Sunday, January 03, 2021

Q4 2020 Update: Unofficial Problem Bank list Increased to 65 Institutions

by Calculated Risk on 1/03/2021 10:16:00 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 only, 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 Q4 2020.

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

Update on the Unofficial Problem Bank List through December 31, 2020. Since the last update at the end of October 2020, the list increased by one to 65 institutions after one addition. Assets increased by $1.5 billion to $58.2 billion, with $1.3 billion of the increase from updated asset figures through September 30, 2020. A year ago, the list held 67 institutions with assets of $51.1 billion. Added this month was the Business Bank of Texas, N.A., Austin, TX ($115 million). On December 1, 2020, the FDIC released third quarter results and an update on the Official Problem Bank List. In that release, the FDIC said there were 56 institutions with assets of $53.9 billion on the official list, up from 52 institutions with assets of $48.1 billion at the second quarter of 2020.

With the conclusion of the fourth quarter, we bring an updated transition matrix to detail how banks are transitioning off the Unofficial Problem Bank List. Since we first published the Unofficial Problem Bank List on August 7, 2009 with 389 institutions, 1,768 institutions have appeared on a weekly or monthly list since then. Only 3.7 percent of the banks that have appeared on a list remain today as 1,703 institutions have transitioned through the list. Departure methods include 1,003 action terminations, 411 failures, 270 mergers, and 19 voluntary liquidations. Of the 389 institutions on the first published list, only 3 or less than 1.0 percent, still have a troubled designation more than ten years later. The 411 failures represent 23.2 percent of the 1,768 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.