Saturday, April 30, 2016

April 2016: Unofficial Problem Bank list declines to 214 Institutions

by Bill McBride on 4/30/2016 08:09:00 AM

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for April 2016.

Changes and comments from surferdude808:

Update on the Unofficial Problem Bank List for April 2016. During the month, the list fell from 222 institutions to 214 after nine removals and one addition. Assets dropped by $2.2 billion to an aggregate $62.4 billion. A year ago, the list held 342 institutions with assets of $105.1 billion.

Actions have been terminated against U.S. Century Bank, Doral, FL ($910 million); Community Bank of Florida, Inc., Homestead, FL ($485 million); Florida Capital Bank, National Association, Jacksonville, FL ($341 million); Advantage Bank, Loveland, CO ($265 million); Transcapital Bank, Sunrise, FL ($169 million); Mountain Valley Bank, Dunlap, TN ($96 million); Bank of Newington, Newington, GA ($87 million); and Rocky Mountain Bank & Trust, Florence, CO ($65 million).

Trust Company Bank, Memphis, TN ($21 million) exited the list via failure becoming the second bank to fail in 2016.

Added this month was First Community National Bank, Cuba, MO ($207 million). Also, the FDIC issued a Prompt Corrective Action order against Proficio Bank, Cottonwood Heights, UT ($110 million), which has been on the list since March 2014.

Friday, April 29, 2016

Fannie Mae: Mortgage Serious Delinquency rate declined in March, Lowest since June 2008

by Bill McBride on 4/29/2016 04:07:00 PM

Fannie Mae reported today that the Single-Family Serious Delinquency rate declined in March to 1.44%, down from 1.52% in February. The serious delinquency rate is down from 1.78% in March 2015.

This is the lowest rate since June 2008.

The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.

Note: These are mortgage loans that are "three monthly payments or more past due or in foreclosure".

Note: Freddie Mac has not reported for March yet.

Fannie Freddie Seriously Delinquent RateClick on graph for larger image

The Fannie Mae serious delinquency rate has only fallen 0.34 percentage points over the last year - the pace of improvement has slowed - and at that pace the serious delinquency rate will not be below 1% until 2017.

The "normal" serious delinquency rate is under 1%, so maybe Fannie Mae serious delinquencies will be close to normal some time in late 2017.  This elevated delinquency rate is mostly related to older loans - the lenders are still working through the backlog.

Lawler:Updated Table of Distressed Sales and All Cash Sales for Selected Cities in March

by Bill McBride on 4/29/2016 12:26:00 PM

Economist Tom Lawler sent me an updated table below of short sales, foreclosures and all cash sales for selected cities in March.

On distressed: Total "distressed" share is down in all of these markets.

Short sales and foreclosures are down in all of these areas.

The All Cash Share (last two columns) is mostly declining year-over-year. As investors continue to pull back, the share of all cash buyers continues to decline.

  Short Sales ShareForeclosure Sales Share Total "Distressed" ShareAll Cash Share
Las Vegas5.9%8.3%7.1%9.3%13.0%17.6%27.7%32.4%
So. California*3.1%4.0%3.9%5.1%7.0%9.1%22.7%25.2%
Bay Area CA*2.2%2.8%2.5%2.9%4.7%5.7%24.0%24.3%
San Bernardino2.4%4.1%3.2%5.2%5.6%9.3%20.7%21.8%
Florida SF2.7%3.9%12.0%21.0%14.7%25.0%32.0%38.8%
Florida C/TH1.6%2.5%9.5%15.3%11.1%17.8%62.0%66.2%
Miami MSA SF3.9%6.6%13.9%19.6%17.7%26.2%32.9%40.0%
Miami MSA C/TH1.9%3.0%12.6%19.1%14.5%22.1%64.2%69.6%
Spokane        11.5%18.1%   
Chicago (city)        19.6%21.9%   
Hampton Roads        18.2%22.7%   
Spokane        11.5%18.1%   
Northeast Florida        19.9%30.9%   
Spokane        11.5%18.1%   
Rhode Island        14.0%17.3%   
Toledo            30.6%32.7%
Tucson            25.8%32.0%
Knoxville            22.1%22.9%
Peoria            21.6%23.7%
Georgia***            21.0%23.2%
Omaha            16.3%16.1%
Pensacola        17.0%28.0%28.3%33.4%
Richmond VA MSA    9.8%11.9%    17.3%18.0%
Memphis****    15.0%15.3%    32.3%37.6%
Springfield IL**    11.2%12.1%    18.1%N.A.
*share of existing home sales, based on property records
**Single Family Only

