Home Archives March 2008 Banks scramble for solid ground

Banks scramble for solid ground

| Print |  Email
Saturday, March 01, 2008

BanksCliff.jpg

STATEWIDE The recent fortunes of Oregon’s banks brings to mind that Beatles song where Paul pipes, “I have to admit it’s getting better,” and John responds, “It can’t get much worse.”

They didn’t lose billions in the manner of Wall Street titans Citigroup and Merrill Lynch — not to mention Seattle-based Washington Mutual — but Oregon’s six publicly listed banks all saw their stock prices plummet in January to lows not seen in years. Two rate cuts in eight days by the Federal Reserve in the same month stopped the slide, but recovery has been sluggish.

The biggest Oregon-headquartered banks, Umpqua Bank, headquartered in Roseburg, and Lake Oswego-based West Coast Bank, hit rock-bottom on Jan. 18, dropping to their lowest stock prices since the recession of 2001. Umpqua and West Coast both took a beating in the fourth quarter of 2007, recording loan loss provisions of $41.7 million and $30 million respectively.

Umpqua’s woes resulted from recent acquisitions of three banks in California, where the residential real estate market is in particularly bad shape. Umpqua CFO Ron Farnsworth points out that nearly three-quarters of the bank’s $98 million of non-performing assets came from bad residential loans in northern California. “We haven’t been impacted that badly in Oregon, and we’re starting to see some light at the end of the tunnel in California,” he says. “There’s a lot of cash in that market chasing deals. Those homes are going to sell eventually.”

West Coast Bank’s losses came from a “two-step” loan program that seemed innovative at the time but unraveled dramatically, causing the bank to lose $7.6 million in the fourth quarter. The first step of this program, wherein West Coast would finance the building of a new home, proved successful. Unfortunately, the second step, where the borrower obtains permanent financing from a third party, didn’t work out so well. After a slew of defaults West Coast terminated the two-step program last October and announced a provision for credit losses of $30 million in January.

Bend-based Bank of the Cascades, the third-largest bank with headquarters in the state, was also hurt by the mortgage meltdown, reporting credit losses of $7.5 million and $45.7 million in nonperforming assets in the fourth quarter. The bank managed to end 2007 with a $35 million profit, but that didn’t stop Cascade Bancorp’s stock price from falling to below $14 per share in January, compared with over $30 in January of 2007.

Oregon’s smaller public banks performed better but reaped little in the way of rewards. The Dalles-based Columbia River Bank, Medford-based PremierWest Bank and Eugene-based Pacific Continental Bank all earned more net income in 2007 than in 2006. But that didn’t stop the market from sending their stock prices into free-fall. Columbia River’s stock dropped 42% from a year earlier, Pacific Continental’s fell 43% and Premier West’s decreased by 22%.

Nowhere to go from there but up, right?

Jim Ford, president of PremierWest Bank, says his bank will continue to make the same loans it always has, which could bring in new customers as credit tightens elsewhere. “We think there are going to be great opportunities in this market,” he says.

BEN JACKLET

Have an opinion? E-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

More Articles

What I'm reading: Brad Smith & Travis Boersma

March 2014
Tuesday, February 25, 2014

Brad Smith, founder of Hot Pepper Studios, and Travis Boersma, president of Dutch Bros. Coffee, share their recent reads.


Read more...

Spreading the wealth

March 2014
Tuesday, February 25, 2014
HiResBY PAIGE PARKER

A money management firm broadens its reach. 


Read more...

Downtime with Ron Green

March 2014
Tuesday, February 25, 2014
BY JESSICA RIDGWAY

Ron Green became president and CEO of Oregon Pacific Bank in August 2013.


Read more...

Small business sales go big

March 2014
Tuesday, February 25, 2014

BY BRANDON SAWYER

Sales of small businesses surged in 2013 according to the biggest Internet marketplace of such transactions, BizBuySell, increasing to 7,056 reported sales, a 24% increase over 2012, when they dropped 7%. Portland Metro sales tracked by the site grew 9% to 73, capping three years of solid growth. On top of that, Portland’s median sale price jumped 67% to $250K, versus just 13% to $180K nationally. Portland was one of just six metros tracked where the median sale price matched the median asking price, with sellers getting, on average, 92% of what they asked.

BTNMarch14 tableBTNMarch14 line


BTNMarch14 piePDXBTNMarch14 pieUSA


Read more...

Revolution in print, pixels and passion

News
Tuesday, March 11, 2014
RyanFrankNewsBY MARK BLAINE | OB BLOGGER

The publisher of the Emerald Media Group moves on, leaving a cutting edge media group that depends on business acumen for its survival.


Read more...

The future of money

March 2014
Tuesday, February 25, 2014
BY JAKE THOMAS

An ancient institution moves slowly into the digital age. 


Read more...

Green eyeshades in the ivory tower

News
Friday, April 04, 2014
EducationCosts BlogBY ERIC FRUITS

The rapidly rising cost of higher education has left even the smartest researchers and the wonkiest of wonks wondering what’s happening and where’s all that money going. More and more, prospective students—and their families—are asking: Is college worth the cost?


Read more...
Oregon Business magazinetitle-sponsored-links-02
SPONSORED LINKS