Pioneer Press on Construction Loan Woes

by Alex Stenback on November 13, 2007

The Pioneer Press has picked up the thread we started last week on the surprising number of Minnesota banks that are hip-deep in non-performing and delinquent construction loans.

The piece, ably penned by Jennifer Bjorhus, ads some excellent context, and digs a little deeper into some of the lingering questions surrounding these institutions.  In other words, how large a problem is this, and are these non-performing construction loans are anything the rank and file bank customer should worry about?

Here’s the money quote, from the president of one bank named on the list of top twenty "most-exposed" banks, which basically encapsulates the issue:

"I’ve been in the business 40 years, and I’ve not seen it like this," said Gene Haberman, president of Citizens State Bank in Hudson, which has $201 million in assets and nearly $10 million in construction loans unlikely to be repaid…

Haberman and the other bankers insist customers have no need to worry. They’re working with their construction borrowers, they said, and the loans pose no threat to financial stability. They dismiss the trouble as a market issue.

"Is it concerning to us? Obviously. Is it an issue of solvency? Absolutely not," Haberman said. "The good news is it is real estate, and it ain’t going away. We have collateral."

Housing Slump Stings Area Banks [PiPress]
Construction Loan Woes Hitting MN Banks [BTM]

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