Steamboat Springs Aspen Times reporter Scott Condon produced this story March 29 that describes the decision by Alpine Banks of Colorado to retain a New York firm to help it unload a portfolio of commercial mortgage loans that are not being repaid.
The Alpine Bank branch in Steamboat Springs is one of 37 on the Western Slope. Condon’s story points out that Alpine Banks of Colorado made a profit in 2008. Commercial mortgage loans typically include residential construction loans.
Alpine Banks of Colorado aimed to trim as much as $60 million in troubled assets from its books this month through sales of commercial mortgage loans that are no longer being repaid, according to President and Vice Chairman Glen Jammaron.
The Glenwood Springs-based company, which has 37 banks in western Colorado, hired a New York financial advisory firm, Mission Capital Advisors LLC, to auction off some of its nonperforming loans.
“We don’t see another solution at this time,” Jammaron said, referring to some of the troubled assets on its books. In other cases, the bank is still working with individuals or companies that borrowed from it but are facing difficulty making loan payments.
“If there are too many of those, it can really be a problem,” Jammaron said.
Alpine’s troubled assets more than tripled in recession-racked 2009, from $41.71 million at the end of 2008, Bank Tracker reported, citing data from the Federal Deposit Insurance Corp. Jammaron confirmed the accuracy of the statistics.
Now the bank is in the process of writing off the losses and clearing the troubled assets off its books. Many of its loans were secured by real estate. When a borrower defaults on a loan, the property or its fate ends up in the hands of the bank. Even though bankers know the property will increase in value from low levels hit during the recession, they don’t want to hold on to troubled assets. Bank regulators also frown on them sitting on troubled assets.
Banks often accept losses as part of the process to move the troubled assets off their books, Jammaron said. For example, a bank might be forced to sell a $10 million note for $8 million because the value of real estate has dropped.
Mike Taets, the president of Timberline Bank in Aspen, said banks in the Roaring Fork Valley are capable of selling non-accruing loans and other troubled assets because there is still real estate sales activity (there). The past strength of the Aspen-area market and its on-going allure has investors shopping for bargains.
Banks in other parts of the country — such as Las Vegas, Phoenix and parts of Florida, for example — are stuck with those troubled assets, Taets said. Those are the banks in danger of failing.
Taets said it is frustrating to hear rumors circulating in Aspen about the alleged unhealthy condition of local banks. Banks in danger of getting shut down have troubled assets equal to or above their capital plus reserves, he said. That’s a measurement known as the “Texas ratio.”
Every bank strives to have as low a ratio as possible. “It’s kind of like being fat; you can never be too skinny,” he said.
And Aspen banks have done pretty well, in his estimation.
“What all of us have done, everybody, is keep that number below 100 percent,” Taets said. “There’s not a bank on the Western Slope that’s even on the radar screen” for failure.
He said the goal of every bank is to have as low a troubled asset ratio as possible.
The statistics are there for all to see, Taets said. He urged people to educate themselves on the topic with data from the FDIC or at Web sites such as Bank Tracker.
Alpine Bank has capital plus reserves of $319.51 million compared to troubled assets of $138.74 million. That produces a troubled asset ratio of 43.40 percent. That is well below the Texas ratio of 100 percent but significantly higher than the national median of 14.5 percent.