Sac Bee: Granite Community Bank In Big Trouble

Problem loans for residential and land development have placed Granite Community Bank, a small lender in Granite Bay, at risk for failure and seizure by the government, according to regulatory filings and banking analysts.

The bank lost more than $5.5 million last year, including more than $3.5 million in the fourth quarter.  According to Oakland-based Foresight Analytics, Granite Community holds $14.2 million in loans that are in default or close to default – about four times the bank’s reserve fund to cover such losses.

“They do face a takeover at some point in time unless they can improve their capital situation,” said Bert Ely, a banking industry analyst in Alexandria Va., who reviewed the bank’s most recent government filing for The Bee.  Ely said the bank reported an unusual burden of bank-owned real estate – a result of area foreclosures – and a perilous dependence on construction and commercial real estate loans.

“It’s quite possible that their losses … will wipe out their capital and render them insolvent,” said Ely.

“Loan losses put Granite Bay bank at risk of failure, seizure”, The Sac Bee, February 11, A1

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