The developing community bank crisis of loan participations
Bring up the subject of loan participations these days and the universal response includes a groan and a roll of the eyes.
Fourth quarter 2010 Call reports are being filed this week. The quarter was worse than expected for many community banks in Georgia. Some credit officers and executive teams no doubt struggled to craft loan loss allowances and establish reserves based on tortured collateral valuations. As year-end auditors and regulators review those files for adequacy, expect much wailing and gnashing of teeth…and then amended call reports with material negative adjustments.