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Look at the Google Ad running on the sidebar right now.

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Quick Facts About CNB

I was just reading the latest CNB 10-Q. I thought I'd post my notes up here.

• Loan portfolio is 37% RE construction, 32% commercial RE, 17% residential RE.
• FDIC insurance and other regulatory fees were $4.4m for Q2, up 258.3% yoy.
• They have a huge portfolio of securities (13% of assets): mostly CMOs, mostly AAA rated by S&P "or equivalent".
• Total nonperforming assets as a percent of loans, other real estate and repossessions is 2.62%.

-Construction loans:

• 47% FL, 9% NV
• waLTV 71%
• Residential land, development and lots are 34% of the construction category (waLTV 74%)
• "The majority of the Company’s nonperforming assets and net charge-offs during recent quarters relate to residential construction loans."
• Commercial land, development and lots are 27% of the construction category.

-Commercial RE:

• 63% FL, 4% NV
• waLTV 64%

Another Leg Down is Coming

I think there will be at least one more big leg down. I see numerous potential catalysts; here are two:

• CFC (or the creditors) file a BK petition
  
• bank failures, e.g. VNBC, BKUNA, and DSL

Check out the deterioration in the (enormous) CFC option-ARM portfolio. (Calculated Risk did a post on this today. Also read the comments on that post. Institutional Risk Analytics has the best coverage of CFC right now.

I suspect that Friday 8/8 was an FDIC vacation; not the end of the bank failure trend.

Would you ever hand a complex problem to Congress to solve?

A post on the energy "crisis" from Art De Vany, one of my favorite economists:

How is it that we have come to expect our candidates to offer comprehensive solutions to problems that cannot be solved through massive government involvement in the economy? The collapsing socialist economies of the past and present clearly show that centralized planning and restrictions on individual freedom do not solve problems. We are watching our own economy crumble under the burden of needless restrictions and self-serving manipulation by politicians.

The Gang of 10 proposed energy legislation is an intrusion on our freedom and of markets to solve what is a simple problem of energy supply and demand. Both Presidential candidates are light weights in energy and how markets function. Because they and the Congress do not understand economics they are doing what political figures always do, they are substituting their decisions and political objectives for the superior rationality of the market.

Would you ever hand a complex problem to Congress to solve? These days, too many people seem to say “yes” to that question.