Goodwill impairment hurts income but not capital
A decade of bank acquisitions resulted in a $34.4 million lossfor First American Bank in the quarter that ended Sept. 30.
First American Bank, with headquarters in Fort Dodge and branches in Greater Des Moines, reported a net after-tax loss of $47.8 million, including the loss, called goodwill impairment, that stems from its purchases of banks in Iowa and Florida. The bank has 15 offices in the state and four in Florida.
Goodwill is the amount above book value that is paid for the purchase of an asset. For any bank, that goodwill is represented in the purchase of another bank.
The loss is not charged against the bank’s capital and amounts to a paper loss. The banks have already been purchased, but the goodwill impairment must be reported at some point.
“We felt pretty good about the quarter until we reported the goodwill,” First American CEO Tom Schnurr said. “I’m not sure it makes me feel any better.”
Overall, the bank reported improvements in its portfolio of non-performing loans and its capital reserves remain strong, Schnurr said.
First American made another accounting change that contributed to the loss for the quarter, adding a $7.7 million loan loss after shortening its historical loan loss period to 2.5 years from 6.5 years, Schnurr said.
“All of our trends improved in the third quarter and continued in October as well,” Schnurr said. “We believe today that we’re seeing improvement in all of our ratios.”
As with other Greater Des Moines banks that played heavily in residential and commercial development, First American has been trimming its book of bad loans.
Its loans that are 89 days or less in arrears dropped to $84.6 million from $85.1 million for the quarter that ended in June, and its loans that are at least 90 days delinquent dropped to $66.7 million from $71.4 million. First American has acquired the deeds to property valued at $22.7 million, a slight increase from the second quarter.
First American reported assets of $1.56 billion at the end of the quarter, a drop of nearly 2.8 percent from the second quarter. First American is the fourth-largest state chartered bank by assets operating in Greater Des Moines.
Quarterly bank reports show impact of bad loans, attempt to whittle them down
|
Bank |
Avg |
Loan |
Real |
Tier 1 |
|
|
First American Bank, |
9/30/2009 |
$1,850,688 |
$22,976 |
$23,915 |
$133,158 |
|
Fort Dodge |
6/30/2010 |
$1,621,159 |
$36,135 |
$22,043 |
$118,425 |
|
9/30/2010 |
$1,586,172 |
$42,198 |
$22,712 |
$115,894 |
|
|
Earlham Savings, |
9/30/2009 |
$223,499 |
$2,023 |
$630 |
$27,299 |
|
West Des Moines |
6/30/2010 |
$236,745 |
$1,852 |
$680 |
$28,614 |
|
9/30/2010 |
$244,586 |
$1,943 |
$973 |
$29,072 |
|
|
City State Bank, |
9/30/2009 |
$196,196 |
$1,943 |
$1,751 |
$16,331 |
|
Norwalk |
6/30/2010 |
$211,932 |
