Friday, July 29, 2011

Bank Failure Friday: FDIC Seizes 3 Banks! (Charts) *2011 Totals: Failures 61, Cost $5.06 Billion*

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2010 bank failures were 157 and 2009 bank failures were 140

The FDIC closed 3 banks on Friday, July 29, 2011, which increased 2011 total bank failures to 61. This was the 23rd week of the 30 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 5, Indiana 1, Michigan 2, Minnesota 1, Mississippi 1, Nevada 1, New Mexico 1, North Carolina 1, Oklahoma 2, South Carolina 3, Virginia 1, Washington 2, Wisconsin 3.

#59 Virginia Business Bank, Richmond, VA
* Xenith Bank, Richmond, VA to assume all of the deposits
* As of March 31, 2011, Virginia Business Bank had approximately $95.8 million in total assets
* Xenith Bank agreed to purchase essentially all of the assets
* FDIC and Xenith Bank did not enter into loss-share transaction
* FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $17.3 million.

#60 BankMeridian, N.A., Columbia, SC
* SCBT, National Association, Orangeburg, SC to assume all of the deposits
* As of March 31, 2011, BankMeridian, N.A. had approximately $239.8 million in total assets
SCBT, National Association agreed to purchase essentially all of the assets
* FDIC and SCBT, National Association entered into a loss-share transaction on $179.0 million of BankMeridian, N.A.'s assets
* FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $65.4 million

#61 Integra Bank National Association, Evansville, IN
* Old National Bank, Evansville, IN to assume all of the deposits
* As of March 31, 2011, Integra Bank, National Association had approximately $2.2 billion in total assets
Old National Bank agreed to purchase essentially all of the assets
* FDIC and Old National Bank entered into a loss-share transaction on $1.2 billion of Integra Bank, National Association's assets
* FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $170.7 million

FDIC Losses The total estimated cost to the FDIC Deposit Insurance Fund for the 2011 bank closures year-to-date is $5.06 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 5.

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. Actual 2011 bank failures will be included on the chart later this year as the closures accumulate to a higher level.
Year, Total Bank Failures
2004: 4
2005: 0
2006: 0
2007: 3
2008: 25
2009: 140
2010: 157
2011: 61 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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Thursday, July 28, 2011

Fed Beige Book: "USA Economic Activity Has Continued to Increase" (Review) "Labor markets continued to improve modestly"

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Marriner S. Eccles Federal Reserve Board Building in Washington


Summary
The Federal Reserve Board issued the much scrutinized Beige Book on July 27, 2011, effective July 19, 2011. Overall, across the 12 Federal Reserve Districts, "economic activity has continued to increase". The prior Beige Book was released June 8, 2011, effective May 27, 2011. The Federal Reserve wording, and theme plus District reports continues positive regarding economic activity, recovery, and growth - but not as positive as the prior report. As always, the Fed Beige Book, officially titled the Summary of Commentary on Current Economic Conditions by Federal Reserve District, is carefully worded.

USA Financial System
Not as positive as prior report. "Reports on banking conditions were largely mixed across the Districts." and "Banking conditions varied across the Districts, with some Districts noting soft or decreased overall loan demand; credit standards remained tight in most reporting Districts."

USA Jobs Nationwide
Not quite as positive as prior report. "Overall labor market conditions improved modestly across the Districts".

Supply Chain Disruption
Not mentioned in current report. Prior report stated, "Widespread supply disruptions - primarily related to the disaster in Japan - were reported to have substantially reduced the flow of new automobiles into dealers' inventories, which in turn held down sales in some Districts."

Economic Conditions Nationwide by Category Based on Information On or Before July 19, 2011:
Consumer Spending: "Retail sales reports generally indicated a continued rise in spending"
Automobile Sales"generally noted a decrease in recent sales"
Travel and Tourism: "increased across most Districts"
Residential Real Estate: "sluggish housing markets in the months since the homebuyer tax credit expired on April 30"
Commercial Real Estate: "continued to struggle in all twelve Districts"
Agriculture: mixed reports
Natural Resources: "activity in the energy sector increased"
Professional and Nonfinancial Services: "Activity in the services sector improved across most Districts"
Manufacturing activity: "Manufacturing activity continued to expand in most Districts"
Transportation activity: "The five Districts reporting on transportation noted increased activity."
Banking and Finance: "Reports on banking conditions were largely mixed across the Districts"
Employment"Labor market conditions improved gradually in several Districts."
Wages: "Wage pressures remained largely contained across most Districts"
Prices: "Prices of final goods and services were relatively stable in most Districts"


Economic Conditions By Federal Reserve District Based on Information On or Before July 19, 2011
Boston: activity continues to expand overall
New York: economy has shown further signs of strengthening
Philadelphia: economic activity has moved up slightly
Clevelandeconomic activity held steady
Richmond: economic activity mixed or modestly improving
Atlanta: pace of economic activity has slowed somewhat
Chicago: economic activity continued to improve, but rate of improvement slowed further
St. Louis: economic conditions continued to improve
Minneapoliseconomy grew slightly
Kansas City: economy held steady
Dallaseconomy expanded at a moderate pace
San Francisco: economic activity picked up slightly

Conclusion
This July 27, 2011 Beige Book, by district economic activity, is not as positive as the previous May 27, April 13 and March 2, 2011 reports. The March and April reports were the most positive post-recession reports so far. Overall, the District reports were not quite as positive. Atlanta reported "activity slowed somewhat". Two of the 12 districts (Cleveland and Kansas City) reported activity "held steady". Richmond reported "mixed or modestly improving". Philadelphia, Minneapolis, and San Francisco reported slight improvement. Chicago reported "rate of improvement slowed further". That leaves 5 districts where economic growth was increasing, compared to 5 in the prior report.


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