A reader thoughtfully points out that while we’re waiting for Antares to get its day in the sunshine in Greenwich Time, a wait that now appears may be a very long one, there’s always Patriot Bank to play with. The bank reports its latest earnings here: I invite any one of you financial wizards to interpret the results for us here but am I wrong to think that “non-accruing loans” aren’t a good thing? * So when they go (way) up, and earnings change to losses, that’s bad, right? Interesting that the bank insists that their building loans for Greenwich spec houses are fine and dandy because, so far as I can see, properties like 516 Round Hill Road, which has $6 million of Patriot’s money sunk into a foundation and a tear-down frame, or 14 S. Baldwin Farms, another $6 million for a house that’s unfinished, unwanted and perched above a swamp, aren’t looking so good. Of course, S. Baldwin is now owned by Patriot, so I guess it’s an asset now, not a bad loan. Lucky for them, and ya gotta give Patriot loan officer Marty Noble for another coup to be recorded in the annals of smart lending.
* at least, the definition doesn’t sound very good, but what do I know?
Asset, usually a loan, that is not earning the contractual rate of interest in the loan agreement, due to financial difficulties of the borrower. Nonaccrual assets are loans in which interest accruals have been suspended because full collection of principal is in doubt, or interest payments have not been made for a sustained period of time. A reserve for possible loan losses is set aside for these loans, and any payments received from the borrower are applied first to principal, and then to loan interest due. According to the guidelines of banking regulators, a loan with principal and interest unpaid for at least 90 days is considered a nonaccrual loan, unless the lender has adequate collateral. Consumer loans and residential mortgage loans are generally exempted from these guidelines. For bank bookkeeping purposes, a nonaccrual loan is recorded as a Cash Basis Loan, that is, a loan in which interest is credited as earned income only when payments are collected from the borrower. See also Nonperforming Asset; Real Estate Owned; Renegotiated Loan; Workout Agreement.