The Boulder Valley's seven local-based banks reduced their outstanding loans by 2 percent in the third quarter, as the amount of delinquent loans and foreclosure properties held by the financial intuitions rose 40 percent.

The latest look at the banks' books, as of Sept. 30, from the Federal Deposit Insurance Corp. reflects how the Boulder Valley's increasing foreclosure activity in the second and third quarters of this year came back to beat up the banks.

Through foreclosures, local banks now own more than $50.5 million in real estate properties. Delinquent loans, or missed payments by borrowers by 30 days or more, rose to more than $172.7 million.

Put it all together, and the seven local banks troubled assets and real estate stood at more than $223.2 million, or 9.5 percent of outstanding loans, at the end of the third quarter.

While local-based banks don't account for all financial activity in the Boulder Valley - national banks like Chase, Wells Fargo and U.S. Bank have a larger share - they do reflect a significant portion of the area's commercial lending activity. And that's where much of the trouble is coming from - 77 percent of the banks' delinquent loans are commercial.

The above figures represent the Boulder Valley's seven local-based banks as a group, but as the recession lingers, some banks are faring better than others.

Local banks with few loan delinquencies and foreclosures - such as AMG National Trust Bank, FirstBank of Boulder, FirstBank of Longmont, FlatIrons Bank - reported third-quarter profits, or nearly broke even in the third quarter and seem to be on the recovery track.

On flip side, local banks with a higher percentage of troubled loans and foreclosures - such as FirsTier Bank, Mile High Banks and Summit Bank & Trust - experienced third-quarter losses as they were forced to increase loan/loss reserves to protect against the possible default of those bad loans.

FirsTier Bank Chairman and Chief Executive Officer Tim Wiens said the difference comes down to how active a bank was lending in community real estate when the economy was growing. Some banks have a "real estate hangover," some don't, he said.

"Real estate is a cycle, and it's very difficult part of the cycle now, but we see Colorado real estate in a better position than elsewhere in the nation," Wiens said.

FirsTier Bank significantly raised its loan/loss reserves in the third quarter - more than doubling the amount to $16.2 million to help ride out the storm, Wiens said.

"We don't intend to dump a bunch of property," he said. "We're looking for reasonable purchasers and looking for joint ventures to build out projects." FirsTier is also looking for additional capital investors.

Wiens believes the real estate market has hit a bottom, and he's starting to see activity creep back.

"The last couple of months, leasing activity is up," he said. "It's not an active market, but it's beginning to surface."

 Regardless of any local bank's financial position, the figures show almost all local banks continuing to cut back lending. Outstanding loans held by the seven banks fell 2 percent to $2.3 billion. Compare that to average 30 percent increases in outstanding loans in 2006.

"It's a Catch-22," Wiens said. On one hand, the government is calling for increased lending to help the economy recover, on the other hand, its regulators are calling for stronger financial sheets leading to less risk and fewer loans.

For a more in-depth look at local bank figures, download the seven local bank quarterly financial reports compiled by the Boulder County Business Report for free at: http://tinyurl.com/BCBRbankfigures