Banks Update 10/09/2009

Detective Krum

Questions have been sent that I must get out of the way first. American Founders Bank based in Lexington Kentucky – their rating is an (E) and the Bank of Bonifay in Bonifay Florida is rated (E-).  It appears the Bank of Bonifay may fail and soon so I would caution depositors, FDIC insurance will not cover deposits over $100,000 and the temporary increase of insured deposits at $250,000 could be a problem because FDIC reported it needs a bailout. For Bank of Bonifay customers, you might want to remove your money from that bank as soon as possible.

The projected outlook for Florida banks according to FDIC through the second quarter of 2009 is as follows:

Past-Due and Nonaccrual Loans / Total Loans (median %) 6.58

Noncurrent Loans / Total Loans (median %) 4.43

Net Loans to Assets (median %) 70.9

Largest Deposit Markets (from 2008 Summary of Deposits)

Miami-Fort Lauderdale-Miami Beach, FL
Tampa-St. Petersburg-Clearwater, FL
Jacksonville, FL
Orlando, FL
Sarasota-Bradenton-Venice, FL

SunTrust Bank Blues

Detective Krum

SunTrust Bank – banking blues. As financial reports come through and TARP funds examined you can begin to  understand the SunTrust Bank blues.  SunTrust Bank appears to have over extended their reach in mortgage areas, particularly in the south. This over reach affects their borrowing power with other banks and lenders.

Let me ask you a question.  If you had a bank and your bank lost a lot of money on foreclosures, how would you compensate your bottom line?  What does SunTrust Bank do? It appears they raise their fees on their good customers. Someone needs to show them how to win friends and influence people. You would think SunTrust would lower their fees, offer perks, do anything for the public to get their business and get out of the mess they created for themselves. Here is a closer look (from a financial source) at SunTrust Bank’s problems:

“The downgrade was triggered by continued deterioration in SunTrust’s asset quality. Until fourth-quarter 2008, asset quality problems had been largely contained to home equity and Alt-A loans with high loan-to-value ratios, but are now beginning to spread to SunTrust’s large portfolio of first mortgage loans on residential properties,” said Standard & Poor’s credit analyst Charles D. Rauch. In addition, the portfolio of loans to regional home builders is weakening. SunTrust has been particularly vulnerable during this credit cycle because of its large real estate exposure in Florida, one of the most overbuilt markets in the country.

The deterioration in credit quality caused the bank to report a large pretax operating loss of $656.5 million in fourth-quarter 2008. The quarter was marked by another spike in loan-loss provisions, as well as higher credit costs (mortgage application fraud and insurance denial claims). Net charge-offs, delinquencies, and nonperforming assets continued to climb from already high levels. We expect loan-loss provisions and other credit costs to remain elevated, causing more pressure on profitability in 2009.

Current ratings on SunTrust reflect its well-established banking franchise and extensive deposit-gathering branch network across the Southeast U.S. SunTrust’s issuance of $4.85 billion of preferred stock under the U.S. Treasury’s Troubled Asset Relief Program bolstered capital levels, increasing the Tier 1 risk-adjusted capital ratio to approximately 10.8% at year-end 2008. We expect SunTrust, which reduced its quarterly common dividend to $0.10 per share, to continue to build capital ratios through the credit downturn. During the fourth quarter, SunTrust raised core deposits and issued FDIC-guaranteed debt to bolster its liquidity profile. As of year-end 2008, the bank was a net supplier of overnight funds, a position we deem prudent in this volatile banking market.

The negative outlook incorporates our baseline scenario that SunTrust’s financial performance will remain weak in 2009. We expect asset quality problems to worsen throughout the year. If credit losses rise materially above our expectations or if core profitability is not poised for a recovery next year, we could lower the ratings.

In addition, complaints have piled up against SunTrust. Allegations of holding deposits for days before crediting them to accounts, overdraft fees charged to accounts because deposits weren’t cleared, mailing bank cards to the wrong address and many others.  These issues are not the way to get your bank in good graces with your customers. One must ask, does SunTrust Bank want customers or just their money?

SunTrust Bank Fraud Allegation

Detective Krum

There are  many SunTrust Bank articles in this blog, just check the archives.  SunTrust Bank has the highest fee schedule compared to similar institutions.  The following complaint alleges SunTrust Bank fraud.  Couple this complaint, if true, to the factual report showing SunTrust Bank partnering with Florida Trend Magazine to mislead the public regarding SunTrust Bank strength shows a pattern of what appears to be deceitful practices.

