Royce Dugan Recommends an Article - BILLIONS IN BANK PROFITS NOT YET TURNING INTO NEW LENDING

This news article was recommended by Royce Dugan: 

Bank_vault

BILLIONS IN BANK PROFITS NOT YET TURNING INTO NEW LENDING

Even though commercial real estate [CRE] asset quality continues to improve gradually on bank's books across the country, it has not translated into additional lending for commercial real estate. In fact, new lending continues to slide in all categories with the exception of multifamily. 

New lending from banks on multifamily projects has increased by about $4 billion year to date. Outside of that category, lending activity continues at slightly declining levels for nonresidential properties and continues to fall off sharply for construction and development projects. 

Still, a handful of banks have reported that demand has picked up slightly in the competition for quality loans. 

For that reason and others, Federal Deposit Insurance Corp. (FDIC) chairman Sheila C. Bair is indicating that the end of a two-year period of contraction in loan portfolios may have run its course. 

"Total loans and leases held by FDIC-insured institutions declined by just $6.8 billion, or 0.1%, in the third quarter," Bair said. "Many large banks have had sizable reductions in their loan portfolios over the past couple of years, but in the third quarter, such reductions were notably absent. I hope we are close to seeing genuine increases in loan balances again." 

"The industry continues making progress in recovering from the financial crisis," the FDIC chairman added. "Credit performance has been improving, and we remain cautiously optimistic about the outlook. Lower provisions for loan losses are driving bank earnings by allowing a larger share of revenues to reach the bottom line." 

But Bair also added, "at this point in the credit cycle it is too early for institutions to be reducing reserves without strong evidence of sustainable, improving loan performance and reduced loss rates. When it comes to the adequacy of reserves, institutions should always err on the side of caution." 

Commercial banks and savings institutions insured by the FDIC reported an aggregate profit of $14.5 billion in the third quarter of 2010, a $12.5 billion improvement from the $2 billion the industry earned in the third quarter of 2009. This marks the fifth consecutive quarter that earnings have registered a year-over-year increase. 

The FDIC noted signs of further improvement in asset-quality trends as the amount of loans and leases that were noncurrent (90 days or more past due or in nonaccrual status) fell for a second consecutive quarter. Before these two quarterly declines, the industry's noncurrent loan balances had risen for 16 consecutive quarters. 

However, noncurrent balances increased in multifamily residential real estate loans (up $1.2 billion, or 13.6%) and in nonfarm nonresidential real estate loans (up $604 million, or 1.3%). 

Insured banks and thrifts charged off $42.9 billion in uncollectible loans during the quarter, down $8.1 billion (15.8%) from a year earlier. This is the second quarter in a row that net charge-offs posted a year-over-year decline. Prior to the past two quarters of improvement, quarterly NCOs had increased year-over-year for 13 consecutive quarters. NCOs for most major loan categories declined year-over-year in the third quarter. 

Real estate construction and development loan NCOs were down by $2.5 billion (32.4%), while NCOs of real estate loans secured by nonfarm nonresidential properties were $1.1 billion (46.2%) higher. 

More banks are also continuing to report an increasing amount of asset sales. The number of banks reporting assets sales has increased 3.2% this year and the amount of assets sold in each quarter has increased 10.4% since the start of the year. In the past quarter 847 banks reported selling $53 billion in loans, leases and foreclosed assets not related to home, consumer or business loans. 

As of Sept. 30, the nation's banks reported having $36.1 billion in distressed CRE assets, which includes past due loans on and foreclosed construction and land development, nonresidential income-producing and multifamily properties. That amount is approximately 2.2% of all outstanding loans on construction and land development, nonresidential income-producing and multifamily properties. The third quarter amount is up from $29.4 billion at the end of 2009. 

The number of institutions on the FDIC's "Problem List" rose from 829 to 860. However, the total assets of "problem" institutions declined from $403 billion to $379 billion. The number of "problem" institutions is the highest since March 31, 1993, when there were 928. Forty-one insured institutions failed during the third quarter, bringing the total number of failures for the first three quarters of the year to 127. 

MBA: Commercial and Multifamily Mortgage Delinquency Rates Mixed in Third Quarter

Separately, the Mortgage Bankers Association (MBA) reported this week that the delinquency rates for different commercial/multifamily mortgage investor groups were mixed in the third quarter. The bad news was that the delinquency rate for loans held in CMBS is the highest since the series began in 1997. The good news is that delinquency rates for other groups remain below levels seen in the early 1990s, some by large margins. 

"Greater strength in the economy is bringing some stability to commercial mortgage delinquency rates," said Jamie Woodwell, MBA's vice president of commercial real estate research. "Commercial mortgage performance among most investor groups, including life insurance companies, Fannie Mae and Freddie Mac and commercial banks and thrifts, continues to be better than during the last major downturn of the early-1990s. Although weak, the economic recovery is just beginning to be seen in commercial real estate fundamentals and the mortgages they support." 

Based on the unpaid principal balance of loans (UPB), delinquency rates for each group at the end of the third quarter were as follows. 

