http://www.nytimes.com/2009/08/14/business/economy/14norris.html Robert E. Lowder believed in growth. He steered his bank into areas where the population was rising rapidly, acquiring dozens of small banks in states like Florida and Nevada. He then accelerated that growth with generous lending to builders. His bank made it a point to raise its dividend to shareholders every year. A Treasury agent,... [more]
http://www.nytimes.com/2009/08/14/business/economy/14norris.html
Robert E. Lowder believed in growth. He steered his bank into areas where the population was rising rapidly, acquiring dozens of small banks in states like Florida and Nevada. He then accelerated that growth with generous lending to builders. His bank made it a point to raise its dividend to shareholders every year.
A Treasury agent, right, supervised the removal of records from Colonial BancGroup’s office in Orlando, Fla., last week in a raid there and on Taylor, Bean & Whitaker Mortgage Corporation.
Now it all is tumbling down. It appears that Colonial BancGroup, which Mr. Lowder started with the acquisition of a small bank in Alabama in 1981, may soon become the largest bank failure of 2009, with more than $25 billion in assets. Alabama regulators have raised the possibility the Federal Deposit Insurance Corporation may take over Colonial.
Even worse, the bank’s attempt to obtain a federal bailout has prompted a criminal investigation. After a raid requested by the inspector general for the government’s Troubled Asset Relief Program, Colonial said it was being investigated on suspicion of accounting fraud.
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Response by Riversider
about 17 years ago
Posts: 13573
Member since: Apr 2009
great quote!!
By last year, it was clear to everyone that the Florida boom was turning to bust. Colonial’s stock price began to slide, and federal regulators may have begun to worry. Colonial was then a national bank, having moved from state regulation to federal in 2003, as deregulatory winds blew in Washington. But in June 2008, it switched back to being regulated by the Alabama state banking department, even though most of its business was in Florida.The move, Mr. Lowder said then, “allows Colonial to continue to evolve in order to remain competitive as we strive to balance our safety and soundness with innovation, both of which are important to our customers.”
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Response by Riversider
about 17 years ago
Posts: 13573
Member since: Apr 2009
remember taylor and beane?
Last December, it appeared that Colonial might get a federal bailout. The Treasury Department agreed to invest more than $500 million in the bank, but only if Colonial could arrange a $300 million capital infusion from some other source.
Colonial announced in March that it had found such an investment. Investors led by Taylor, Bean & Whitaker Mortgage Corporation had agreed to put up $300 million for a 75 percent stake in the bank.
The idea that a mortgage company had that kind of money in 2009 seemed a little improbable, but the agreement did not fall apart until the end of last month. Last week, federal agents, acting at the request of the special inspector general for the TARP program, raided the offices of both Taylor Bean and Colonial, carting off boxes of documents.
In the aftermath, Colonial announced the federal inquiry, and the Federal Housing Administration suspended Taylor Bean’s status as a mortgage company that could deal with government programs. The government said Taylor Bean had failed to disclose that its auditor discovered “certain irregular transactions that raised concerns of fraud.”
Colonial officials did not return phone calls, and a call to Taylor Bean was answered by a recording stating no message could be left because the mailbox was full. Earlier, Taylor Bean had said it was ceasing operations.
CALA, Fla. (AP) -- One of the nation's largest wholesale mortgage lenders stopped funding mortgages Wednesday, a day after federal authorities barred it from making loans insured by the Federal Housing Administration.
Taylor, Bean & Whitaker ceased all mortgage-origination operations immediately, officials with the firm said in an e-mail to employees and others.
''We understand that this could have a significant impact on our valued employees, customers and counterparties, and are very disappointed that a less drastic option is unavailable,'' the e-mail said.
Taylor, Bean & Whitaker expects to continue servicing mortgage loans as it restructures but will not be able to close or fund any mortgage loans currently in the pipeline, the e-mail said.
The Federal Housing Administration on Tuesday suspended the firm from originating new FHA-insured mortgages, and Ginnie Mae also terminated Taylor, Bean & Whitaker as an issuer of its mortgage-backed securities program. The termination ended the firm's ability to issue securities from Ginnie Mae, the government-owned cooperation that provides guarantees on mortgage-backed securities, and the agency planned to take control of Taylor, Bean & Whitaker's nearly $25 billion Ginnie Mae portfolio.
On Monday, federal agents raided the lender's Ocala-based headquarters, along with the Orlando office of Colonial BancGroup.
The firm failed to submit a required annual financial report and misrepresented that there were no unresolved issues with its independent auditor, even though the auditor ceased its financial examination after discovering certain irregular transactions that raised concerns of fraud, officials with the federal agencies said in citing the reasons for their actions
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Response by inonada
about 17 years ago
Posts: 8085
Member since: Oct 2008
What does all this have to do with mark-to-market?
