Financial Controls: Bank Failure Friday: FDIC Closes 2 Banks (Charts) *2010 total now 151*

Saturday, December 11, 2010

Bank Failure Friday: FDIC Closes 2 Banks (Charts) 2010 total now 151

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2009 Bank Failures were 140, 2010 YTD is 151

Bank Failure Friday: FDIC Closes 2 Banks

The 2010 USA bank failures increased to 151 with the closure of the 2 banks listed below. The 151 closings in 2010 exceed the 2009 total of 140. Annual charts of USA bank closings and the FDIC problem bank list are below.

Total assets of the closed banks were $365,300,000 ($365.3 million), based on the September 30, 2010 call reports (regulatory financial statements). Both banks were merged via purchase and assumption agreements into other banks.

Overall, both were small community banks that were closed by the FDIC. Paramount Bank was the larger with $252.7 million in total assets.

#150 Paramount Bank, Farmington Hills, MI

As of September 30, 2010, Paramount Bank had approximately $252.7 million in total assets

Level One Bank, Farmington Hills, Michigan, to assume all of the deposits

Level One Bank agreed to purchase essentially all of the assets.

#151 Earthstar Bank, Southampton, PA

As of September 30, 2010, Earthstar Bank had approximately $112.6 million in total assets

Polonia Bank, Huntingdon Valley, Pennsylvania, to assume all of the deposits, except for certain out-of-state certificates of deposit

Polonia Bank agreed to purchase approximately $77.1 million of the failed bank's assets

The FDIC will retain most of the assets for later disposition

The next FDIC bank closings, if any, will most likely be announced on Friday, December 17.

USA Failed Banks by Year

Bank failures and therefore FDIC seizure of banks, has dramatically increased in 2009 and 2010 - a 2-year total of 289 compared to 0 in both 2005 and 2006. As noted below regarding total problem banks, bank failures in 2011 should continue at a high rate. Chart data, from 2005 through December 10, 2010, is:

Year, Total Bank Failures

2005: 0

2006: 0

2007: 3

2008: 25

2009: 140

12/10/10 YTD: 151

USA Problem Banks by Year

The FDIC problem bank list continues to rise, actually skyrocket, although the total assets of these banks has leveled off. From the year-ends 2005 through 2009, the total problem banks were 52, 50, 76, 252, and 702, respectively. Now at 9/30/2010 the total is an astronomical 860. The total assets of the problem banks from the year-ends 2005 through 2009 were $7B, $8B, $22B, $159B, and $403B, respectively. The total assets of the current (9/30/2010) 860 problem banks is $379B, indicating most of these are small to medium community banks. Chart data, from YE 2005 through the QE September 30, 2010, is:

Date, Total Problem Banks

12/31/2005: 52

12/31/2006: 50

12/31/2007: 76

12/31/2008: 252

12/31/2009: 702

9/30/2010: 860