Chicago PMI declines in April, Final April Consumer Sentiment at 89.0

by Bill McBride on 4/29/2016 10:08:00 AM

Chicago PMI: April Chicago Business Barometer Down 3.2 Points to 50.4

The Chicago Business Barometer decreased 3.2 points to 50.4 in April from 53.6 in March led by a fall in New Orders and a sharp drop in Order Backlogs. It marks a slow start to the second quarter, with most measures down from levels seen a year earlier.
The decline in the Barometer was led by a fall in New Orders, leaving it at the lowest level since December 2015.
Chief Economist of MNI Indicators Philip Uglow said, “This was a disappointing start to the second quarter, with the Barometer barely above the neutral 50 mark in April. Against a backdrop of softer domestic demand and the slowdown abroad, panellists are now more worried about the impact a rate hike might have on business than they were at the same time last year.”
emphasis added
This was below the consensus forecast of 53.4.

Consumer Sentiment
Click on graph for larger image.

The final University of Michigan consumer sentiment index for April was at 89.0, down from 91.0 in March:
"Consumer sentiment continued its slow decline in late April due to weakening expectations for future growth, although their views of current economic conditions remained positive. All of the April decline was in the Expectations component, which fell by 4.8% from one month ago and by 12.6% from a year ago and by 14.7% from its January 2015 peak. The retreat from the 2015 peaks was evident across a wide range of expectations about prospects for the national economy. The size of the decline, while troublesome, is still far short of indicating an impending recession. The decline is all the more remarkable given that consumers' assessments of current economic conditions, including their personal finance, have remained largely unchanged at very positive levels during the past year."
emphasis added

Personal Income increased 0.4% in March, Spending increased 0.1%

by Bill McBride on 4/29/2016 08:33:00 AM

The BEA released the Personal Income and Outlays report for March:

Personal income increased $57.4 billion, or 0.4 percent, ... according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $12.8 billion, or 0.1 percent.
Real PCE -- PCE adjusted to remove price changes -- increased less than 0.1 percent in March, compared with an increase of 0.3 percent in February. ... The price index for PCE increased 0.1 percent in March, in contrast to a decrease of 0.1 percent in February. The PCE price index, excluding food and energy, increased 0.1 percent, compared with an increase of 0.2 percent.

The March PCE price index increased 0.8 percent from March a year ago. The March PCE price index, excluding food and energy, increased 1.6 percent from March a year ago.
On inflation: The PCE price index increased 0.8 percent year-over-year due to the sharp decline in oil prices. The core PCE price index (excluding food and energy) increased 1.6 percent year-over-year in March (slightly lower than in February).

Thursday, April 28, 2016

Friday: Personal Income and Outlays, Chicago PMI, Consumer Sentiment

by Bill McBride on 4/28/2016 09:17:00 PM

From Merrill Lynch on April NFP:

Nonfarm payroll growth likely posted a solid 200,000 in April, driven once more by service-providing firms. Of this, government hiring likely contributed 5,000, which is a more modest clip than the 20,000 pop in March. ...

We look for the unemployment rate to hold at 5.0%, assuming the participation rate holds steady. However, there is a risk it heads higher, following the recent trend, which could boost the unemployment rate. The participation rate has seen an impressive recovery since September of last year, rising to 63% from 62.4%. A robust labor market has attracted many workers back into the labor market, and it is more likely than not that this trend generally continues in the near term. However, increased labor supply also means delayed wage pressures: we are looking for only 0.2% monthly growth in average hourly earnings. This would leave the yoy growth rate unchanged at 2.3%, though this is still greater than the 2% pace seen earlier in this cycle. ...
• At 8:30 AM ET, Personal Income and Outlays for March. The consensus is for a 0.3% increase in personal income, and for a 0.2% increase in personal spending. And for the Core PCE price index to increase 0.1%.

• At 9:45 AM, Chicago Purchasing Managers Index for April. The consensus is for a reading of 53.4, down from 53.6 in March.

• At 10:00 AM, University of Michigan's Consumer sentiment index (final for April). The consensus is for a reading of 90.4, up from the preliminary reading 89.7.

HVS: Q1 2016 Homeownership and Vacancy Rates

by Bill McBride on 4/28/2016 04:45:00 PM

Earlier today, the Census Bureau released the Residential Vacancies and Homeownership report for Q1 2016.

This report is frequently mentioned by analysts and the media to track household formation, the homeownership rate, and the homeowner and rental vacancy rates.  However, there are serious questions about the accuracy of this survey.

This survey might show the trend, but I wouldn't rely on the absolute numbers.  The Census Bureau is investigating the differences between the HVS, ACS and decennial Census, and analysts probably shouldn't use the HVS to estimate the excess vacant supply or household formation, or rely on the homeownership rate, except as a guide to the trend.

Homeownership Rate Click on graph for larger image.

