I believe that the $110 million number is commitments, as opposed to actual loans. My understanding is that $55 million has been loaned out. Still, assuming that $20-$30 million gets charged-off, that’s a big hit to equity, although not enough to put them out of business. The bank can always shrink the balance sheet assuming that there are no other terminal problems – but the stock’s probably headed lower.
Another one to look at is Corus Bancshares (CORS) in Chicago. Corus is one of the nation’s largest lenders to condo developers – they’ve underwritten a bunch of projects here in San Diego. Corus’ nonperforming loans increased from less than $1 million at the end of ’05 to $107 million at the end of ’06. In my opinion, Corus is the canary in the coalmine regarding lenders’ troubles vis-a-vis condo development nationwide. Corus’ stock is trading at $22, down from $33 in the summer of ’05.
Likewise, Vineyard National Bancorp (VNBC)is the canary in the coalmine for Riverside and San Bernardino County home development – they’re one of the largest pure local lenders to builders in the Inland Empire. VNBC’s stock is at $21, down from $34 in the summer of ’05. Vineyard’s nonperformers have also jumped considerably over the last year.
