I’ve given you straight and cold facts for a while. Some things you already know? Maybe. Maybe not. But what is the reality of it all? You’ve heard the phrase “personal reality” when it comes to individual thought. But what about collective reality? What are the “personal” realities of banks and lenders? What’s the real deal?
We know banks are failing. We know this! Big banks! Huge banks! But why? Really, why? It’s not the money! Yes, that’s what I said: it’s not the money. Money is a constant. It exists and will always have some value, period. We created it, so it exists. Anything we create, we can manipulate. So what’s the problem?
The problem is not money, it’s management. Management is the variable. This is the element that changes money. What do I mean? Just look around. For those of you who live and work in or near Cucumonga, CA., you know for sure that last month Vineyard Bank NA in Rancho Cucamonga, Calif., which had approximately $1.9 billion of assets and $1.6 billion of deposits at the end of March, CLOSED.
San Diego-based California Bank & Trust agreed to assume all deposits (except $134 million of brokered accounts) and purchase about $1.8 billion of assets. Temecula Valley Bank, Temecula, Calif.,was closed by the California Department of Financial Institutions, and its assets were assumed by Raleigh, N.C. based First-Citizens Bank and Trust Co. As of May 31, Temecula Valley Bank had total assets of $1.5 billion and total deposits of approximately $1.3 billion. In addition to assuming all of the deposits of the failed bank, First-Citizens Bank and Trust agreed to purchase essentially all of the assets. The FDIC and First-Citizens Bank & Trust entered into a loss-share transaction on approximately $1.3 billion of Temecula Valley Bank’s assets.
BankFirst, Sioux Falls, S.D., and First Piedmont Bank, Winder, Ga., closed as well. The FDIC brokered transactions in which Grand Forks, N.D. based Alerus Financial NA took over BankFirst, and Athens, Ga. based First American Bank & Trust Co. took over First Piedmont.
So four Federal Deposit Insurance Corporation (FDIC) insured institutions were closed and the collective damage on the FDIC’s Deposit Insurance Fund was estimated at $1.09 billion. Here on the one hand you have Vineyard Bank, Temecula valley Bank, BankFirst and First Piedmont, LOSERS; and on the other you have First-Citizens Bank & Trust, Alerus Financial NA, and First American Bank & Trust, WINNERS. Why? Aren’t all those banks on the same planet?
Better yet, in the same month, the Boston office of Holliday Fenoglio Fowler secured $25 million in financing for a 10-story, 159,000-square-foot Class A office building in Boston. Completed in 1990, 101 Merrimac is currently 95% leased. Yes, 95% leased. How is that possible? Aren’t many offices going vacant all over the place? I’ll save that for another post. But what’s your opinion? What’s really our reality? What’s really their reality? Is it mind over money or money over mind? What do you think?
