What a difference three months makes.
Since Banker & Tradesman named the 10 Massachusetts banks with the greatest number of past-due loans as a percentage of their equity capital, as of March 31, six banks have dropped off the list and six more have replaced them.
With Federal Deposit Insurance Corp. data now available for all banks through June 30, Commonwealth Co-operative Bank, Adams Co-operative Bank, Meetinghouse Bank, Weymouth Bank, Strata Bank and Mt. Washington Co-operative Bank are no longer among the state’s top-ranked banks for problem loans.
Boston-based Commonwealth Co-operative, which in March was ranked fourth in that category, has fallen farthest, to 154th out of 174 community banks ranked. The $42.7 million institution’s past-due loans – defined as those 30 or more days overdue – had shrunk from 62 percent of its equity capital to just 14 percent.
Commonwealth Co-operative President John J. Doyle Jr. was on vacation last week, and a bank vice president did not return a call.
Meetinghouse Bank President Anthony Paciulli, whose $55 million bank ranked fifth in the state in March, when past-due loans repre-sented 68.5 percent of equity, said the fact that it has fallen to 13th place (tied with Chelsea Provident Co-operative Bank) is explained by the fact that the FDIC requires banks to record past-due loans as of a certain date.
Today, Meetinghouse’s past-due loans represent just 21 percent of its equity capital. The $696,000 in delinquent status is accounted for by just two single-family home loans, Paciulli said.
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Things aren’t looking so rosy for the banks that stayed on the top-10 list or made their way on to it in June.
Lowell-based Butler Bank, Lowell Co-operative Bank, The Community Bank in Brockton and The Braintree Co-operative Bank are still among the top 10, and the number of problem loans at all but The Braintree Co-operative has increased.
For example, loans 30 or more days past due account for 179 percent of Butler Bank’s $19.3 million in equity capital, compared to 73 percent in March. Non-accruing loans (those 90 or more days past due) have also increased to $27.5 million, accounting for 143 percent of the bank’s equity.
Bank President and CEO John H. Pearson Jr. said his bank is “well-capitalized” (as of June, its capital level was 8 percent).
Butler Bank has also set aside $2.7 million in loan loss reserves – funds in excess of capital that indicate the bank anticipates it will take a loss on about 10 percent of today’s non-current loans.
Six banks in the top 10 for the first time in June are Norwood Co-operative Bank, Millbury National Bank, Seamen’s Bank in Province-town, Clinton Savings Bank, The Co-operative Bank in Roslindale and The Bank of Canton. Most have comfortable capital levels of 8 percent or above, but non-accruing loans account for between 15 percent and 34 percent of capital at these banks, and loans 30 or more days past due account for even more.
Peter Conrad, president and chief executive officer of The Cooperative Central Bank, which provides excess deposit insurance to the state’s cooperative banks, said four of the five cooperative banks with the highest numbers of past-due loans are construction lenders.
“It’s taking longer for builders to sell properties these days,” he said. “That’s why you’ve seen [the current problems] in these particular banks.” The construction specialists – Butler, Lowell Co-operative, Norwood Co-operative and The Community Bank – have years of experience in the market, he said.
