Troubles in the credit markets have hit local banks hard, leaving several in need of money to cover loan losses. The Daily Bulletin's Matt Wrye writes that loan losses by area banks have eaten up large amounts cash:
In the last two quarters, local banks collectively shoveled a whopping $230 million into their loan loss reserves to cover tens of millions of dollars in loan write-offs, and they may have to set aside even more cash for future losses.
Is the environment ripe for bank buyouts?
The answer is no, according to one financial guru on Wall Street steeped in years of industry knowledge.
"Bankers become very cautious in markets like this," said John Eggemeyer, chairman of San Diego-based PacWest Bancorp and CEO of Castle Creek Capital private equity firm. "It's a mistake to jump into a troubled market too early. Banks are reluctant to expose their own balance sheets to other banks."
The next choices in line: private equity or institutional capital.
"There's plenty of private equity flying around, looking for banks like these," said Eggemeyer, who has cobbled together PacWest through several acquisitions in recent years.
The most glaring examples of possible buyouts or capital infusions are Rancho Cucamonga-based PFF Bancorp and Corona-based Vineyard National Bancorp, but smaller banks' financial statements are also raising eyebrows.
We've written about PFF's troubles recently, and we suspect that the worst is not over.
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