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Premierwest Bancorp Message Board

  • pmoishe pmoishe Jan 10, 2010 12:41 PM Flag

    Xlnt Analysis of PRWT and CACB

    Re-posted from CACB Message Board:

    I think you are correct with your assessment of CACB and PRWT. CACB has about $110 million of non accrual land development loans against about $400 million of those types of loans outstanding (see 9-30 quarterly report). The killer is the re-appraisals that banks must do; if impairment exists (property value adjusted for costs like appraisals and delinquent taxes, less than the loan amount) generally the amount needs to be charged off. That type of portfolio exposure is the real reason, in my opinion, that this bank would have great difficulty in raising capital. Imagine if 4th quarter or 1st quarter partial charge offs completely offset the amount of new capital raised. The stock has about 10% of total shares shorted (per NASDAQ short sale statistics). That is a clear indication that the shorts believe this bank has serious problems.I assume they will have possibly one more quarter to see where they stand after many re-appraisals are made on that sizeable land development portfolio. Land values are sharply down and this bank's over exposure is a killer. Ditto with PRWT just not as great an exposure to short sellers but the same risky RE portfolio that will be marked down. I doubt PRWT will be successful in raising capital for the same reason. If capital is raised, PRWT isn't planning on paying off the TARP money with proceeds, so that is a negative what with dividend payments on TARP investment, and those dividends are now not being paid. I suspect by mid Feb to mid March the FDIC will be closing many Oregon and Washington banks. Time will tell but there are plenty of candidates.

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    • Both banks are candidates for closure. The real point is that it didn't have to be this way. Both banks had fine local franchises that generated lots of profit. But both had managements for whom that was not enough. They dreamed of empires and grandeur and vast wealth and both managements were way out of their league. Now, the shareholders and depositors, who were just along for the ride, are screwed. Typical case of poor leadership and a bunch of handpicked board members who are in the hip pocket of management who rubber-stamp everything they do. Pathetic and should be criminal.