Capital G restructured nearly $50 million in loans in 2012

Capital G is working with its customers to help them through this difficult economic time.

The Bank saw the amount of past due and impaired loans increase to 20 per cent of its commercial and retail loans portfolio. By comparison, 16 per cent of those types of loans were past due or impaired on December 31, 2011.

Then Bank had nearly $1 billion in commercial and retail loans on December 31, 2012. Of this amount, just over 43 million of it was impaired, with $29.824 million over 12 months. In 2011, just $11.439 million was over 12 months impaired.

The vast majority of the Bank’s loans and advances to retail and commercial customers that was impaired or past due was in the category of seven days to three months past due.

A total of $88.665 million was in this category.

The Bank said in its 2012 Annual Report that “restructured loans are loans whose terms have been renegotiated due to the deterioration in the borrower’s financial position. The Bank undertakes such restructuring to maximize collection opportunities and minimize the risk of default.

“Upon restructuring such loans are no longer past due, but are treated as up to date loans for measurement purposes once the minimum number of payments required under the new arrangements have been received. The revised terms usually include extending maturity, changing timing of interest payments and amendments to the terms of loan covenants. Both retail and corporate loans are subject to this policy.”

Capital G said for the end of 2012, “loans amounting to $49.771 million, that would otherwise be past due or considered impaired have had their terms renegotiated.

“A substantial portion of the loans and mortgages receivable is due from the residents of Bermuda and is secured by residential property in Bermuda. The Bermuda economy is largely dependent upon tourism and international business services and the health of these sectors depends to a large extent upon the strength of the United States and European economies.

“Therefore an adverse change in these sectors in future periods may have a material impact on the carrying value of the Bank’s loans and mortgages receivable. “

Capital G is holding $345 million in collateral for past due but not impaired loans and $31.318 million in collateral for impaired loans.

The Bank took a $16.455 million credit loss in 2012 on loans, mortgages and credit cards compared to $6.682 million in 2011.