$1,731 |
$581 |
$17,458 |
|
9/30/2010 |
$214,456 |
$1,882 |
$509 |
$17,943 |
|
|
Iowa State Bank, |
9/30/2009 |
$288,005 |
$2,905 |
$4,068 |
$32,097 |
|
Des Moines |
6/30/2010 |
$295,392 |
$3,571 |
$2,949 |
$35,048 |
|
9/30/2010 |
$295,878 |
$3,461 |
$2,663 |
$35,977 |
|
|
West Bank, |
9/30/2009 |
$1,533,600 |
$19,658 |
$18,089 |
$139,381 |
|
West Des Moines |
6/30/2010 |
$1,656,957 |
$21,091 |
$24,637 |
$145,920 |
|
9/30/2010 |
$1,517,768 |
$19,085 |
$10,189 |
$149,557 |
|
|
Bankers Trust, |
9/30/2009 |
$2,490,146 |
$24,504 |
$39,086 |
$180,660 |
|
Des Moines |
6/30/2010 |
$2,425,310 |
$27,885 |
$35,019 |
$208,707 |
|
9/30/2010 |
$2,506,269 |
$28,717 |
$34,538 |
$211,859 |
|
|
Freedom Financial, |
9/30/2009 |
$161,698 |
$1,314 |
$2,627 |
$15,644 |
|
West Des Moines |
6/30/2010 |
$161,617 |
$1,500 |
$699 |
$16,490 |
|
9/30/2010 |
$162,653 |
$1,430 |
$444 |
$16,589 |
|
|
State Savings Bank, |
9/30/2009 |
$90,886 |
$1,391 |
$459 |
$8,934 |
|
West Des Moines |
6/30/2010 |
$90,309 |
$1,406 |
$30 |
$9,009 |
|
9/30/2010 |
$87,906 |
$1,376 |
$645 |
$9,071 |
|
|
MetaBank, |
9/30/2009 |
$834,022 |
$5,150 |
$2,053 |
$55,813 |
|
Storm Lake |
6/30/2010 |
$955,355 |
$5,140 |
$1,071 |
$71,756 |
|
9/30/2010 |
$1,024,525 |
$5,234 |
$1,295 |
$74,642 |
|
|
Two Rivers Bank & Trust, |
9/30/2009 |
$521,700 |
$4,795 |
$7,743 |
$60,205 |
|
West Des Moines |
6/30/2010 |
$571,661 |
$6,142 |
$6,748 |
$59,217 |
|
9/30/2010 |
$610,885 |
$5,822 |
$6,520 |
$59,932 |
|
|
Valley Bank, |
9/30/2009 |
$670,319 |
$5,819 |
$13,075 |
$50,671 |
|
Moline |
6/30/2010 |
$635,273 |
$6,604 |
$17,079 |
$53,515 |
|
9/30/2010 |
$640,878 |
$9,051 |
$18,061 |
$55,301 |
|
|
Community State Bank, |
9/30/2009 |
$620,622 |
$7,658 |
$8,935 |
$49,686 |
|
Ankeny |
6/30/2010 |
$536,121 |
$7,489 |
$7,182 |
$48,600 |
|
9/30/2010 |
$537,661 |
$6,692 |
$9,636 |
$49,169 |
|
|
Bank Iowa, |
9/30/2009 |
$181,883 |
$2,099 |
$612 |
$13,485 |
|
Altoona |
6/30/2010 |
$151,364 |
$2,239 |
$2,737 |
$12,459 |
|
9/30/2010 |
$143,459 |
$4,150 |
$2,342 |
$12,010 |
|
|
Liberty Bank, |
9/30/2009 |
$1,145,586 |
$7,128 |
$15,633 |
$98,605 |
|
West Des Moines |
6/30/2010 |
$1,198,954 |
$13,361 |
$20,846 |
$113,593 |
|
9/30/2010 |
$1,182,082 |
$15,717 |
$21,775 |
$108,456 |
|
|
Legacy Bank, |
9/30/2009 |
$91,306 |
$979 |
$1,054 |
$7,693 |
|
Altoona |
6/30/2010 |
$90,973 |
$935 |
$1,356 |
$7,882 |
|
9/30/2010 |
$92,786 |
$962 |
$1,744 |
$7,942 |
|
|
First Bank, |
9/30/2009 |
$136,037 |
$2,894 |
$7,681 |
$6,148 |
|
West Des Moines |
6/30/2010 |
$120,768 |
$3,490 |
$5,525 |
$4,575 |
|
9/30/2010 |
$115,825 |
$3,620 |
$5,188 |
$4,862 |
|
|
Polk County Bank, |
9/30/2009 |
$138,434 |
$3,488 |
$7,680 |
$7,963 |
|
Johnston |
6/30/2010 |
$116,812 |
$2,519 |
$10,736 |
$5,943 |
|
9/30/2010 |
$112,067 |
$2,016 |
$10,145 |
$4,444 |
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