  • Banks and thrifts: 4.41% (90 or more days delinquent or in non-accrual);
  • CMBS: 8.58% (30+ days delinquent or in REO);
  • Life company portfolios: 0.22% (60+days delinquent); 
  • Fannie Mae: 0.65% (60 or more days delinquent); and
  • Freddie Mac: 0.35% (60 or more days delinquent).


    • The MBA does not include construction and development loans in its numbers. 

    Download this story and other national news in the Watch List Newsletter,, a weekly pdf that includes leads of distressed properties and loans and other news items not found on the CoStar Group web news pages. Sign up for the Watch List E-Mail Alert. It's the quickest way to link directly to the news and leads you want. Just e-mail your name, title, company, company business, city, state, and e-mail address to Mark Heschmeyer


    Message from Royce Dugan:
    Positive signs. Good news Needs to be published also!

     

    Fairvue clubhouse to be auctioned Dec. 20

    You have been sent an online news article from Royce Dugan as a courtesy of www.tennessean.com.


    Article Title: Fairvue clubhouse to be auctioned Dec. 20

    To view the contents on www.tennessean.com, go to: http://www.tennessean.com/apps/pbcs.dll/article?AID=/201012012044/GALLATIN01/101201083

     

    Fairvue_club

    A foreclosure auction has been set for the private clubhouse at Fairvue Plantation, scheduled to take place a little more than a year after the development company that owned it declared bankruptcy. 

     

     First State Bank holds a claim for $4.6 million in unpaid loans that were made to TLP DevCo and its various entities, of which about $2 million was secured using the clubhouse property as collateral. The auction will help the bank recover some of that claim. 

     It is unclear what the clubhouse auction might mean for the future of the Fairvue golf course, on which a different bank, American Security Bank and Trust, holds the lien. The attorney representing American Security did not return a phone call for comment by this newspaper’s deadline Wednesday.

     

    At least one group has already shown interest in purchasing the members-only clubhouse — the homeowners living in the subdivision.

     

    The president of the Fairvue Plantation Homeowners Association, Earl Fischer, said the residents have been “constantly” in meetings with the banks and haven’t made a definitive decision yet on which direction they will go. 

    Other Bidders Expected

     However, the homeowners aren’t expecting to be the only interested party on the steps of the Sumner County Courthouse when the auction takes place the week before Christmas.

     

    “The banks are wanting to move very quickly, which means the Homeowners Association would have to make up its mind soon,” Fischer said. “We certainly won’t be the only ones interested in purchasing this property.”

     

    The appraised value of the clubhouse, according to Sumner County property assessment data, was $3.5 million in 2009; however, in bankruptcy documents filed in August, the property was independently appraised for its value if it were liquidated — sold at a foreclosure auction — and in that case it came in at $1.6 million.

     

    As to how much the homeowners might be willing to pay for the property, Fischer said it was too early to tell, though he praised the banks for being “extremely cooperative” and “very willing to share information” in the past week.

     

    “Of course the banks hope to recover as much of the loans as they can, but they have given us no indication at this point of what they expect out of this sale or what their bottom line is that they would take at this point,” he said. 

    Purchaser Might Pick Up $150k Tax Bill

     The purchaser could also be liable for any unpaid property taxes, including penalty and interest on back taxes, according to the foreclosure notice.

     

    City Attorney Joe Thompson said taxes on the clubhouse haven’t been paid since 2008.

     

    The city is looking to collect about $50,000 in back taxes, and the county would be owed about twice that — making for a total bill of roughly $150,000.

     

    The auction is scheduled to begin at 10:01 a.m. on Dec. 20 on the steps of the Sumner County Courthouse.

    Mini Horse Farm in Nashville, TN area offered in ONLINE AUCTION

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    Royce Dugan Recommends an Article

    This news article was recommended by Royce Dugan:

    PENT-UP CAPITAL GENERATES 'FEROCIOUS' COMPETITION FOR CORE, DISTRESSED SHOPPING CENTERS


    While still a far cry from the avalanche some predicted would hit the market a year ago, distressed shopping malls and strip centers have contributed to a marked increase in retail sale activity this year. At the same time, a rush by institutional investors to pick up quality core properties at the other end of the retail property spectrum has also...


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    CoStar Group, Inc.
    2 Bethesda Metro Center, 10th Floor
    Bethesda, Maryland 20814 USA
    Tel: 800-204-5960
    http://www.costar.com/

    Foundation elements for modern businesses

    Great points for growing a business in todays fast track, internet driven markets.

    via Seth's Blog by Seth Godin on 8/12/10

    When you sit down to dream up a new business, you can imagine a world without constraints. Or you can choose to build in fundamental pieces that will make it more likely your idea will pay off.

    Here are some fundamental pieces of most new successful businesses. The goal is to build these elements into the very nature of the business itself, not just to tack them on. For example, the Scotch tape people at 3M can't do #5, because of the structure of retail distribution and the way they mass produce and can't track who is buying what.

