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Friday, August 26, 2016

August 2016: Unofficial Problem Bank list declines to 184 Institutions

by Calculated Risk on 8/26/2016 07:49:00 PM

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

Here is the unofficial problem bank list for August 2016.

Changes and comments from surferdude808:

Update on the Unofficial Problem Bank List for August 2016. During the month, the list declined by a net 12 institutions from 196 to 184. The net change of 12 institutions results from 14 removals and two additions. Assets dropped by $2.3 billion to an aggregate $56.5 billion, with $350 million of the decline coming from updated figures for the second quarter. A year ago, the list held 282 institutions with assets of $82.7 billion. This week, we were anticipating for the FDIC to release second quarter industry results and an update on the Official Problem Bank List, but that will have to wait until next month's update.

Actions have been terminated against SpiritBank, Tulsa, OK ($767 million); Tennessee State Bank, Pigeon Forge, TN ($641 million); First American State Bank, Greenwood Village, CO ($279 million); First National Bank, Camdenton, MO ($206 million); Cornerstone Bank, Overland Park, KS ($159 million); Friends Bank, New Smyrna Beach, FL ($104 million Ticker: FRIE); New Jersey Community Bank, Freehold, NJ ($103 million); GSL Savings Bank, Guttenberg, NJ ($91 million); RepublicBankAZ, N.A., Phoenix, AZ ($90 million); and FirstSecure Bank and Trust Co., Palos Hills, IL ($61 million).

Several banks merged to find their way off the problem bank list including Hopkins Federal Savings Bank, Baltimore, MD ($229 million); Harvard Savings Bank, Harvard, IL ($142 million); and The Bank of Oswego, Lake Oswego, OR ($61 million).

In the very hard to believe category, another bank headquartered in Georgia -- The Woodbury Banking Company, Woodbury, GA ($22 million) – found its way off the list through failure. Since the on-set of the Great Recession, 91 institutions headquartered in Georgia have failed. Of the 352 institutions open at year-end 2007 in Georgia, 91 or nearly 26 percent have failed, which is more than four times the national failure rate of 6 percent. It begs the question, how is it possible for there to be any banks left in the state that could fail.

Nationwide, since the on-set of the Great Recession, 533 institutions with assets of nearly $4 trillion have failed or received open-bank assistance. To put this in context, there were 8,544 institutions with assets of $13.1 trillion open in the U.S. at year-end 2007. Thus, 6.2 percent of institutions that held 30.3 percent of assets have failed or received open-bank assistance. In comparison, from 1980 through 1994, a period most consider as the most severe banking crisis since the Great Depression, 9.1% of institutions holding nearly 9.0% of assets failed or received open-bank assistance. So while the failure rate is lower in this episode, the share of assets is significantly greater. In the 1990s, the FDIC produced comprehensive research (“History of the Eighties”) to understand the causes of that crisis and identify ways to limit a future crisis. In response, FDIC Chairman Ricki Helfer spearheaded the formation of a new division to identify emerging systemic risks in the industry. In a 1996 speech, FDIC Chairman Helfer said “Neither we nor the industry we supervise can afford being so wrong again. The speed of technology and the rapid innovations in the marketplace mean that trouble could come quickly and in large numbers. We need to avoid being that wrong again by monitoring trends more broadly and taking specific action on the information we receive.” But somehow the FDIC’s division designed specifically to identify a widespread banking crisis got it way wrong. The lack of a major research effort by the FDIC to understand what went wrong in this current episode should be concerning to all industry observers.