The Red dots are the decennial Census homeownership rates for April 1st 1990, 2000 and 2010. The HVS homeownership rate decreased to 63.5% in Q1, from 63.8% in Q4.

I'd put more weight on the decennial Census numbers - and given changing demographics, the homeownership rate is probably close to a bottom.

Homeowner Vacancy RateThe HVS homeowner vacancy declined to 1.7% in Q1. 

Once again - this probably shows the general trend, but I wouldn't rely on the absolute numbers.

Rental Vacancy RateThe rental vacancy rate was unchanged at 7.0% in Q1.

I think the Reis quarterly survey (large apartment owners only in selected cities) is a much better measure of the rental vacancy rate, but this does suggest the rental vacancy rate might have bottomed.

The quarterly HVS is the most timely survey on households, but there are many questions about the accuracy of this survey.

Overall this suggests that vacancies and the homeownership rate are probably close to the bottom.

Q1 GDP: Investment

by Bill McBride on 4/28/2016 01:45:00 PM

The graph below shows the contribution to GDP from residential investment, equipment and software, and nonresidential structures (3 quarter trailing average). This is important to follow because residential investment tends to lead the economy, equipment and software is generally coincident, and nonresidential structure investment trails the economy.

In the graph, red is residential, green is equipment and software, and blue is investment in non-residential structures. So the usual pattern - both into and out of recessions is - red, green, blue.

The dashed gray line is the contribution from the change in private inventories.

Investment ContributionsClick on graph for larger image.

Residential investment (RI) increased at a 14.8% annual rate in Q1.  Equipment investment decreased at a 8.6% annual rate, and investment in non-residential structures decreased at a 10.7% annual rate.   On a 3 quarter trailing average basis, RI (red) is positive,  equipment (green) is close to zero, and nonresidential structures (blue) is negative.

Nonresidential investment in structures typically lags the recovery, however investment in energy and power provided a boost early in this recovery - and is now causing a decline.  Other areas of nonresidential are now increasing significantly.  I'll post more on the components of non-residential investment once the supplemental data is released.

I expect investment to be solid going forward (except for energy and power), and for the economy to continue to grow at a steady pace.

Residential Investment
The second graph shows residential investment as a percent of GDP.

Residential Investment as a percent of GDP has been increasing, but is only just above the bottom of the previous recessions - and I expect RI to continue to increase for the next few years.

I'll break down Residential Investment into components after the GDP details are released.

Note: Residential investment (RI) includes new single family structures, multifamily structures, home improvement, broker's commissions, and a few minor categories.

non-Residential InvestmentThe third graph shows non-residential investment in structures, equipment and "intellectual property products".  Investment in equipment - as a percent of GDP - has been moving sideways.  Other investment is generally trending up as a percent of GDP, except for nonresidential structures due to less investment in energy and power.

Kansas City Fed: Regional Manufacturing Activity "declined modestly" in April

by Bill McBride on 4/28/2016 11:00:00 AM

From the Kansas City Fed: Tenth District Manufacturing Activity Declined Modestly

The Federal Reserve Bank of Kansas City released the April Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity declined modestly.

Factories reported a modest decline in activity in April, but expectations for future activity increased to their highest reading of the year”, said Wilkerson.
Tenth District manufacturing activity continued to decline modestly, while producers’ expectations for future activity improved considerably. Most price indexes moved slightly higher in April, but remained at low levels.

The month-over-month composite index was -4 in April, up from -6 in March and -12 in February ...
emphasis added
The Kansas City region was hit hard by lower oil prices and the stronger dollar, but the impact is fading.

This was the last of the regional Fed surveys for April.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Fed Manufacturing Surveys and ISM PMI Click on graph for larger image.

The New York and Philly Fed surveys are averaged together (yellow, through April), and five Fed surveys are averaged (blue, through April) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through March (right axis).

It seems likely the ISM manufacturing index will show slow expansion again in April.

Weekly Initial Unemployment Claims increase to 257,000, Lowest 4-Week Average since 1973

by Bill McBride on 4/28/2016 08:45:00 AM

The DOL reported:

In the week ending April 23, the advance figure for seasonally adjusted initial claims was 257,000, an increase of 9,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 247,000 to 248,000. The 4-week moving average was 256,000, a decrease of 4,750 from the previous week's revised average. This is the lowest level for this average since December 8, 1973 when it was 252,250. The previous week's average was revised up by 250 from 260,500 to 260,750.

There were no special factors impacting this week's initial claims. This marks 60 consecutive weeks of initial claims below 300,000, the longest streak since 1973.
The previous week was revised up by 1,000.

Note: The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 256,000.

This is the lowest level for the four-week average since 1973.

This was below the consensus forecast of 260,000. The low level of the 4-week average suggests few layoffs.