Financial Controls: Bank Failure Friday: FDIC Closes 1 Bank (Charts) *2011 total now 3*

Friday, January 14, 2011

Bank Failure Friday: FDIC Closes 1 Bank (Charts) 2011 total now 3

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2010 bank failures were 157, 2009 bank failures were 140

Bank Failure Friday: FDIC Closes 1 Bank

The FDIC closed 1 bank to increase the 2011 total to 3. Annual charts of USA bank seizures and the FDIC problem bank list are below. States where banks have been closed in 2011 are: Florida 1, Arizona 1, Georgia 1.

Total assets of the closed bank was $230,600,000 ($230.6 million), based on the September 30, 2010 call report (regulatory financial statements). The bank was merged via purchase and assumption agreement into another bank. Overall, Oglethorpe Bank was a small community bank.

#3 Oglethorpe Bank, Brunswick, GA
Bank of the Ozarks, Little Rock, Arkansas, to assume all of the deposits
As of September 30, 2010, Oglethorpe Bank had approximately $230.6 million in total assets
Bank of the Ozarks agreed to purchase essentially all of the assets.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $80.4 million

The next FDIC bank closings, if any, will most likely be announced on Friday, January 21. There will probably be several seizures in January after the halt for the Christmas and New Year's holidays. However, the 3 FDIC closures so far in 2011 are lower than we estimated.

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 actual data from 2005 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

2005: 0

2006: 0

2007: 3

2008: 25

2009: 140

2010: 157

2011: 3 actual, 78 estimated

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