Evabank Has Great Rates and A Horrible Surprise

2.84 percent is a great rate on a five year CD by current standards, but is it worth tangling with Evabank's zero-star Bauer Financial rating?

EvaBank in Eva, Alabama currently has a terrific 2.84 percent on a five year CD, but they've also got a zero star rating from Bauer Financial.

Speaking to several bank employees, including the CFO, underscored about what I thought was going on--it's all an issue of capital. Between development loans in the real estate bubble that went sour and an ongoing loss of capital due to the souring of the rest of the market, EvaBank is venting capital.

All lending is down on the year. Real estate loans down six percent, commercial down a crippling twenty four, individual down nineteen and agricultural down about ten. Real estate, however, did see a tiny hike this quarter, about half a percent.

Savings is pretty much up on the year--demand deposits, now and ATS accounts and other savings deposits are up, but money market deposit accounts are down. This is given them a bit of a cash cushion but at the same time represents a serious liability. If those balances were pulled it'd be death for this bank.

But the biggest problem here seemed to be on the balance sheet, average assets during quarter. It was down four and a half percent on this time last year, and that, at least to me, suggests a much more systemic problem. This Alabama bank didn't run amok on excessive real estate lending it can't collect (oh, that does play a role here, just not as big a role as many had to face), it's just slowly getting bled dry by loss of asset.

However, EvaBank tells me they're readying prospectuses to drive some new capital in place, although even this is tinged by the ongoing but largely unknown threat of the recent oil spill. But with growth falling and income falling with it, that goes a long way to suggesting why EvaBank of Eva, Alabama is a zero star bank. Still, even with this ranking, it's important to remember that EvaBank is an FDIC member, and thus, account holders are insured by the federal government for two hundred fifty thousand dollars.

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