by Calculated Risk on 8/30/2014 08:33:00 AM

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

Here is the unofficial problem bank list for Aug 29, 2014.

Changes and comments from surferdude808:

As expected, the FDIC released q2 industry results and provided an update on its latest enforcement action activity. The update led to six removals from the Unofficial Problem Bank List pushing the list total down to 439 institutions with assets of $139.97 billion. A year ago, the list held 707 institutions with assets of $250.6 billion.

Actions were terminated against First State Bank, Lonoke, AR ($256 million); The Business Bank, Appleton, WI ($253 million); First Financial Bank, Bessemer, AL ($183 million); Citizens State Bank, Hudson, WI ($146 million); South Georgia Bank, Glennville, GA ($125 million); and Golden State Bank, Upland, CA ($92 million Ticker: GSBB).

The FDIC told there are 354 institutions with assets of $110 billion on the Official Problem Bank List. Since their last update, the official list declined by 13.9 percent or 57 institutions, which the largest percentage decline over the past 13 quarters since the official list peaked at 888 institutions in the first quarter of 2011. The unofficial list fell by an identical 57 institutions since the last update from the FDIC on May 28, 2014.

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.

by Calculated Risk on 8/29/2014 08:22:00 PM

The August employment report will be released next Friday, September 5th and the consensus is that 210 thousand payroll jobs were added in August. Here are two forecasts:

From economist Kris Dawsey at Goldman Sachs:

Employment indicators have strengthened a bit in August vs. July, including the employment components of the available service sector surveys, the Conference Board labor differential, and initial jobless claims. Our preliminary forecast for August payroll job growth is 240k, with the important caveat that we have yet to receive a few key pieces of data for the month, most notably the ISM nonmanufacturing report. ... With no special factors on weather, strikes, unusual composition in the prior month, fiscal policy issues, or obvious seasonal distortions, we think the August report should be a fairly “clean read” on the likely-strengthening underlying trend. We also anticipate a downtick of one-tenth in the unemployment rate to 6.1%, matching its prior cycle low set two months back. Should the participation rate give up its small July increase, the risk is skewed toward 6.0%, in our view.

From Merrill Lynch:

The August employment report is likely to be healthy with nonfarm payroll growth of 245,000 and a decline in the unemployment rate to 6.1% from 6.2%. ... Early indicators of the labor market have all been encouraging with the conference board labor differential narrowing to -12.4% as an increase in respondents believe jobs have become plentiful. Initial jobless claims have remained low, hovering around 300,000, consistent with little firing. Moreover, manufacturing job growth should be strong as suggested by healthy surveys and recent industrial production data.

We expect the unemployment rate to fall back to 6.1%, reversing the increase last month.

by Calculated Risk on 8/29/2014 04:10:00 PM

Fannie Mae reported today that the Single-Family Serious Delinquency rate declined in July to 2.00% from 2.05% in June. The serious delinquency rate is down from 2.70% in July 2013, and this is the lowest level since October 2008.

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

Earlier this week, Freddie Mac reported that the Single-Family serious delinquency rate declined in July to 2.02% from 2.07% in June. Freddie's rate is down from 2.70% in July 2013, and is at the lowest level since January 2009. Freddie's serious delinquency rate peaked in February 2010 at 4.20%.

Both Fannie and Freddie's serious delinquency rates will probably be below 2% in August.

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

Click on graph for larger image

The Fannie Mae serious delinquency rate has fallen 0.70 percentage points over the last year, and at that pace the serious delinquency rate will be under 1% in early 2016.

Note: The "normal" serious delinquency rate is under 1%.

Maybe serious delinquencies will be close to normal in 2016.

by Calculated Risk on 8/29/2014 02:06:00 PM

From HotelNewsNow.com: STR: US results for week ending 23 August

The U.S. hotel industry recorded positive results in the three key performance measurements during the week of 17-23 August 2014, according to data from STR.

In year-over-year measurements, the industry’s occupancy rate rose 5.0 percent to 70.6 percent. Average daily rate increased 5.4 percent to finish the week at US$116.13. Revenue per available room for the week was up 10.7 percent to finish at US$82.04.
emphasis added

Note: ADR: Average Daily Rate, RevPAR: Revenue per Available Room.

The occupancy rate has peaked for the year.

The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Click on graph for larger image.

The red line is for 2014, blue is the median, and black is for 2009 - the worst year since the Great Depression for hotels.  Purple is for 2000.

The 4-week average of the occupancy rate is solidly above the median for 2000-2007, and is slightly above the level for the same week in 2000 (the previous high). 

Right now it looks like 2014 will be the best year since 2000 for hotels.   Since it takes some time to plan and build hotels, I expect 2015 will be a record year for hotel occupancy. Note: Smith Travel analysts say that supply growth will pickup next year, but remain relatively slow, "hotel supply growth in the United States is forecast to be 1% this year and 1.3% in 2015".

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 8/29/2014 09:59:00 AM

Click on graph for larger image.

The final Reuters / University of Michigan consumer sentiment index for August was at 82.5, up from the preliminary reading of 79.2, and up from 81.8 in July.

This was above the consensus forecast of 80.3. Sentiment has generally been improving following the recession - with plenty of ups and downs - and a big spike down when Congress threatened to "not pay the bills" in 2011.