BluegrassForeclosure.com

From the Lane Report:  “Looking at the short- and long-term performance of Kentucky’s publicly held companies offers a significant lesson in economics. Blessed with a location that’s crucial in terms of distribution to the eastern half of the U.S., the Commonwealth’s businesses also have to deal with the fact that they are located in a state that is primarily rural.

This means that while communications and distribution are relatively easy issues to deal with for Kentucky corporations, gaining market share on a national basis can be a challenge. Our state’s relatively small population pretty much guarantees that the state’s manufacturers are well run. They have to be. They’re not going to reach their goals by reaching customers solely within the state’s boundaries.

Yet the non-manufacturing sectors of Kentucky’s business population seem to draw from a diverse customer base. With economic challenges being what they are, those companies that can still turn a profit are indeed worthy of note and praise. Investment-wise, however, those who hold stock for the long term are more likely to see the benefits of corporate growth than short-term investors.”

This appears to be from an older article but still interesting.

Another report regarding bank’s real estate owned department.

“Other real estate owned increased to $26,435 at September 30, 2009, compared to $19,396 at December 31, 2008, again, due largely to our CRE portfolio. The ratio of non-performing assets to total loans and other real estate owned increased to 9.69% at September 30, 2009, compared to 6.79% at year end 2008 and 8.90% at June 30, 2009. Approximately 57.5%, or $124,453, of our total nonperforming assets are in our Chicago region and 35.0%, or $75,699, are in our CRE group. These assets represent approximately 38% of the total loans and other real estate owned in our Chicago region and almost 10% of our total loans and other real estate owned in our CRE group.”

“Total non-performing loans at September 30, 2009, consisting of non-accrual and loans 90 days or more past due, were $189,897, reflecting increases of $38,998 from December 31, 2008 and $7,484 from June 30, 2009. Non-performing loans were 8.61% of total loans, compared to 6.06% at December 31, 2008 and 7.76% at June 30, 2009. Of the non-performing loans, $174,005 are in our commercial real estate portfolio and $8,752 are commercial and industrial, while the balance consists of homogenous 1-4 family residential and consumer loans.”

Banks still reporting a downturn in their income for the quarter.  Bank of Kentucky Financial Corporation is also reporting the same.

“The Company reported a decrease in diluted net income per share of 40% for the first nine months of 2009, and a decrease of 70% for the third quarter, as compared to the same periods in 2008. Highlighting third quarter 2009 results was an increase in total operating revenue of 1,065,000 (7%), an increase in loans of $110,809,000 (11%) and an increase in deposits of 158,272,000 (16%), as compared to the third quarter of 2008. Offsetting these increases was an additional $3,225,000 provision for loan losses and a $523,000 increase in losses on the sale of other real estate owned (OREO) as compared to the third quarter of 2008. Contributing to the revenue increase was the result of increases in net interest income of $873,000, or 8% in the third quarter of 2009, as compared to the same period in 2008. Contributing to the increase in the provision for loan losses were higher levels of charge-offs and non-performing loans in the third quarter of 2009 as compared to the same period in 2008, and management’s continuing concerns over the effect of the declining housing market, falling real estate values and the overall deteriorating economic conditions will have on the Company’s loan portfolio. The losses on the sale of OREO property included a loss of $462,000 on one property.”

As you can see they speak directly about their real estate owned or REO department.  Many banks have had a huge increase in their REO and must figure out something to do with all the foreclosed property that they now have.

Yet another great way for the foreclosure real estate investor to pick up some good bargains.

The more I read about banks and their reports, the more interesting theybecome.

First Federal Bancorp reports “All forward-looking statements are based on current expectations regarding important risk factors including, but not limited to, real estate values, the impact of interest rates on financing, changes in general economic conditions, legislative and regulatory changes that adversely affect the business of the Company, changes in the securities markets and the Risk Factors described in Item 1A of the Company’s Annual Report on Form 10-K for the year ended June 30, 2009.”

A small decrease was reported, “At September 30, 2009 assets had decreased $5.1 million or 2.1% to $235.8 million compared to $240.9 million at June 30, 2009.”

More and more 3Q reports coming out suggest that the foreclosure rates are possibly declining, but still significant across the state. Community Trust reports the following:

“Nonperforming loans decreased $14.4 million during the third quarter 2009 to $45.2 million compared to $59.6 million at prior quarter end and $49.3 million at September 30, 2008. The decrease in nonperforming loans was in both the 90 day and accruing and the nonaccrual classifications. Nonperforming assets, however, increased $1.8 million from prior quarter-end, June 30, 2009, and $23.0 million from prior year quarter-end, September 30, 2008, as a result of increased other real estate owned.”

Other portions of their 3Q report suggest that they are still making loans, but not in the residential sector.

“Loan growth occurred during the quarter in the residential and consumer loan portfolios with residential loans increasing by $23.4 million and consumer loans increasing by $18.5 million.  The commercial loan portfolio declined by $19.4 million during the quarter.  Year-to-date loan growth of $54.0 million consisted of growth in the commercial loan portfolio of $12.8 million, growth in the consumer loan portfolio of $45.1 million, and a decline in the residential portfolio of $3.9 million.”

Read the full report.

More 3Q reports.  I think it is important to get a snapshot from banks to see where we are heading in the final few months of the year and for next year as well.  FHL reporting the following:

“At September 30, 2009, 98 percent of our mortgage-backed securities were issued by Fannie Mae or Freddie Mac, which we believe have the backing of the United States government. Only 2 percent ($211 million) of the holdings were in private-label mortgage-backed securities, which comprise high-quality residential mortgage loans issued and purchased in 2003 and which were rated triple-A at September 30, 2009. The underlying collateral has a de minimis level of delinquencies and foreclosures as reflected in the average serious delinquency rate (loans at least 60 days past due) of 0.54 percent of total principal, while their average credit enhancement stood at 7.5 percent. We expect to experience no credit losses on any of our mortgage-backed securities.”

They are projecting that they should be able to hold firm for now.  It will be very telling once the first time home buyer’s credit finally runs out.  All bets are off though, if Congress extends the credit and/or broadens who can use it, which is a distinct possibility.

Read FHL Bank’s full report.

For those of you wondering what the largest Kentucky Based banks are, here is the top ten as listed by www.iBanknet.com in order of their asset holdings:

1.  Community Trust Bank, Inc.

2.  Republic Bank & Trust Company

3.  Stock Yards Bank & Trust Company

4.  PBI Bank

5.  Central Bank & Trust Company

6.  Whitaker Bank Inc.

7.  The Bank of Kentucky, Inc.

8.  First Federal Savings Bank of Elizabethtown

9.  Forcht Bank, National Association

10.  Traditional Bank, Inc.

On August 4, 2009, the mortgage company Taylor, Bean & Whitaker (TBW), was no longer a HUD-approved company.  This revocation in turn led the Kentucky Department of Financial Institutions to issue a cease and desist order to TBW.  Any loan that was in the process of being approved by TBW is hereby null and void.  All individuals that were going through the process must find another loan.  Kentucky is taking steps to make sure that current loans will be properly serviced through TBW.

This order also prevents TBW from advertising new loans.  What will happen remains to be seen.  However, HUD suspended TBW on suspicion and/or allegations of fraud.  I foresee additional lawsuits filed by various entities against TBW, so we should expect more news to come.

For more information, click here and here.