Alpine Bank posts $48 million loss in 2010
GLENWOOD SPRINGS, Colorado – Alpine Banks of Colorado lost $48.18 million in 2010 as it continued to shed bad loans and other assets that went sour during the recession, President and Vice Chairman Glen Jammaron said Friday.
Alpine Bank, like many banks in the country, saw its non-performing loans soar in 2009 and last year as the wrath of the recession was felt. Some loans made for real estate acquisition and development couldn’t be paid off by borrowers. Loans were often secured by property, which ended up back in the hands of the bank through foreclosures and other steps.
Jammaron said the bank isn’t in the real estate business, so it tries to clear the troubled assets off its books as quickly as possible. Alpine has sold some property at a loss and held auctions for other properties.
The bank’s strategy was to respond to the problem as quickly as possible rather than spread the financial pain out over several years. So in 2010, the bank wrote off nearly $90 million in loans, he said.
“We wanted to put the bad year behind us in one year,” Jammaron said. “We want to make sure we make money in 2011.”
It is inevitable that more loans will have to be written off in 2011 and even in 2012 as some borrowers struggling to make payments find they cannot do it. “We know we’re not done,” he said.
But bank officials believe their books are improving because there are fewer new troubled assets and they are clearing the troubled assets by write-offs and real estate sales. As a result, Alpine Bank expects to show a profit this year, Jammaron said.
The 2010 loss wasn’t quite as drastic as it appears. The Glenwood Springs-based bank increased its loan reserve by $29.67 million over the year. Banking industry accounting requires that funds set aside as loan reserves be considered a loss even though those funds are still possessed and can be used by the bank.
Jammaron said despite the $48 million loss, Alpine Bank remains healthy and committed to the 37 cities and towns it serves in western Colorado. The bank has $1.58 billion in loans. It has $109.52 million in non-performing loans, generally considered 90 or more days past due. The percentage of bad loans to total loans is 6.91 percent. That is up from 6.04 percent at the end of 2009. Alpine Bank’s percentage of non-performing loans was virtually non-existent during the booms years of 2005-08.
In addition to the non-performing loans, Alpine Bank possesses $17 million in real estate it doesn’t want on its books. That’s generally property the bank ended up with as a result of bad loans and hasn’t had a chance to sell yet.
Jammaron said the performance of the bank essentially mirrors the health of the region it serves. As the communities recover, the bank recovers.
“We’re a boat on the tide of our customers,” Jammaron said.
The recession hit western Colorado later than it hit most of the country. Now that skiers from Chicago and Los Angeles are taking vacations again, the resort areas that Alpine Bank serves are showing signs of recovery quicker than other areas. Aspen, for example, showed an increase in skier visits and sales tax revenues early in the ski season.
Alpine Bank’s total deposits are at $2.04 billion, the lowest level since 2007. That is simply a reflection of its customers – from shop owners to construction firms – not having as much cash on hand because of the economic downturn, Jammaron said.
He said Alpine Bank, which celebrated its 38th anniversary this year, had only one prior annual loss. That was in the mid-1980s following the oil and gas bust that affected western Colorado so severely.
The company hasn’t laid off any employees because of the latest recession and slow recovery, he said, although some positions might not be filled when a worker leaves. In addition, its charitable giving was the highest ever in 2010 as a display of commitment to the communities it serves, according to Jammaron.
The first quarter was the most brutal for the bank. It lost more than $23 million in that quarter alone, about half of its annual loss.
Over the last six years, Alpine Bank has shown a cumulative profit of $85.72 million despite the big loss in 2010.