Fiasco is the word that InDenverTimes business reporter David Milstead (formerly with the Rocky Mountain News) used on my show last week to describe Greeley-based New Fronteir Bank.   According to Milstead’s article, New Frontier has nearly 157 percent problem loans to capital.  If I understand this correctly, for every $1.57 in bad loans, the bank only has $1 in capital — placing it second on the list of problem local Colorado banks.   (First on the list is Colorado National Bank in Colorado Spring, which was seized by regulators on March 20) It doesn’t take an investment banker to figure out that is a recipe for disaster.  

Milstead also suggested on my show that possible new investors in the bank that would help make it solvent were disappointed with the bank’s financial situation saying the numbers were worse than the investors anticipated.  Sharon Dunn confirmed that in an excellent article in Saturday’s Greeley Tribune.  

I take no pleasure in writing about the situation with New Frontier Bank.  NFB does a great job of community outreach by sponsoring events and civic organizations.  However, bad and risky loans also affect the community but in a negative way.  I would not be doing my job if I ignored the situation. 

To be fair, New Frontier was not the only local northern Colorado bank on the list but the others barely made the list and some would fall off if bad loans between 3o and 90 days late were not included.  Milstead does a great job of explaining how he got his numbers and why he used certain information to develop his list.  I encourage everyone to read “Colorado banks in distress: Warning signs.” And remember the FDIC guarantees deposits up to $250,000 so you don’t have to stash your cash in your mattress.

This entry was posted on Sunday, April 5th, 2009 at 1:31 pm and is filed under northern Colorado. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.