California foreclosures ding Frontier |

California foreclosures ding Frontier

by Jay Hamburger OF THE RECORD STAFF

Frontier Bank by the end of 2008 had amassed just less than $4.1 million worth of real estate through foreclosures, a nearly fivefold increase in the figure the bank’s holding company reported at the same time the year before, according to a filing submitted to federal bank regulators.

The Federal Deposit Insurance Corp. filing, the bank’s first since the upheaval in the banking industry and Frontier’s tapping of Troubled Asset Relief Program funds, indicates the foreclosures were split almost evenly between residential properties and construction or development land.

The filing, meanwhile, shows the amount of loans that were between 30 and 89 days past due at the end of 2008 had risen by nearly five times from the same period the year before, to just less than $1.9 million. None, though, were reported to be more than 90 days overdue.

The Dec. 31, 2008 figures are the most recent available. The next report to the FDIC will cover the first quarter of 2009. It will be submitted shortly.

A bank executive said all of the foreclosures reported in the filing at the end of 2008 occurred in California, where Frontier Bank operates three locations in Southern California. The California housing market has suffered terribly in the recession.

The dollar amount of the foreclosed property at the end of 2008 represents less than 2 percent of Frontier’s overall loan portfolio, a ratio that the bank’s president and chief operating officer, Marc Estabrook, said shows the bank’s portfolio is in good shape. Frontier has moved from "no problems to some problems" with the loans, he said in an interview.

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"Most of the pain on those assets was absorbed in 2008," he said.

Estabrook, though, said it is probable the bank will foreclose on properties in the Park City area this year. He said Frontier has extended approximately $125 million in loans locally, mostly through mortgages. Estabrook said a little less than 1 percent of the local loan portfolio could fall into foreclosure, or approximately $1.2 million worth of property, in 2009.

"We expect, in Park City, we’ll have some foreclosures this year. We’ll go from zero in Utah to a handful," he said, describing foreclosures as the "least attractive option" for the bank.

Estabrook said approximately half of the loans that were between 30 and 89 days past due at the end of 2008 were made in Utah, but he expects the just less than $1.9 million reported in that category stabilized in the first quarter. He said the bank is pleased that none of the loans were past due more than 90 days.

Frontier’s Palm Desert, Calif., holding company in December received $7.3 million in funding from Washington as part of the Troubled Asset Relief Program, widely known as TARP. Estabrook said afterward Frontier was not in danger, but executives wanted to remain competitive with banks that received the federal money.

He said early in 2009 the $7.3 million increased Frontier’s lending capacity and strengthened its balance sheet should it pursue a merger with another bank or an acquisition of another one. He said the bank can leverage the federal money by 10 times, meaning that the $7.3 million is worth $73 million to the bank.

According to Estabrook, Frontier has provided $5.2 million in loans thus far attributable to the money from Washington. Of that sum, approximately $750,000 was loaned in Utah.