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Part 1: Minnesota's small banks on the brink
Noah Wilcox's family has owned and operated Grand Rapids State Bank since 1920 and, as he watched colleagues and rivals plunge into Minnesota's hot real estate market over the past decade, he recalled a comment a friend in the business once made: "Real estate is the cocaine of the banking business."
Today, even as the world's biggest banks show signs of recovery, many of the community banks that anchor the nation's Main Streets are paying the price for over-indulging on housing, retail and office projects.
In Minnesota, regulators have seized and closed two banks since 2008 and have ordered 16 others to clean up their balance sheets. Another 65 of the state's 430 banks and thrifts are on a secret watch list, and state banking officials expect more to fail as they are pulled down by bad real estate loans.
Minnesota ranks fifth nationally, with 50, or 12 percent, of its banks carrying particularly high levels of dead real estate loans, according to an analysis done for the Star Tribune by Foresight Analytics, a financial research firm in Oakland, Calif. Only Florida, Georgia, Illinois and California have more banks at such levels.
Joe Witt, CEO of the Minnesota Bankers Association, a state trade group, said the percentage of Minnesota's stressed banks is not out of line given the high number of banks in the state, growth in the metro area during the boom and the flurry of new bank formations.
But some bankers and industry watchers disagree.
"That's inordinately high for a marketplace that's supposedly more rural and more conservative," said Jeff Judy, a former banker and Bloomington-based consultant to the industry.
Read more...
Second in a series: Lenders Gone Wild
Part 2: Credit unions: Where the credit flowed too freely
Long known as lenders to the little guy, credit unions jumped into high-risk loans. Now almost half of them are losing money.
How's your bank doing?
Click the link above for an interactive, sortable graphic showing the financial performance of all Minnesota's community banks -- or the link below for Minnesota's credit unions.
More from this series:
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Part 3: As loans grew, regulators shrank
The Minnesota Commerce Department scaled back its monitoring of lenders even as indicators worsened. -
Lenders Gone Wild: Part 1
Business reporter Jennifer Bjorhus talks with James Lieks about the aggressive lending practices of some Minnesota banks and credit unions. -
Lenders Gone Wild: Part 2
Business reporter Chris Serres talks with James Lileks about the current state of Minnesota credit unions. -
Lenders Gone Wild: Part 3
Business reporter Chris Serres talks with James Lileks about bank regulators and the role they played in the failing of some Minnesota banks and credit unions. -
Reporter's Notebook: The grim repo
Photographer Glen Stubbe rides with a repo man as he repossesses two vehicles from owners who had fallen behind on their payments. -
This maverick succeeds where other bankers fail
Stearns Bank CEO keeps buying insolvent banks while unloading his own toxic loans. -
Loan analyst felt push to get deals done
"Let's get the deal done and worry about the details later." -
Credit unions dig deep to rebuild fund
By now, it's a familiar story: A group of financiers eager to juice returns buys billions of dollars of exotic securities backed by mortgages that plunge in value and can only be sold at a huge loss. -
Poll:
Who's to blame?
Who do you think is most to blame for the financial crisis? -
Some useful links about banks and credit unions
