Saturday, December 30, 2017

December 2017: Unofficial Problem Bank list declines to 103 Institutions, Q4 2017 Transition Matrix

by Bill McBride on 12/30/2017 01:59:00 PM

Note: Surferdude808 compiles an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for December 2017.

Here are the monthly changes and a few comments from surferdude808:

Update on the Unofficial Problem Bank List for December 2017. During the month, the list fell by five institutions to 103 after seven removals and two additions. Assets declined to $20.9 billion from $25.5 billion a month earlier. A year ago, the list held 169 institutions with assets of $45 billion.

This month, actions were terminated against The Brand Banking Company, Lawrenceville, GA ($2.3 billion); Los Alamos National Bank, Los Alamos, NM ($1.3 billion); PBI Bank, Louisville, KY ($961 million Ticker: PBIB); Brickyard Bank, Lincolnwood, IL ($106 million); American Metro Bank, Chicago, IL ($63 million); State Bank of Burnettsville, Burnettsville, IN ($39 million); and Eagle Community Bank, Maple Grove, MN ($23 million).

The two additions this month were South LaFourche Bank & Trust Company, Larose, LA ($157 million) and Bank of Hazlehurst, Hazlehurst, GA ($124 million). Concentrations of lending to commodities sectors are contributing factors in these banks problem status – oil & gas lending for South LaFourche Bank & Trust Company and agriculture lending for the Bank of Hazlehurst.

Two weeks ago, Washington Federal Bank for Savings, Chicago, IL ($166 million) became the eight failure of 2017; however, its failure did not cause a removal from the Unofficial Problem Bank List as the thrift had not been identified as a problem bank by the Office of the Comptroller of the Currency (OCC), its primary federal regulator. The FDIC estimated the thrift’s resolution cost at an extremely high 36.4 percent of the thrift’s assets.  It seems likely that a long running fraud happened at the thrift. The lack of fraud identification by the OCC and the high resolution cost would lead some observers to say there was negligent oversight by the primary regulator. The untimely failure left $11.6 million of uninsured deposits at risk of loss. Moreover, the thrift’s CEO & president committed suicide about two weeks before the failure. Perhaps better and timelier oversight would have limited the losses. See this media account for further details: Failed Bridegport bank sold, millions in uninsured deposits at risk

With it being the end of the third quarter, we bring an updated transition matrix to detail how banks are moving off the Unofficial Problem Bank List. Since the Unofficial Problem Bank List was first published on August 7, 2009 with 389 institutions, a total of 1,725 institutions have appeared on a weekly or monthly list at some point. Only 6.0 percent of the banks that have appeared on a list remain today. In all, there have been 1,622 institutions that have transitioned through the list. Departure methods include 946 action terminations, 406 failures, 253 mergers, and 17 voluntary liquidations. Of the 389 institutions on the first published list, only 9 or 2.3 percent still remain in a designated troubled status more than eight years later. The 406 failures represent 23.5 percent of the 1,725 institutions that have made an appearance on the list. This failure rate is well above the 10-12 percent rate frequently cited in media reports on the failure rate of banks on the FDIC's official list.
Unofficial Problem Bank List
Change Summary
  Number of InstitutionsAssets ($Thousands)
Start (8/7/2009)  389276,313,429
 
Subtractions     
  Action Terminated178(65,500,762)
  Unassisted Merger40(9,818,439)
  Voluntary Liquidation4(10,584,114)
  Failures158(186,397,337)
  Asset Change(256,902)
 
Still on List at 12/31/2017  93,755,875
 
Additions after
8/7/2009
  9417,175,536
 
End (12/31/2017)  10320,931,411
 
Intraperiod Removals1     
  Action Terminated768318,084,198
  Unassisted Merger21381,629,084
  Voluntary Liquidation132,515,855
  Failures248125,152,210
  Total1,242527,381,347
1Institution not on 8/7/2009 or 12/31/2017 list but appeared on a weekly list.