Center Financial Corp (CLFC)

4everlost (44.78) Submitted: 8/19/08 4:28 PM : Start Price: $13.03 CLFC Score: 13.56

From the 10K:
Page 4: As of December 31, 2007, the principal areas of focus related to the Bank’s lending activities, and the percentage of total loan portfolio composition for each of these areas, were as follows: commercial loans secured by first deeds of trust on real estate 66.0%; commercial loans 17.2%; SBA loans 3.9%; trade financing 3.7%; and consumer loans 5.5%.

Page 31: Net loans grew $252.0 million or 16.4% to $1.79 billion at December 31, 2007 as compared to $1.54 billion at December 31, 2006. The growth in net loans was comprised primarily of net increases in commercial construction loans of $24.6 million, or 56.7%; real estate commercial loans of $154.5 million, or 14.9%; commercial loans of $33.7 million, or 12.1%; SBA loans of $19.9 million, or 39.3%; and consumer loans of $21.4 million, or 27.6%.

I believe that the commercial construction loans and the real estate commercial loans are bad business. They are 66% of their primary business. The net loans grew by $252M with $154.5 of it for real estate. It's very likely that the value of the real estate that is the collateral for those loans is overvalued and if (when?) those loans default the bank will be left owning land, overvalued land. The only option will be to sell the land to... um, to... I don't know, shoot, someone will buy it, right?

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