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Losses Continue

Losses ContinueRecent mergers, corporate and earnings activity

December 26, 2007

By SAM GARCIA

As two banking mergers managed to progress, a number of other financial institutions disclosed losses while one ratings agency took negative debt ratings actions in response to losses.

But first, civil monetary penalty orders were issued during December to Kathy A. Yesh of Lasalle Bank MidWest N.A. in Troy, Mich.; Jono Anzalone of American National Bank in Omaha, Neb.; and Roger A. Luhring of The First National Bank of Bellevue in Bellevue, Ohio, according to an announcement from the Office of the Comptroller of the Currency Friday. Also hit with the monetary penalties were JW Compton of First Tennessee Bank N.A. in Memphis and Associated Bank N.A. in Green Bay, Wis.

Yesh, Anzalone and Luhring were also issued personal cease and desist orders, OCC said. Compton was issued a removal/prohibitions order, as were Jessica Charfauros of the Armed Forces Bank of California N.A. in San Diego; Terri Hemphill of The First National Bank of Buhl in Buhl, Minn.; and Isaac Demarcus Dulane and Oral R. Williams Jr. of Wachovia Bank N.A. in Charlotte, N.C.

Hemphill also faced a restitution order while FA, First National Bank of Julesburg, Colo., saw an existing enforcement action terminated, according to OCC.

The book value of E-LOAN may be reduced by as much as $175 million because of ongoing operational losses, parent Popular Inc. reported Friday. Puerto Rico-based Popular also warned of a up to $165 million in losses recognized from a re-characterization of Equity One mortgage securitizations.

U.S. Bancorp disclosed a fourth quarter charge of around $215 million in connection with its proportionate share of certain litigation involving Visa and a number of Visa banks and a $110 valuation loss on asset-backed commercial paper holdings acquired from a subsidiary.

First Horizon National Corp. announced an estimated fourth quarter goodwill impairment on its mortgage business of $70 million and a $40 million reduction in gain-on-sale margins and hedging performance. Additional reserves have also been set aside for One-Time Close and Homebuilder residential construction portfolios.

Following Bear Stearns Companies Inc.’s earnings announcement last week indicating an $854 million loss, Fitch Ratings affirmed the long-term debt ratings of the company and its subsidiaries while the short-term ratings were downgraded and remain on a negative outlook.

Fitch lowered Bank of America Corp.’s ratings outlook to negative from stable reflecting the level of sensitivity to the deteriorating residential mortgage market trends, a press release said.

“Management recently announced that it expects to substantially increase loan loss provisions in fourth quarter-2007 to offset deterioration in its home equity loan portfolio,” Fitch said. “Management also announced that negative mark-to-market valuations in its holdings of collateralized debt obligations, particularly those secured by subprime residential mortgages, will be larger than previously anticipated.”

The South Financial Group Inc. said in an 8-K Securities and Exchange Commission filing Friday it expects a $32 million fourth quarter provision for credit losses as well as well as up to $5 million in other mortgage-related charges.

People’s United Financial Inc. and Chittenden Corp. announced election results for their merger expected to close on Jan. 1, 2008. About 49 percent of shareholders elected to receive People’s United common stock while 41 percent elected to receive cash.

First Florida Bank will be merged into Synovus Bank of Tampa Bay pending regulatory approval, parent Synovus announced Friday. First Florida President and CEO Robert Smedley will retire on Jan. 31, 2008, while Synovus Bank CEO David W. Dunbar will oversee the combined operation.

 

Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of MortgageDaily.com.

e-mail: mtgsam@aol.com


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