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Response by Riversider
about 17 years ago
Posts: 13573
Member since: Apr 2009
Inonada , All the bad loans were held accrual. Getting rid of mark to market enabled this. The Taylor & Beane was an unexpected surprise. Guess there is some truth to the axiom, "Never just one Cockroach in the kitchen"
Those accounting policies involving significant estimates and assumptions by management which have, or could have, a material impact on the reported financial results are considered critical accounting policies. BancGroup recognizes the following as critical accounting policies: Allowance for Loan Losses, Fair Value of Financial Instruments, Purchase Accounting and Goodwill, Income Taxes, Consolidations and Stock-Based Compensation. Information concerning these policies is included in the Critical Accounting Policies section of Management's Discussion and Analysis in BancGroup's 2008 Annual Report on Form 10-K.
EXECUTIVE OVERVIEW
The Colonial BancGroup, Inc. is a $26.4 billion financial services company providing diversified services including retail and commercial banking, wealth management services, mortgage origination and insurance products through its branch network, private banking offices or officers, ATMs and the internet as well as other distribution channels to consumers and businesses. At March 31, 2009, BancGroup's branch network consisted of 352 offices in Florida, Alabama, Georgia, Nevada and Texas.
Colonial Bank and BancGroup are currently operating under heightened regulatory scrutiny, and each has entered into an informal Memorandum of Understanding (the MOUs) with its regulators. Colonial Bank and BancGroup continue to work with the banking regulators under the MOUs. As of March 31, 2009, Colonial Bank was not in compliance with the MOU requirements for the Tier I Leverage Ratio and Total Risk-Based Capital Ratio. Colonial Bank is not subject to any "formal written agreements" or "cease and desist" orders with the banking regulators. See Note 1, Accounting Policies, and Note 19, Regulatory Matters and Restrictions, for additional information.
On March 31, 2009, BancGroup signed a definitive agreement with investors led by Taylor, Bean & Whitaker Mortgage Corp. (TBW) for a $300 million equity investment in Colonial, subject to certain conditions and the approval of the banking regulatory authorities. On April 30, 2009, the definitive agreement was amended to extend the periods for due diligence, superior offers and joinders and to remove the financing contingency. See Note 20, Definitive Agreement, for additional information.
Colonial reported a net loss of $168.4 million, or $0.86 per diluted common share, for the quarter ended March 31, 2009. Colonial recorded $257.2 million in provision for loan losses and $132.2 million in net charge-offs during the quarter.
Colonial recorded a noncash charge of $28.5 million in the quarter ended March 31, 2009 for goodwill impairment. Goodwill recorded on past acquisitions in Alabama became impaired in the first quarter primarily due to declining bank market valuations and increased credit costs. Refer to the Goodwill section of Management's Discussion and Analysis for additional information.
During the first quarter of 2009, net gains of $20.3 million were recognized due to the repurchase of $43.9 million in subordinated debt with maturities in 2009, 2011 and 2015 and a weighted average interest rate of 7.71%. See Note 12, Long-Term Debt, for additional information.
great quote!!
By last year, it was clear to everyone that the Florida boom was turning to bust. Colonial’s stock price began to slide, and federal regulators may have begun to worry. Colonial was then a national bank, having moved from state regulation to federal in 2003, as deregulatory winds blew in Washington. But in June 2008, it switched back to being regulated by the Alabama state banking department, even though most of its business was in Florida.The move, Mr. Lowder said then, “allows Colonial to continue to evolve in order to remain competitive as we strive to balance our safety and soundness with innovation, both of which are important to our customers.”
remember taylor and beane?
Last December, it appeared that Colonial might get a federal bailout. The Treasury Department agreed to invest more than $500 million in the bank, but only if Colonial could arrange a $300 million capital infusion from some other source.
Colonial announced in March that it had found such an investment. Investors led by Taylor, Bean & Whitaker Mortgage Corporation had agreed to put up $300 million for a 75 percent stake in the bank.
The idea that a mortgage company had that kind of money in 2009 seemed a little improbable, but the agreement did not fall apart until the end of last month. Last week, federal agents, acting at the request of the special inspector general for the TARP program, raided the offices of both Taylor Bean and Colonial, carting off boxes of documents.
In the aftermath, Colonial announced the federal inquiry, and the Federal Housing Administration suspended Taylor Bean’s status as a mortgage company that could deal with government programs. The government said Taylor Bean had failed to disclose that its auditor discovered “certain irregular transactions that raised concerns of fraud.”
