Today's question comes from Tracy who writes:
I am a developer/builder in Eastern Washington State. I have been
in talks for months with a regional bank for a new apartment building. We have satisfied all the preliminary requirements to be pre-approved. Recently, we went for final loan approval for the project and the bank came back with the determination that they did not have the liquidity to fund the 7.5M loan and they could not find another bank that was willing to participate in the deal.
I am not completely surprised by this given the information you have imparted in your hugely informational podcast. However, I have several commercial loans with this bank, and it made me start thinking that I should probably check the health of the bank so I could determine if there is additional risk to my portfolio.
So, my question is: What information should I gather and how do I gather it, to determine the stability of a bank?
A secondary question is if a bank fails what happens to those that have debt with that bank? Everyone talks about the deposits, but how does a
bank failure affect those who have loans in place with the failing bank?
Host: Victor Menasce