Berkshire Bancorp announced on Sept. 16 that Moses Marx, the company's chairman and majority stockholder, would make $60 million in cash available for the company to draw upon to bring Berkshire Bank back to well-capitalized status, subject to regulatory approval. Apparently, this approval was not granted before the end of the third quarter.
One United Bank of Boston was well-capitalized at the end of the second quarter, but slipped to critically undercapitalized, with a leverage ratio of 1.70% and a risk-based capital ratio of 3.67%, as of Sept. 30. The institution reported securities losses of $54.9 million during the third quarter, leading to a net loss of $48.3 million and leaving One United with $11.8 million in tier 1 capital to support $625 million in total assets.
The good news is that the bank has raised about $20 million in additional capital during the fourth quarter. Robert P. Cooper, senior counsel for One United Bank, said the institution is now adequately capitalized per regulatory guidelines and expects to improve to well-capitalized by year-end. "The reduction in capital was solely the result of the government conservatorship of Fannie and Freddie," he said.
One United Bank is a certified Community Development Financial Institution (CDFI), whose main business is lending to low- to moderate-income individuals and businesses in Boston, Miami and Los Angeles. The CDFI Fund is run by the Treasury Department, and allocates monetary awards and tax credits to foster development in distressed areas.
"This is actually a good story," said Cooper, who pointed out that the bank hadn't engaged in "the subprime madness," and was on pace for strong earnings before Fannie and Freddie were taken over. Indeed, One United Bank has maintained decent asset quality in the crisis environment, with a nonperforming assets ratio of 1.51% as of Sept. 30, and more importantly, an annualized net charge-off ratio of just 0.35%.