Colonial officials did not return phone calls, and a call to Taylor Bean was answered by a recording stating no message could be left because the mailbox was full. Earlier, Taylor Bean had said it was ceasing operations.
http://www.nytimes.com/aponline/2009/08/05/business/AP-US-Mortgage-Lender.html
CALA, Fla. (AP) -- One of the nation's largest wholesale mortgage lenders stopped funding mortgages Wednesday, a day after federal authorities barred it from making loans insured by the Federal Housing Administration.
Taylor, Bean & Whitaker ceased all mortgage-origination operations immediately, officials with the firm said in an e-mail to employees and others.
''We understand that this could have a significant impact on our valued employees, customers and counterparties, and are very disappointed that a less drastic option is unavailable,'' the e-mail said.
Taylor, Bean & Whitaker expects to continue servicing mortgage loans as it restructures but will not be able to close or fund any mortgage loans currently in the pipeline, the e-mail said.
The Federal Housing Administration on Tuesday suspended the firm from originating new FHA-insured mortgages, and Ginnie Mae also terminated Taylor, Bean & Whitaker as an issuer of its mortgage-backed securities program. The termination ended the firm's ability to issue securities from Ginnie Mae, the government-owned cooperation that provides guarantees on mortgage-backed securities, and the agency planned to take control of Taylor, Bean & Whitaker's nearly $25 billion Ginnie Mae portfolio.
On Monday, federal agents raided the lender's Ocala-based headquarters, along with the Orlando office of Colonial BancGroup.
The firm failed to submit a required annual financial report and misrepresented that there were no unresolved issues with its independent auditor, even though the auditor ceased its financial examination after discovering certain irregular transactions that raised concerns of fraud, officials with the federal agencies said in citing the reasons for their actions
What does all this have to do with mark-to-market?
Inonada , All the bad loans were held accrual. Getting rid of mark to market enabled this. The Taylor & Beane was an unexpected surprise. Guess there is some truth to the axiom, "Never just one Cockroach in the kitchen"
http://biz.yahoo.com/e/090508/cnb10-q.html
Do investors read these things?
CRITICAL ACCOUNTING POLICIES
Those accounting policies involving significant estimates and assumptions by management which have, or could have, a material impact on the reported financial results are considered critical accounting policies. BancGroup recognizes the following as critical accounting policies: Allowance for Loan Losses, Fair Value of Financial Instruments, Purchase Accounting and Goodwill, Income Taxes, Consolidations and Stock-Based Compensation. Information concerning these policies is included in the Critical Accounting Policies section of Management's Discussion and Analysis in BancGroup's 2008 Annual Report on Form 10-K.
EXECUTIVE OVERVIEW
The Colonial BancGroup, Inc. is a $26.4 billion financial services company providing diversified services including retail and commercial banking, wealth management services, mortgage origination and insurance products through its branch network, private banking offices or officers, ATMs and the internet as well as other distribution channels to consumers and businesses. At March 31, 2009, BancGroup's branch network consisted of 352 offices in Florida, Alabama, Georgia, Nevada and Texas.
Colonial Bank and BancGroup are currently operating under heightened regulatory scrutiny, and each has entered into an informal Memorandum of Understanding (the MOUs) with its regulators. Colonial Bank and BancGroup continue to work with the banking regulators under the MOUs. As of March 31, 2009, Colonial Bank was not in compliance with the MOU requirements for the Tier I Leverage Ratio and Total Risk-Based Capital Ratio. Colonial Bank is not subject to any "formal written agreements" or "cease and desist" orders with the banking regulators. See Note 1, Accounting Policies, and Note 19, Regulatory Matters and Restrictions, for additional information.
On March 31, 2009, BancGroup signed a definitive agreement with investors led by Taylor, Bean & Whitaker Mortgage Corp. (TBW) for a $300 million equity investment in Colonial, subject to certain conditions and the approval of the banking regulatory authorities. On April 30, 2009, the definitive agreement was amended to extend the periods for due diligence, superior offers and joinders and to remove the financing contingency. See Note 20, Definitive Agreement, for additional information.
Colonial reported a net loss of $168.4 million, or $0.86 per diluted common share, for the quarter ended March 31, 2009. Colonial recorded $257.2 million in provision for loan losses and $132.2 million in net charge-offs during the quarter.
Colonial recorded a noncash charge of $28.5 million in the quarter ended March 31, 2009 for goodwill impairment. Goodwill recorded on past acquisitions in Alabama became impaired in the first quarter primarily due to declining bank market valuations and increased credit costs. Refer to the Goodwill section of Management's Discussion and Analysis for additional information.
During the first quarter of 2009, net gains of $20.3 million were recognized due to the repurchase of $43.9 million in subordinated debt with maturities in 2009, 2011 and 2015 and a weighted average interest rate of 7.71%. See Note 12, Long-Term Debt, for additional information.