Bank of Asheville on shaky ground

Asheville Citizen-Times reporter Mark Barrett had a well-reported story in Sunday’s newspaper that deserves a look, if you haven’t read it. It notes financial troubles at the Bank of Asheville. From the story:

Bad real estate loans are threatening the future of the Bank of Asheville.

Officials with the 55- employee bank said last month that it was writing off $14.5 million in bad loans, about three-fourths of which were for real estate, and reported second-quarter losses of $6.50 a share.

Both its president and chairman of the board have resigned over the past three months, and the stock price of the bank’s parent company has dropped to pennies a share.

And a federal lawsuit alleges the bank mishandled a $4.25 million account, improperly allowing it to be drained.

The recession and the dramatic decline in the housing market have cut bank earnings across the country. The Federal Deposit Insurance Corp. shut down 119 banks nationwide this year as of Sept. 10.

Many of those closures have been in areas that experienced dramatic swings in real estate values — way up during the middle of the last decade and way down more recently. North Carolina, however, has seen only two bank failures since 1991, and home prices have been somewhat less volatile in Buncombe County.

Randall Hall, Bank of Asheville’s new president and CEO, said he expects regulators to direct the bank later this month to take actions to shore up its books and that the bank hopes to raise additional capital by the end of the year.

Meantime, dailytraderalert.com has Bank of Asheville on a list of banks in danger of failing.