When I was in grade school, I often awaited for the release of a computer or video game. In high school and college I eagerly awaited the release of a new album or an upcoming concert. Now I eagerly await such things as annual reports and the release of FDIC data.
There are several banks out there that I want to check up on, but I suppose I should first do an update on Atlantic Southern (ASFN), one of the struggling banks in my former hometown of Macon, Georgia. One of the first big local banks to fail in that area was Security Bank, so I have used the last several quarters of Security Bank’s existence as a rough benchmark for Atlantic Southern’s likelihood of success of avoiding failure.
Here are my thoughts on the current data for ASFN:
- I don’t take it as a good sign that returns on assets and equity are still negative
- Net interest margin has declined again
- The loss allowance to noncurrent loans ratio is still in decline. This means that ASFN has potentially not set aside enough money to cover losses from their bad loans.
- The non-accrual rate for ASFN’s largest loan portfolio – construction and development which makes up 37.44% of its total portfolio – has increased again by a very significant amount, from 14.42 to 19.85 quarter over quarter.
- Tier one capital ratio has declined again.
- The Texas ratio has increased again from last quarter, rising from 105.71 to 141.41, which means the bank’s credit troubles are increasing. History has shown that banks with a ratio above 100 tend to fail at a higher rate than banks with a ratio less than 100.
Right now I’m pretty undecided about the future of Atlantic Southern. They could struggle through this difficult time and survive intact or they could very well fail, albeit in a slow motion kind of way.