New Mexico's First State in the Red

Despite a boost from the sale of its Colorado branches, First State Bancorp in Albuquerque said Thursday that it lost $6.2 million in the second quarter.

Though credit deterioration continued, the $3 billion-asset company had a gain of $23.3 million from the June sale, which returned the capital ratios at its bank unit to the typical regulatory minimums required.

Still, First State must get the ratios even higher.

The company and the bank reached a formal agreement this month with the Federal Reserve Bank of Kansas City and the New Mexico Financial Institutions Division, based on findings from regulatory exams conducted in the first quarter. First State said the agreement is similar to an informal one in place since September, but the company did not provide details.

The earlier agreement had required increasing the bank's total risk-based capital to 12% and Tier 1 leverage ratio to 9%.

At midyear 30 the bank's total risk-based capital ratio was 10.77%, up from 9% the end of the first quarter. Its leverage ratio decreased to 6.29%, from 6.5%.

First State, which has been hurt by construction lending, attributed its second-quarter loss to a $31.1 million loan-loss provision, up 8% from a year earlier because of rising chargeoffs and nonperformers.

Its allowance improved to 4.89% of total loans, from 2.17%. But nonperforming assets jumped to 8.05% of total assets, from 2.88%.

Excluding the sale of 20 branches to Great Western Bank in Watertown, S.D., First State said it lost $29.5 million in the quarter.

It reported a loss of $118.3 million for the second quarter of 2008, after taking a $127 million goodwill impairment charge. It said the loss for that quarter excluding the charge was $10.8 million, net of tax.

For reprint and licensing requests for this article, click here.
Community banking
MORE FROM AMERICAN BANKER