Sunday, March 29, 2020

March 2020: Unofficial Problem Bank list Increased to 65 Institutions

by Calculated Risk on 3/29/2020 09:57:00 AM

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.

DISCLAIMER: This is an unofficial list, the information is from public sources and while deemed to be reliable is not guaranteed. No warranty or representation, expressed or implied, is made as to the accuracy of the information contained herein and same is subject to errors and omissions. This is not intended as investment advice. Please contact CR with any errors.

Here is the unofficial problem bank list for March 2020.

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

Update on the Unofficial Problem Bank List for March 2020. During the month, the list increased by two to 65 institutions two additions. Assets increased by $93 million to $48.6 billion. A year ago, the list held 72 institutions with assets of $51.6 billion. Added this month was Mutual Savings Bank, Hartsville, SC ($52 million) and Ford County State Bank, Spearville, KS ($41 million). Also, the FDIC updated actions against Southwest Capital Bank, Albuquerque, NM ($339 million) and California Business Bank, Irvine, CA ($83 million).

With the conclusion of the first quarter, we bring an updated transition matrix to detail how banks are transitioning off the Unofficial Problem Bank List. Since the Unofficial Problem Bank List was first published on August 7, 2009 with 389 institutions, 1,760 institutions have appeared on a weekly or monthly list since the start of publication. Only 3.7 percent of the banks that have appeared on a list remain today as 1,695 institutions have transitioned through the list. Departure methods include 1,000 action terminations, 409 failures, 267 mergers, and 19 voluntary liquidations. Of the 389 institutions on the first published list, only 5 or 1.3 percent, are still designated as being in a troubled status more than ten years later. The 409 failures represent 23.2 percent of the 1,760 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.
The first unofficial problem bank list was published in August 2009 with 389 institutions. The number of unofficial problem banks grew quickly and peaked at 1,003 institutions in July, 2011 - and has steadily declined since then to well below 100 institutions.