Saturday, February 09, 2013

Unofficial Problem Bank list declines to 820 Institutions

by Bill McBride on 2/09/2013 04:55:00 PM

Note: The first unofficial problem bank list was published in August 2009 with 389 institutions. The number of unofficial problem banks grew steadily and peaked at 1,002 institutions on June 10, 2011. The list has been declining since then.

Here is the unofficial problem bank list for Feb 8, 2013.

Changes and comments from surferdude808:

Two publicly traded organizations announced this week the termination of enforcement actions issued by the FDIC. The removals leave the Unofficial Problem Bank list at 820 institutions with assets of $305.0 billion. A year ago, the list held 958 institutions with assets of $ 389.6 billion.

The removals were The Home Savings and Loan Company, Youngstown, OH ($1.8 billion Ticker: UCFC) and The Palmetto Bank, Greenville, SC ($1.1 billion Ticker: PLMT).

On Thursday, SNL securities published an interesting article “Private capital investments in failed banks rare, but cheaper for FDIC” that found private capital investors acquired 40 failed banks from the FDIC since it issued a policy statement on private capital acquiring failed banks on August 26, 2009. While private capital deals only cost the FDIC a median 25 cents on the dollar compared to 27 cents with existing bank buyers, private investor only acquired 11 percent of the 361 failures since the policy statement issuance. Thus, private capital has not been that successful in acquiring many failed banks from the FDIC.

Next week, we anticipate for the OCC to release its enforcement action activity through mid-January 2013.
CR Note: The FDIC's official problem bank list is comprised of banks with a CAMELS rating of 4 or 5, and the list is not made public. (CAMELS is the FDIC rating system, and stands for Capital adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to market risk. The scale is from 1 to 5, with 1 being the strongest.)

As a substitute for the CAMELS ratings, surferdude808 is using publicly announced formal enforcement actions, and also media reports and company announcements that suggest to us an enforcement action is likely, to compile a list of possible problem banks in the public interest.

When the list was increasing, the official and "unofficial" counts were about the same. Now with the number of problem banks declining, the unofficial list is lagging the official list. This probably means regulators are changing the CAMELS rating on some banks before terminating the formal enforcement actions.

Earlier:
Summary for Week Ending Feb 8th
Schedule for Week of Feb 10th

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