PFF Bank & Trust was assigned an E (Very Weak) financial strength rating by TheStreet.com Ratings in September, which was a downgrade from an E+ in June and a D- (Weak) in March. The institution had $3.7 billion in total assets and $2.4 billion in deposits. PFF's problem was that nearly all of its residential and commercial construction loans (mainly in the "Inland Empire" in Riverside and San Bernardino counties) had gone bad, with nonperforming assets comprising 19.22% of total assets as of September 30, even after net loan charge-offs of $199 million year-to-date. PFF was also considered undercapitalized per regulatory guidelines, with a leverage ratio of 4.53% and a risk-based capital ratio of 6.72% as of September 30. The FDIC's estimated its insurance fund would lose $700 million from PFF's failure.
The Community Bank
The Community Bank was closed by state regulators Friday and was the third Atlanta area bank closed this year. The FDIC took the institution into receivership and sold all of its deposits to Bank of Essex, of Tappahannock, Va. The failed institution had total assets of $611 million. The Community Bank was assigned an E- (Very Weak) financial strength rating by TheStreet.com Ratings in September, a downgrade from E+ rating, assigned back in March. Like the other failed Georgia banks, The Community Bank was an exuberant construction lender, with construction loans (mainly builder loans) comprising 63% of total assets as of Sept. 30. Nonperforming assets comprised 37.83% of total assets and overwhelmed The Community Bank's capital base. The institution was considered significantly undercapitalized per regulatory guidelines as of Sept. 30, with a leverage ratio of 3.71% and a risk-based capital ratio of 5.39%.