I have removed the name of the person filing this complaint. Here is a complete copy of the complaint:

Suntrust Bank fraud

I went online to find out if I had lost my mind… only to find out that there are millions of people just like me out there that have been defrauded by Suntrust Bank.

I have a small Internet business and use my bank card for all of my transactions. This way I always have a record of them. and un like a credit card I have no interest and can not spend beyond the cash on hand.

One night, about 11:00pm when checking my account I noticed that there was a $500.00 hundred dollar charge pending on the account. Mind you my balance at the time was $223.00. a couple of small “legitimate” charges for about $15.00 and 28.00 so this caused the account to be overdrawn. I quickly called the 800 number to find out what the charge was for. I was placed in an endless loop of about 35 minutes and then the call was dropped. I decided I would wait until morning since it was late.

When I contacted customer service the following morning I was told there was nothing I could do until the transaction posted to the account. However, I was given the name of the company that was making the charge. As i suspected the the charge was not from any of my vendors and was indeed fraudulent… Still they insisted there was nothing they could do until it posted to the account.. I checked my account daily to see if the transaction had posted (still not sure why we would wait for a fraudulent charge to post) each night I noticed that not only had the charge not posted but suntrust was now charging me nsf fees for the “unposted fraudulent charge” 32.00 first then 64.00 then 96.00 from the 17th to the 20th when it finally posted they had racked up over $200.00 in fees. Mind you my business is at a stand still because I can not purchase material or process orders.

When it finally posted I called customer service, who transferred me to the fraud department, who told me that I would have to sign and affidavit, have it signed and notarized, return it, and then wait 7-10 days for them to sort this out. I decided not to leave this to fax machines and customer service, I would go directly to the branch an speak with a manager. I did what they asked and was told the 7-10 days is perfectly acceptable for me to wait for this kind of thing to be cleared up . However, again my business is still on hold for another 7-10 days!

My question to any one is this….. why would they pay a “check card” transaction (not a credit card) that was more then the balance IF THE FUNDS ARE UNAVAILABLE RETURN THE CHECK OR DECLINE THE CHARG! The only logical reason is because they want to collect the fees so they allowed a fraudulent charge to be posted to my account even though there was only $200.00 in the account when the fraudulent 500.00 charge came through. Now my account is on hold because they decided to pay it against monies the were not available.

So now my company is on hold while they investigate a charge that they should never have paid in the fist place… and charging me overdraft fees for the privilege. my overdraft fees now have fees (extended overdraft fees)

I am finding an attorney and changing banks as soon as they finish their investigation!

SunTrust Bank has the highest fees and makes a great deal annually from fees as you will notice in their financial report.  SunTrust Bank also participated in the bank bailout scheme and received TARP funds. Taxpayers paid to help bailout SunTrust Bank.

America’s Financial Future Projection

Detective Krum

Some report the “recession” is almost over while others say the pattern today is similar to the 1929/1930 Great Depression.  Those supporting the latter scenario say in 1929 the stock market rallied for 6 months after the first fall.  They claim the rally lasted about six months and then the stock market free fell.  What scenario will play out now? Only God knows for sure but I looked at various reports and here are clips.

Government reports now point to fiscal doomsday for America; and one of the reports, issued by the Congressional Budget Office (CBO), says so explicitly:

• The CBO paints two future scenarios for the U.S. budget deficit and the national debt. But it plainly declares that fiscal disaster will strike in EITHER scenario. Furthermore …

• The CBO states that its fiscal disaster scenarios could cause severe economic declines for decades to come, including hyperinflation and destruction of retirement savings.

• The CBO then proceeds to admit that even its worse-case scenario could be understated by a wide margin due to panic in the financial markets or vicious cycles that are beyond control.

See the complete report here. If the link doesn’t work for you then go here. The links show the financial and budget outlooks for America for Fiscal Years 2009 – 2019.  How’s that hope and change working for you now? Retirement accounts were a pad for baby-boomers because social security would not be there for baby-boomers. This report reflects the years baby-boomers saved for retirement in retirement accounts will be wiped out.

The Federal Reserve released the Flow of Funds Report in a pdf file format. You can view the entire report here. This report reflects credit will be cut off to business and consumers. One must ask, what was the purpose of the bank bailouts if it was not for liquidity.