In Depth Analysis: CalculatedRisk Newsletter on Real Estate (Ad Free) Read it here.

Friday, September 05, 2014

Unofficial Problem Bank list declines to 437 Institutions

by Calculated Risk on 9/05/2014 09:40:00 PM

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

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

Changes and comments from surferdude808:

The Federal Reserve terminating two actions were the only changes to the Unofficial Problem Bank List this week. After removal, the list holds 437 institutions with assets of $138.9 billion. A year ago, the list held 704 institutions with assets of $249.8 billion.

The Fed terminated actions against Commercial Bank, Harrogate, TN ($771 million) and American Bank, Bozeman, MT ($313 million). With these terminations, there are only 44 or 5.1 percent of the 858 banks supervised by the Fed operating under a formal enforcement action. In comparison, 6.2 percent of the state non-member banks supervised by the FDIC and 10.5 percent of the national banks supervised by the OCC are operating under a formal agreement.

Next week should be as quiet as the OCC will likely not provide an update on its enforcement action activity until September 19th.
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.