third quarter and many will continue cleaning-up their books for year-end to "start fresh in 2011."
Keefe Bruyette and Woods Christopher McGratty said in a research report published Tuesday that banks in his coverage universe had sold $16 billion in nonperforming assets during the first three quarters of 2010, which was "more than double the amount sold during all of 2009." He also said that with 149
so far during 2010, the
Federal Deposit Insurance Corp.
would "remain a seller of problem assets, primarily focused in CRE and construction portfolios."
Many banks took significant mark-downs on problem asset sales. KBW said that "A combination of stronger capital levels, improved price discovery, and greater market liquidity" were "contributing factors to accelerating problem asset sales."
Here are some of the banks covered by KWB that disposed of significant amounts of problem assets:
sold $350 million in nonperforming commercial real estate loans during the third quarter at "60% of par," and transferred another $332 million to held-for-sale, at 79% of book value. KBW has a "market perform" or neutral rating on the shares. The company was included among
Fifth Third Bancorp
sold $228 million in residential loans during the third quarter, which KBW said included $205 million in nonaccrual balances and resulted in $123 million in net charge-offs. The company also transferred $961 million in commercial loans - including $694 million in nonaccrual loans - to held-for-sale, which resulted in $387 million in net charge-offs. KBW also has a market perform rating for Fifth Third. Along with Regions, Fifth third is among the group of 19 large holding companies required to submit capital plans including
to the Federal Reserve by early January.
of San Juan, Puerto Rico sold $60.6 million in construction loans in Florida during the third quarter. KBW has a market perform rating on the shares. The company was included among
based on loan loss reserve coverage levels.
of Troy, Mich. reported that on Nov. 2 it sold $474 million in nonperforming residential loans for $209 million. Since the company already had specific reserves of $133 million for these loans, it expects additional charge-offs of $132 million from the transaction. Flagstar announced a $380 million
when it reported its third-quarter financial results and was earlier included among
Written by Philip van Doorn in Jupiter, Fla.
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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.