And the second to follow?

Back in October I wondered if Sterling Savings Bank would be the first bank in Missoula to go under. Well, that story seems to drag on and on (see updates at the end of that post).

Now, it seems as if a Montana chartered community bank, Treasure State Bank, is on the same path. On December 29th they announced they would agree to a regulator contract to maintain a Tier 1 leverage capital ratio of 12%. The average for all FDIC insured commercial banks in Montana as of September 30, 2009 was 10.43%.

As the Missoula Independent reports, the “consent order,” aims to address losses to the bank resulting from loans gone bad. Basically, the have to set aside a chunk more cash to cover the dodgy loans that they made in the past. And since Treasure State Bank is relatively young bank, founded in January 2007, they don’t have those reserves.

So, they went out to raise some more capital. Perhaps the problem is that investors don’t think Treasure State is such a good deal. The bank had to extend the stock offering another month.

Back in July, you’ll remember Treasure State Bank had the second worst Troubled Asset Ratio of the banks in Missoula (after Stirling Savings Bank). Now admittedly that Troubled Asset Ratio was a little bit better by September (down to 49%, from 54%), but of the 38 banks the FDIC has closed since Sept. 30, 32 had a troubled asset ratio of greater than 100.

Oh, and you’ve got to wonder why they needed a new President and CEO back in October? Maybe because a few days earlier the bank had announced they had lost $74,000 in the previous quarter. In the year to Sept 30, they’d managed to lose over a $1 million.   Not bad for a bank with less than 20 employees!

How is, exactly, that a bank loses money when they borrow from you and I at exceedingly low rates (our savings accounts) and lend that money to folks to buy cars and stuff at a much higher rate? Yep, management probably made some bad decisions, so management had to go.

Now, who is supervising the management? On the Board of Directors of Treasure State Bank, you’ll find:

Howard C. Chandler, a neurosurgeon
Mark S. Hawkins, president of InterWest Health
Stanley Earl Jenne, formerly Chair of Accounting at UM
Raymond Joseph Round, director of Davidson Investment Advisors
Mark C. Staples, an attorney based in Helena
William R. Weaver, a real estate developer
James A. Salisbury, the new CEO

If Treasure State is your bank, or if your business is relying on a loan from Treasure State, now might be a good time to get to know these folks.

If you’re an investor, then this graph tells your story:

Treasure State Bank currently trades on the Over the Counter Bulletin Board (OTCBB) under the ticker symbol “TRSU”.

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One Response

  1. many new properties (condos) linger on the market and twist slowly in the hellgate winds as each passing month draws the day of reckoning closer. builder can’t pay developer, developer can’t pay bank. bank runs out of money….

    there is a quiet riot also brewing out there as small business owners begin to default on lease payments. much more trouble on the way before we see the bottom of this.

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