US Century Bank, Zero Leadership, Credibility, and Zero Rating ... by gimleteye

On the same day that Sergio Pino announced his resignation from the board of the bank he founded, US Century Bank had more bad news: the ratings agency, Fitch, withdrew its rating. In a public statement to South Florida Business Journal, Pino said his withdrawal had nothing to do with the severely deteriorating condition of the bank.

Pino, along with other bank directors, have been major Republican campaign contributors and lobbyists for suburban sprawl in Florida wetlands and farmland. They have strongly supported and pushed for the expansion of the Urban Development Boundary in Miami-Dade to include lands purchased as speculative investments for future platted subdivisions and sprawl. The bank they founded has been the recipient of the largest infusion of federal taxpayer moneys, through TARP, among all Florida banks.

Also on March 15, Business Wire reported on the mounting troubles at US Century, "Although the company remains above minimum regulatory capital standards to be considered 'well-capitalized', Fitch believes that, given the bank's CRE and construction portfolios, the embedded losses will deplete capital further. In Fitch's opinion, USCB will likely need to raise additional capital. It is also extremely likely that the bank's regulator will place capital requirements on the bank through a regulatory agreement." Business Wire notes that the new Fitch rating, by definition, considers US Century Bank to have exceptionally high levels of credit risk.

Fitch noted, also, a lack of information provided by the company. Eyeonmiami has written extensively about the role of US Century Bank and its founders, including Sergio Pino, in fomenting the housing and construction bubble in Miami-Dade and, by extension of its political influence, in the state of Florida. For example, US Century investors and shareholders are prominent owners of land outside the Miami Dade Urban Development Boundary, bought in some cases at the height of the real estate bubble. Last week South Florida Business Journal reported that Pino’s 77 Acres LLC lost a $22.6 million foreclosure judgment over a site in Hialeah Gardens. BankUnited is suing Pino for $34 million on a Doral project, Century Grand. In 2009, Pino reportedly was seeking to create a visa program to allow temporary residency visas to foreigners if they invested in his project. Wachovia Bank, in Dec. 2009, hit Pino with a $65.5 million foreclosure lawsuit for Century Grand. In addition, Pino was battling recovery by Mercantil Commercialbank of a $4.4 million loan for an office building in Coral Gables.

Another bank rating agency, Bauer Financial based in Coral Gables, has noted that among the bank's problems-- leading to a recent rating of "zero"-- are the extraordinarily high level of loans to insiders, as expressed as a percentage of total loans; nearly ten times higher than similarly sized banks. It is possible that US Century's disclosure of the exact nature of those insider transactions would prove an embarrassing connection to politically connected individuals in Miami Dade County. Like the 2008 disclosure that US Senator Marco Rubio, with little worth at the time, in 2005 at the height of the real estate bubble obtained a $135,000 equity loan from US Century to the purchase of a $550,000 home in West Dade. Rubio failed to disclose it until three years later. So much slipped through the cracks.

In the last quarter of 2010, US Century Bank lost $44.7 million. In 2008, the bank received the top minority business award from the Greater Miami Chamber of Commerce that was the victim of a $2 million theft by its financial auditors in 2004. Absent federal rescue, US Century would not have survived. Some banks are too big to fail, some banks should be allowed to sink of their own weight. In that category, would be Ocean Bank-- another favorite bank with sprawl developers-- that in July 2010 extended a $39.1 million loan to Pino for another condominium project in Coral Gables. The due date on that loan, according to South Florida Business Journal, is April 30. There is no similar expiration date on the enormous political pressure brought to bear on county governments and the state legislature by lobbyists using the economic crisis to eviscerate environmental regulations, hoping that a free pass to build more sprawl in wetlands and the Everglades will refloat their speculative investments. A yacht owned in whole or part by Pino sank two weeks ago in a Coral Gables canal.