Professional Documents
Culture Documents
Recipients of Construction Loan District Case No. Bankruptcy Date Exposure Amt
Caruso Virginia Homes BR, LLC) Maryland 08-18275 6/23/2008 $ 1,000,000.00
Caruso Maryland Homes CY, LLC) Maryland 08-18268 6/23/2008 $ 6,934,313.00
Caruso Homes Inc Maryland 08-18254 6/23/2008 $ 1,910,341.00
Island Developers Fruitland LLC Maryland 08-20557 9/15/2008 $ 1,009,000.00
We can find more defaults, but given the low level of the
documented charge-offs and the aggregate of these 4
exposures is around $11M, let’s take a look at the losses
incurred in these cases
Analyzing Island Developers Fruitland LLC:
Construction loan of over $1million
Though the bankruptcy occurred in Sep’08, the loan
should be in non-accrual status earlier
▪ Foreclosure proceedings first docketed on 7/3/08 (forestalled by filing)
▪ Developer was 7 payments past due at the time of bankruptcy filing
*At the time of sale, the amount outstanding (including fees and charges) was $1.108 million
For 2 of the Caruso Homes construction loans, schedules of assets &
liabilities filed on 8/30/08 provided values* of collateral upon which
Susquehanna’s loans were secured
See estimated losses which supported higher charge-offs by Sep’08
Recipients of Construction Loan Collateral Scheduled Value Exposure Amt Estimated Loss
Caruso Virginia Homes BR, LLC) 4 Lots in Breckenridge Estates 411,012.00 $ 1,000,000.00 59%
Caruso Maryland Homes CY, LLC) 33 Lots in Rivergate Estates 3,448,060.00 $ 6,934,313.00 50%
Susquehanna Susquehanna
(merged) (summed)
12/31/2008 12/31/2008 9/30/2008 9/30/2008
Charge-offs Recoveries Charge-offs Recoveries
'000s (YTD) (YTD) (YTD) (YTD)
1. Loans secured by real estate
a. Construction, land development, and other land loans
1. 1-4 family residential construction loans 3,586 3 2,946 3
2. Other construction loans and all land development and
other land loans 5,299 2 268 2
Note the spike of YTD charge-offs from $3.2M (9/30/08) to $8.9M (12/31/08)
To round up the case, let’s take a look at the numbers for defaults
(90 days past due and non-accrual status)
Excerpt below shows amounts outstanding on loans placed in default
status
Observation: Little change between 9/30 and 12/31 numbers, i.e., the
spike in Dec’08 is unlikely due to defaults recorded in Q4
Susquehanna Susquehanna
000s (merged) (summed)
90 days past 90 days past
due + due + Change over
Nonaccrual Nonaccrual 2008Q4
12/31/2008 9/30/2008
1. Loans secured by real estate
a. Construction, land development, and other land loans
1. 1-4 family residential construction loans 29,103 30578 -4.82%
2. Other construction loans and all land development and
other land loans 23,259 22073 5.37%
Conclusion: Questions could have been raised about the Sep’08 YTD
charge-offs with some research on potential losses based on bankruptcies
to which the bank was exposed
For more details on distressed construction loans, bankrupt home builders
and the banks exposed to this sector, visit:
http://www.homebuilder-bankruptcy.com
http://thedownturnanalyst.com