Nearly half NC's state-chartered banks 'troubled'

CHARLOTTE, N.C. (AP) - North Carolina banking regulators say nearly half of the 86 state-chartered banks are troubled institutions.

The Charlotte Observer reported Monday the 40 banks considered troubled are up from 23 in October. There are typically only two or three on the list.

Regulators are barred from disclosing individual bank names or ratings to prevent a run on deposits that would prevent banks from solving problems.

Banks have been hurt by falling real estate values, delinquent loans and weak loan demand.

State Banking Commissioner Joseph Smith says he expects few banks will fail, if any.

A Virginia bank announced plans Friday to buy one of the seven most distressed North Carolina banks, The Bank of Currituck.

Information from: The Charlotte Observer

(Copyright 2010 by The Associated Press. All Rights Reserved.)

Disclaimer: Comments posted on this, or any story are opinions of those people posting them, and not the views or opinions of WWAY NewsChannel 3, its management or employees. You can view our comment policy here.

Arranging some $200 mln to buy NPN's and REO's, many of the State's banks would benefit from this resolution solution -

Christopher Tingus
chris.tingus@gmail.com

Woodlands Bank, based in Bluffton, SC, with branches in Southport & Wilmington has been taken over by Bank of the Ozarks.

Another one bites the dust.

BUT, if you watch the stock market report nightly, for local stocks, one or two jump out. When stock drops from $15 to $20 a share and now rides at $1.50 or thereabouts, you know there is a challenge.

Same trend was true when Cape Fear & Cooperative went down.

I believe you can also check the State website. Go to the Banking Commission link and there should be directions on how to review recent activity and orders. Look for the banks which have been ordered to increase capital and surplus.

Cooperative was screwed by the FDIC. They had raised the capital ahead of the deadline they were told. They were closed on a Friday by the feds with a statement that they didn't raise enough and were opened on a Monday owned by First Bank. The feds didn't give Cooperative a chance, they assumed they would fail and had prematurely put them up for sale.

They use the weekend to make a fast transition to the new owner.

As a former shareholder in Cooperative, I assure you that Cooperative was screwed by no one but themselves. They had far too much money invested in MBOs and when the MBO market had a massive coronary and it became painfully apparent that their portfolio consisted of 98% junk, they were in a position from which winning the lottery presented their only viable path to recovery.

But they were meeting the requirements set by the FDIC but were still closed and sold. That means the FDIC had them up for sale early on. They never had a chance to pull out.

but they were not making the progress at a rate satisfactory to the Banking Commission and the FDIC.

They knew over a year in advance; and could not get where they needed to be in time.

What amazes me is some of the Loan Officers are still employed by the purchaser.

I have good knowledge of what happened in there. They received the cease and desist letter with guidelines of how much capital needed to be raised by a certain date. They had raised much of the capital ahead of schedule and had not past the deadline when FDIC shut them down. That means the FDIC had them up for sale before they reached the drop dead date. I will agree that some of the loan officers made some bad decisions.

It was the people in high management who forgot a little word called diversification. Cooperative had WAAAAAAAY too much money in high yielding notes from Fannie Mae and when the fecal matter hit the rotary air displacer in regard to MBOs, they were essentially broke. A bank is not supposed to make the same mistakes that your average Enron employee fell for. You never put too many eggs in one basket.

I was actually surprised that COOP got themselves into that pickle. (I was NOT surprised by CAPE, whose loan portfolio always appeared to be managed more like a Three Stooges short than a bank.)

You have to refresh my memory on COOP's deadline however. I thought that it was "Seven million by the Seventh," and they failed to meet that deadline. They were then shut down on the Twelfth.

The drop dead date was sometime July of 2008 and FDIC closed Cooperative Friday, June 20th 2008. That means the FDIC had them on the chopping block way before the dead date.

actually it was June 19, 2009.

Yes, you are correct about the date. Sorry about that, for some reason I was thinking it was in 2008.