The third bank to be closed by the regulators this year is 1st Centennial Bank in Redlands California. I was looking at this bank Sunday after I saw the announcement and it looks like the problems in the loan portfolio snowballed very quickly. The annual report for 2007 stated that NPA’s plus loans 90 days delinquent were $15 Million on a loan portfolio of roughly $520 million. That number rose from $15 million to $111 million over the first 9 months of 2008. They essentially had 20% of the loan portfolio go bad by the end of the 3rd quarter 2008.
You can take a look at the map below and get a good feel for what’s going on in California right now. That market is like a minefield…you don’t know you’re in one until it’s too late and not everybody gets to come out alive.
The map below plots the percentage change in NPA’s for banks around the country on a county by county basis. The darker the red the higher the NPA’s. 1st Centennial had 5 branches, 4 of them were in geographic areas in which banks are experiencing high rates of NPA’s. I would not be surprised to see a lot more bank failures coming to us from the darker red regions on the map below.
If you have any questions on this material just let me know.
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