    You can live without some of these, but go in with your eyes open if you do:

    1. Build in virality. Consider: Groupon.
    2. Don't sell a product that can be purchased cheaper at Amazon.
    3. Subscriptions beat one-off sales.
    4. Try to create an environment where your customers are happier when there are other customers doing business with you (see #1).
    5. Treat different customers differently.
    6. Generate joy, don't just satisfy a need for a commodity.
    7. Rely on unique individuals, not an easily copyable system.
    8. Plan on remarkable experiences, not remarkable ads.
    9. Don't build a fortress of secrets, bet on open.
    10. Unless there's a differentiating business reason, use off the shelf software and cheap cloud storage.
    11. The asset of the future is the embrace of a tribe, not a cheaper widget.
    12. Match expenses to cash flow--don't run out of money, because it's no longer 1999.
    13. Create scarcity but act with abundance. Free samples create demand for the valuable (but not unlimited) tier you offer.
    14. Tell a story, erect a mythology, walk the walk.
    15. Plan on obsolescence (of your products, not your customers).

    Notes:

    3. The cost of selling a subscription to your product or service is not a lot higher than the cost of selling just one, but you benefit by having sales you can count on at low cost. Your customers benefit because you depend on them more and they save time.

    5. Everyone has different needs and expectations and resources. The internet lets you tell people apart and give them what they need.

    7. AKA as Linchpins.

    9. If you're building a business on trade secrets or lack of information among your customers, you're trying to fill a leaky bucket. Far easier to bet on the more people know, the better you do.

    10. Because cheap software and the cloud are going to continue to get cheaper, and custom work that's worth anything is going to continue to get more expensive.

    12. The best people to fund your growth are your customers.

    13. When the marginal cost of an interaction approaches zero, you benefit by creating plenty of them.

    14. We can tell.

    Great Nashville, TN (White House) area Country Home / Rental / Investment Property

    100_0641
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    Commercial Retrofits Could Save $41B Annually in Energy Cost

    This news article was recommended by Royce Dugan:

    STUDY FINDS COMMERCIAL RETROFITS COULD SAVE $41B ANNUALLY IN ENERGY COSTS

    Nashville_skyline

    Although energy-efficient retrofitting of commercial buildings has the potential to return twice as much in savings to owners and tenants as they require in investments, interest in pursuing retrofits has remained relatively low, dampened by the financial constraints on building owners from the economic recession, and lack of available financing options...

    Message from Royce Dugan:
    Pricing pressure on commercial properties are causing owners to look at gains now available by reduced operating cost. Energy-efficient retrofitting of commercial buildings has the potential to return twice as much in savings to owners and tenants as they require in investments.


    -----------------------------------
    CoStar Group, Inc.
    2 Bethesda Metro Center, 10th Floor
    Bethesda, Maryland 20814 USA
    Tel: 800-204-5960
    http://www.costar.com/

    China…times they are a changin';!

     
     

    via The 21st Century Supply Chain by jwesterveld on 6/23/10

    I've recently been noticing a number of articles in Industry Week dealing with labor disputes and issues in China;

    Foxconn, Honda, Brother have all been the target of labor disruptions driving higher labor costs.   Foxconn and Microsoft are both mired in reports of poor working conditions.  While China's communist government doesn't officially allow unions, they seem to turn their head at labor protests – so long as the protest doesn't appear to be critical of government policies.  

    Is it any wonder that this is happening?  Prices for electronics have been pressured downwards continuously over the past several years.  Just look at the cost of a laptop today compared to a few years ago.  Almost a 1/3 the cost.  While some of these reductions are due to economies of scale and improved manufacturing techniques, much of the savings is because of the low cost of labor.  Even still, factory wages are significantly more than a typical Chinese worker could make farming or as a laborer in the rural parts of the country, and so workers flocked to the factory towns.  As a result, China's workers started having a disposable income.  Money for televisions, cell phones, bicycles and automobiles.  The same desire that drives consumption in the West, is starting to permeate life in China.  The Chinese worker wants the same things that you and I want.   Can you blame them?

    So what do these changes mean for us?  To a certain extent, we will need to accept that things will get more expensive (in the case of electronics, the downward price trend will slow and perhaps even reverse).  Chinese workers will continue to demand fair wages and better working conditions (as they should!). But these changes can continue only to a certain point.  At some point (as it did in North America, Europe and Japan), the wage pressures are going to increase to the point that the advantages of doing manufacturing in China will start to disappear and China will transition from being a low cost supplier of goods to a net consumer of goods.   At this point work will be moved to the next hub of low cost labour (India?  Africa?). 

    My advice for companies with manufacturing in China?  First and foremost, take notice of the working conditions in the factories.   It doesn't matter that the contract manufacturer is a separate company with their own policies, it is your company name and brand that is attached to the product. Have a plan in place in case your manufacturing source (or their supplier) goes on strike.   Also, (and I'm sure this is something that you are doing already),  closely monitor the costs from your manufacturing operations.  At some point, costs will rise to the point where you will need to start looking at other sources. The sooner you recognize that point, the better off your company will be.  

    Before looking for another low cost offshore location to manufacture your goods, consider bringing your manufacturing back to North America.  While labor costs would be undeniably higher, these additional costs might just be offset by reduced lead time, reduced transportation costs, improved quality, reduced risk and improved goodwill.   Just a thought.