Saturday, December 06, 2014

Unofficial Problem Bank list declines to 407 Institutions

by Bill McBride on 12/06/2014 08:01:00 AM

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

Here is the unofficial problem bank list for Dec 5, 2014.

Changes and comments from surferdude808:

Very quiet week for changes to the Unofficial Problem Bank List as there was only one removal that pushed the list total down to 407 institutions with assets of $124.0 billion. A year ago, the list held 643 institutions with assets of $219.8 billion.

The Federal Reserve terminated the Written Agreement issued against United Security Bank, Fresno, CA ($693 million Ticker: UBFO). We expect for minimal changes to the list next week.
CR Note: The first unofficial problem bank list was published in August 2009 with 389 institutions. The list peaked at 1,002 institutions on June 10, 2011, and is now down to 407.

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.