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Sunday, July 31, 2011

Problem Banks: Comparing Official and Unofficial Counts

by Calculated Risk on 7/31/2011 03:41:00 PM

The following graph compares the weekly count of banks on the "unofficial problem bank list" with the number from the FDIC's Quarterly Banking Profile.

We started posting the Unofficial Problem Bank list in early August 2009 (credit: surferdude808).

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 (just the number of banks and assets every quarter). Note: Bank CAMELS ratings are also 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.

Problem Banks
The red dots are the number of banks on the official problem bank list as announced in the FDIC quarterly banking profile for Q1 2009 through Q1 2011. The dots are lagged one month because of the delay in announcing formal actions. Here is a graph from the FDIC back to Q1 2006.

On August 7, 2009, we listed 389 institutions with $276 billion in assets, and the list now has 995 institutions and $415 billion in assets.

For Q1 2011, the FDIC listed 888 institutions and $390 billion in assets (somewhat less than the unofficial list a month later). The FDIC Q2 2011 Quarterly Banking Profile will be released in a few weeks.

The unofficial count is close, but is somewhat higher than the official count.

Summary for Week ending July 29th
Schedule for Week of July 31st