Wednesday, June 08, 2011

US Century Bank: time to stop the madness ... by gimleteye

The US taxpayer is still on the hook for US Century Bank, founded in 2002 to take advantage of the building boom in South Florida and representing-- as we have documented at Eyeonmiami-- the biggest GOP lobbyists and boosters of suburban sprawl in Miami-Dade. This model of growth went haywire in the nation's fastest growing regions, but especially in Miami-Dade where its organizers had also perfected the work of extracting campaign cash from low cost, platted subdivisions. Let the landscape reflect the claim: ghost suburbs, abandoned homes, and decaying neighborhoods. It was all championed as "what the market wants" but it really was what the market could finance, generating hush money for media corporations while throwing off billions in bonuses and compensation for the webs of commercial interests represented best, here, in the board of directors of US Century Bank.

According to just released reports by Bauer Financial, the Gables based banking analyst based, US Century is still the largest commercial bank debtor to the US government in Florida, owing at least $123.4 million. Ramon Rasco, Chairman and one of the lead organizers of the Homestead Air Force Base fiasco, recently partnered in a big ticket fund raiser for US Senator Bill Nelson, a Democrat.

One of the anomalies in FDIC supervision of US banks is that spokespersons for US Century can state, without lying, that the bank is "adequately capitalized". Nevertheless, Bauer metrics gleaned from regulatory filings show US Century is in so much trouble that the bank warrants a "zero" rating for the past two quarters, Bauer's lowest rating. By those yardsticks, it is a candidate for closure.

Since the housing crash, insiders like the board of US Century have been counting on the revival of their business model: conversion of farmland and wetlands into suburban sprawl. Waiting and waiting. Members of the board were some of the biggest speculators and investors charging after farmland on the other side of the Urban Development Boundary. They were likely behind the scenes players in Tallahassee this year, as well, arranging for support to destroy the state authority that held the Urban Development Boundary to be a legitimate state protection for Miami-Dade taxpayers and the environment. They may have knocked the barriers down but they killed the market.

So one remaining question, as the national economy sputters and the sprawl model of growth remains bankrupt: will US Century investors and insiders have time to recoup their investments before the feds close it down? This waiting game is symptomatic of the Great Recession: no one is held accountable. No one goes to jail. There is no economic policy beyond hoping that the same engine kicks back in, that drove the economy into the ground. (Casinos and full-scale gaming is the best, new idea from special interests whose principal businesses are other forms of gambling.)

At US Century, non-performing loans as a percent of Tier 1 Capital (ie. the money you and I guarantee in the form of US Treasury loans) are steadily rising; from 147 percent to 184 percent in the last quarter (ending March 31, 2011). For its peer group -- the best measure of how US Century stands up to other similarly sized banks in the nation -- its non performing asset ratios are staggering. For instance, as a percentage of net worth its peer group has 2.23 percent non-performing assets. US Century's is 38.8 percent.

In the last quarter, loans to insiders as a percent of total net worth increased to 84.4 percent from the prior quarter 75.5 percent. Its peer group metric for comparison: .88 percent. That's a shocking statistic. One interpretation: that US Century only exists to cover its loans to insiders.

To the extent there has been any improvement at all, from quarter to quarter (as US Century spokespersons will undoubtedly tell the business press) it is due to shifting numbers: the bank lost more than $40 million in each of the past two years and last quarter's loss of $16 million puts it on a track for record losses in 2011. It will claim it has "made progress" paying down obligations to the federal government, but its history as a piggy-bank for insiders in Miami-Dade continue to drag down the comparative ratios.

Miami is not good at reconciling fictions and fact. Watch how rezonings outside the Urban Development Boundary begin to pick up steam in Miami Dade. This accompanies news in the business press that the markets for financial derivatives formed by the nation's largest banking institutions, tied to mortgage pools, are starting to revive. Whatever that means. Once the new mayor is elected, that will be where the action is for the US Century insiders. Until the FDIC comes in and shutters the doors.

4 comments:

Anonymous said...

In your own words: "US Century only exists to cover its loans to insiders." It would be most enlightening to see an audit of this bank. This banking "instituion" was found strictly to fulfill the needs of "that group" and whoever doesn't know that doesn't know this community. Sadly, neither Robaina nor Gimenez will be inclined to do anything against their "buddies"... and that's a fact, my friend. US Century could be compared, in benign terms, to a cancer that has been slowly, but surely, eating this community. Just look at the names on the board of directors! Bunch of crooks is what they all are!

Anonymous said...

I agree with the anon poster above. It is the Sergio Pino crowd, including Herran and Cancela and Barreto. If you don't follow how these make their money, you don't understand Miami. All the Adrienne Arshts don't make up for a thin cover over what drives this city. The failure of the Chamber to stand up for anything other than get rich quick schemes is why Miami is always going to be a third class American city. Yeah it still might attract South Americans, whose own capitals compared to Miami look like backwaters. But the essential nature of this place is parochial and speculative. WYSIWYG.

Anonymous said...

Even Giminez supported Sergio and his gang with the Krome Gold approval. I was at the hearing and couldn't believe how Giminez justified the approval when I know him to be so much smarter than that.

That's what irks me about supporting him for Mayor. He sold out on this vote and it's one I'll never forget.

But, I will NEVER support Hialeah Julio, he's a bona crook/thug in my book.

So, I'm going to vote for Gimenez because there is no other viable option but I'm not happy and certainly know what we're going to get!

Even Juan Zapata, who was a SR at the time was shmoozing with the Century Bank gang at the Community Council meeting, another politician who I liked up until that night, and will not support for anything ever again.

Anonymous said...

It's even worse than you point out.

1. Due to their high levels of non-performing assets, they are exempted from paying back the principal and the interest on the TARP monies that they received in 2009. So basically, the taxpayer is eating the loss for US Century's shareholders. Their capital base was fairly strong before the collapse, but nevertheless.

2. What's surprising is the lack of a regulatory enforcement action against the bank. Normally a bank in their financial condition would have gotten a cease and desist order from the FDIC. No such thing. I suspect it has something to do with the TARP monies that they received, with political connections.

3. Nearly 200% of non-performing assets is shocking to say the least. Another market decline/financial crisis will put their capital levels is severe jeopardy. Same goes for BankAtlantic, Ocean Bank and other local players.