Stretched Banks Are Snapping Across The U.S.
Homebuilders, buyers and sellers aren’t the only ones hit hard by the foreclosure crisis. A large number of banks, especially at the local level, are suffering greatly from poor returns on loans they’ve extended. Many are being forced to lay off workers, merge with larger banks, or close their doors entirely.
LaSalle Bank merged with Bank of America. Ocean Bank merged with Peoples United and closed three New Hampshire branches. All across South Florida, numerous banks are reporting significant losses. Perhaps most earthshaking of all, Citigroup announced a loss of $5.1 billion and the impending layoff of 9,000 employees.
Fort Lauderdale-based BankAtlantic, one of South Florida’s largest local banks, recently reported that 3.38 percent of its loans were “problem loans,” up from .10 percent the year before. That bank laid off 115 people this month, on top of 225 layoffs last year. Alan Levan, chairman of parent company Bank Atlantic Bancorp, said the bank has successfully weathered such financial downturns in other decades, and maintaining strong capital is the key.
“Our financial results reflect the continuation of the unprecedented market and credit environment and its impact on our historical risk positions,” said new CEO Vikram S. Pandit in a statement. Pandit added that efficiency in operations and accountability at all levels of the Citigroup organization will aid the effort to right the ship.
Accountability, efficiency, strong capital and skilled PR spin aside, some banks are still just not going to make it. Time can only tell who will outlast this period of “survival of the fittest.”
