Amboy Bank About to get Stiffed Again
According to the Asbury Park Press, Amboy Bank is one of Kara's largest creditors. Amboy recently got stiffed by Solomon Dwek.
"Amboy National Bank has suffered its second blow this year after a home building company filed for bankruptcy Thursday.
Amboy holds $58.2 million in loans with Kara Homes Inc., one of the largest home builders in Monmouth and Ocean counties. According to the bankruptcy filing, it is the largest creditor to Kara Homes.
A bank analyst said the bankruptcy puts Amboy in a difficult financial position, and could be a harbinger of things to come for local and regional banks if the real estate market continues to decline."
Full article...
"Amboy National Bank has suffered its second blow this year after a home building company filed for bankruptcy Thursday.
Amboy holds $58.2 million in loans with Kara Homes Inc., one of the largest home builders in Monmouth and Ocean counties. According to the bankruptcy filing, it is the largest creditor to Kara Homes.
A bank analyst said the bankruptcy puts Amboy in a difficult financial position, and could be a harbinger of things to come for local and regional banks if the real estate market continues to decline."
Full article...
posted by Little_Silvered at 9:44 AM
6 Comments:
That would explain part of what's going on in Cape May County. Despite the county seeing the sharpest decline in YOY sales in the state, builders are breaking ground on new properties on a regular basis.
I think that they believe that housing will pick back up in Spring 07. If things remain slow, I would expect a fire sale next summer.
scprof - thats the dumbest thing i have ever heard. you are explaining exactly what builders do. all businesses rely on cash flow. why dont you blame banks for lending money.
What SCprofessor means is that Kara, like many small builders, did not purchase land over the years from which it could draw down and put houses on to generate cash.
The other large homebuilders actually buy land and sit on it for years. In Hovnanian's situation for example, they will be able to stop land purchases today, (which stops cash outflows)and still build houses into next fall, thereby generating cash.
Kara, unlike Hov. or Toll relies on the Cash flows of the last project to fund the next project. Once they stop buying land, they are out of it altogether. They have no onventory.
I think I'd want to have a discussion with Amboy Bank's VP of Commercial Lending. What was he looking for from Kara and Dwek as far as soundness of these deals?
What due diligence did he perform before opening the vault?
I'd also like to talk to their Appraisal Dept. Or has that been outsourced already?
Little silvered,
sorry to say you are incorrect on this issue. One of the biggest contributers to Karas downfall was its extensive land bank. In the recent past Zhudi had more lots than any one in the state. The problem was he overpaid for them and over extended his firm to get them. This EGO driven strategy more than any other issue drove the firm to were it is at this time.
What you must understand is that Zudi was too busy being charismatic to care about the fact that for years, his business was positively bleeding money from every pore, all the time. The money I personally saw wasted at Kara Homes boggles the mind. We all questioned it, but no one in a position to do anything about it wanted to be bothered. I worked alongside people who put serious effort into finding ways to save the company's money, and these employees were basically ignored. So much nepotism, shady deals, favors for "friends", high-paying "advisory" positions invented for friends and lovers, and incredible, wanton waste. That's what pushed Zudi into his current position. Analysis is not necessary. The answer is, "he pissed it away".
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