Saturday, August 6, 2011

Bank Failure Friday: FDIC Seizes 2 Banks! (Charts) *2011 Totals: Failures 63, Cost $5.2 Billion*

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2010 bank failures were 157 and 2009 bank failures were 140

The FDIC closed 2 banks on Friday, August 5, 2011, which increased 2011 total bank failures to 63. This was the 24th week of the 31 weeks in 2011 that the FDIC has seized at least 1 bank.  Annual charts of USA bank seizures, FDIC Deposit Insurance Fund Cost for Failed Banks, and the FDIC problem bank list are below. States where banks have been closed in 2011 are: Alabama 2, Arizona 2, California 3, Colorado 5, Florida 9, Georgia 16, Illinois 6, Indiana 1, Michigan 2, Minnesota 1, Mississippi 1, Nevada 1, New Mexico 1, North Carolina 1, Oklahoma 2, South Carolina 3, Virginia 1, Washington 3, Wisconsin 3.

#62 Bank of Shorewood, Shorewood, IL
* Heartland Bank and Trust Company, Bloomington, IL to assume all of the deposits
* As of June 30, 2011, Bank of Shorewood had approximately $110.7 million in total assets
* Heartland Bank and Trust Company agreed to purchase essentially all of the assets
* FDIC and Heartland Bank and Trust did not enter into loss-share agreement
* FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $25.6 million.

#63 Bank of Whitman, Colfax, WA
* Columbia State Bank, Tacoma, WA to assume all of the deposits
* As of June 30, 2011, Bank of Whitman had approximately $548.6 million in total assets
Columbia State Bank agreed to purchase $314.4 million of the assets
* FDIC will retain remaining assets for later disposition
* FDIC and Columbia State Bank did not enter into a loss-share agreement
* FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $134.8 million

FDIC Losses The total estimated cost to the FDIC Deposit Insurance Fund for the 2011 bank closures year-to-date is $5.22 billion (see chart below). The Top Ten mostly costly banks to the Deposit Insurance Fund in 2011 year-to-date:
1) The Park Avenue Bank, Valdosta, GA $306.1 million
2) Chicago Bank and Trust, Chicago, IL $284.3 million
3) Colorado Capital Bank, Castle Rock, CO $283.8 million
4) Atlantic Southern Bank, Macon, GA $273.5 million
5) First Community Bank, Taos, NM $260.0 million
6) Superior Bank, Birmingham, AL $259.6 million
7) FirsTier Bank, Louisville, Ky $242.6 million
8) Bank of Choice, Greeley, CO $213.6 million
9) Community Central Bank, Mount Clemens, MI $183.2 million
10) Integra Bank N.A., Evansville, IN $170.7 million

The next FDIC bank closings, if any, will most likely be announced on Friday, August 12.

USA Failed Banks by Year Bank failures and therefore FDIC seizure of banks, dramatically increased in 2009 and 2010 - a 2-year total of 297 compared to 0 in both 2005 and 2006. As noted below regarding total problem banks, bank failures in 2011 are expected to continue at a high rate and be 100+. The chart below is the data from 2004 through 2010. Bank failures for 2011 are estimated by extrapolating 2011 actual closures based on a 52-week year.
Year, Total Bank Failures
2004: 4
2005: 0
2006: 0
2007: 3
2008: 25
2009: 140
2010: 157
2011: 63 actual, 106 estimated

FDIC Deposit Insurance Fund Cost of Failed Banks Failed banks and the seizure by the FDIC cost money. The seized banks' deposits are usually assumed by another bank as are most of the assets. However, not all assets of the failed bank have value (usually the worst performing loans, non-performing loans, repossessions, and foreclosures). The FDIC may enter into a loss-share agreement with another bank to manage the questionable assets or take direct possession of the assets and attempt to dispose of them. Upon seizure of a bank, the FDIC estimates the loss to the Deposit Insurance Fund. The Deposit Insurance Fund is normally funded by the banking community through FDIC assessments to each FDIC insured bank based on insured deposits, plus special assessments. Below is a chart of the estimates by the FDIC of costs (losses) incurred upon seizure of banks in 2011. The chart is by week for 2011 and shows the accumulated losses as the year goes along.

FDIC Problem Banks by Quarter The FDIC problem bank list rose from 884 at 12-31-10 to 888 at 3-31-11. The total problem banks remain elevated. The total assets of the problem banks from the year-ends 2004 through 2010 were $28B, $7B, $8B, $22B, $159B, $403B, $390B, respectively. The total assets of the current (3/31/2011) 888 problem banks is $397B, or an average of $447 million in total assets per problem bank. The FDIC reports the total problem banks on a quarterly basis.
Date, Total Problem Banks
12/31/2005: 52
12/31/2006: 50
12/31/2007: 76
12/31/2008: 252
12/31/2009: 702
12/31/2010: 884
3/31/11: 888

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