Early Briefing: Small Banks Feel the Crunch
*Kassie Rempel, owner and founder of the boutique online retailer SimplySoles, had to personally guarantee a loan from Bethesda-based Eagle Bank three months ago to build her first store, in Columbia Heights in Northwest Washington. Bank officials told her that because of credit conditions, the practice has become standard across banks, she said.
"It gave me pause, but not enough to not proceed with the paperwork," said Rempel, who has been operating her online and catalogue business from her basement in Mount Pleasant.
Late loan payments and defaults by commercial and residential developers have soared to the highest levels since the early 1990s, threatening the health of some small banks, regulators said yesterday.
The delinquency rate on construction and development loans hit 8.1 percent at the end of June, the highest rate for any category of bank loans, according to new data from the Federal Deposit Insurance Corp. The rate has more than tripled from 2.4 percent at the end of June last year.
*Comstock Homebuilding of Reston has defaulted on several development loans the company used to finance its projects during the years of the housing boom. The company is hoping to renegotiate the terms of its loans with several banks, but some analysts warned that the company's future is cloudy.
*Novavax said yesterday that its bird flu vaccine elicited a robust immune response in humans, moving the biotech a step closer to licensing its pandemic vaccine production system. Shares of the Rockville-based biotech fell 6 cents, or 2 percent, to $2.91. Novavax has had a demo of the vaccine manufacturing process set up at its headquarters since May 1 but does not yet have a buyer.
*Falling property values, rising fuel costs and stagnant sales tax receipts are pushing Fairfax County and other local governments to their worst budget crunch in nearly two decades, just as the new fiscal season gets underway.
In Fairfax, Virginia's largest jobs center and one of the nation's wealthiest counties, officials are bracing for a projected $430 million shortfall in both county and school spending. Even as they promise to maintain the quality classrooms, parks, police protection and highways that residents have come to expect, officials said they will have to make deeper cuts and consider bigger tax increases than they have done in years.
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