Algon Group Predicts 'Perfect Storm' in Homebuilding Industry Will Lead to Significant Bank Failures in Next 24-36 Months

At Alabama Bankers Convention, Algon Group founder Troy Taylor predicts substantial bank losses; in July Taylor tells American Bankruptcy Institute - Southeast Members that 25-50% of Atlanta, GA banks may fail or merge by 2011.

PRNewswire/ -- Citing excess inventory and the substantial erosion of housing asset value - particularly in certain Southeastern areas - Algon Group founder and president Troy Taylor predicts that the inability of homebuilders to satisfy loans will lead to increasing bank failures in these markets over the next 24-36 months.

Addressing the Alabama Bankers Convention in June 2008, Taylor said that based on what Algon Group clients and other homebuilders were experiencing in Florida and Georgia, he expects banks to suffer substantial losses as builders default on loans. In July 2008, Taylor told Southeastern members of the American Bankruptcy Institute that he predicts 25-50% of Atlanta-based banks will fail or merge by 2011. Taylor said that the ongoing problems Algon Group has seen over the past two months have only furthered his belief that the worst is yet to come.

Taylor and Algon's Managing Director Larry Comegys - a housing industry veteran and former President of Pulte-Florida and Meritage Homes-Florida - have since January 2008 advised homebuilders, banks, hedge funds, and trustees in eight separate real estate-related engagements. Taylor attributes the housing industry crisis to a "perfect storm" created by the confluence of subprime mortgages, real estate speculation, new home prices outpacing income, and overbuilding. As an example, he points to select Florida counties where the supply of vacant developed lots increased from 12 months in the second quarter (Q2) of 2005 to 80 months in Q2 2008, and the inventory of future lots increased from 64 months in Q2 2005 to 391 months in the fourth quarter of 2007. During this same period, the average price of new homes in the sample areas fell by 27 percent.

Taylor said that although home sales in the Florida panhandle may be helped by the eventual opening of the proposed airport, most developers do not have enough working capital to last until recovery. "To survive this crisis, banks can't wait until the interest reserve runs out," said Taylor. He advises banks to recognize that housing assets will re-price, raise capital, and clean up their balance sheets.

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Citizens Trust Bank Will Be Awarded the MBDA's National Director's Access to Capital Award

PRNewswire-FirstCall/ -- The United States Department of Commerce's Minority Business Development Agency (MBDA) will award Citizens Trust Bank (CTB) with the National Director's Access to Capital Award of the Year during their 26th Annual National Minority Enterprise Development (MED) Week on September 5, 2008. The National Director's Access to Capital Award is presented to an individual or organization who has demonstrated outstanding leadership in the financial communities by providing, supporting or advocating access to capital for minority businesses.

Out of the many organizations that were applicable for this celebrated award, Citizens Trust Bank, the third largest African-American owned bank in the Southeast, has truly demonstrated excellence in financial leadership, whether providing millions in commercial loans contributing to the growth and development of the surrounding community, or with its Financial Empowerment Series that offered enlightening and educating seminars that provided tools for personal and financial success. With a foundation of constructing "a relationship that you can bank on," CTB has always been committed to aiding in the creation of wealth for its customers through its wide variety of financial products and services.

This prestigious award will be presented to CTB during the MBDA's annual MED Week 2008 Awards Gala. As a part of the U.S. Department of Commerce the MBDA is the only federal agency created to cultivate the growth and establishment of minority-owned businesses. The annual MED Week events leading up to the ceremony are designed to bring together the nation's foremost business leaders to offer advice, counsel and insight to help minority businesses continue to be competitive within the marketplace.

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