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Sunday, June 27, 2021

Q2 2021 Update: Unofficial Problem Bank list Decreased to 65 Institutions

by Calculated Risk on 6/27/2021 08:29:00 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 are the quarterly changes and a few comments from surferdude808:

Update on the Unofficial Problem Bank List through June 25, 2021. Since the last update at the end of March 2021, the list decreased by two to 65 institutions after four additions and six removals. Assets decreased by $7.2 billion to $51.8 billion, with the change entirely from a $7.2 billion decrease because of updated asset figures through March 31, 2021. During the first quarter of 2021, assets at Deutsche Bank Trust Company Americas declined by $7.6 billion.

A year ago, the list held 64 institutions with assets of $52.4.6 billion. Additions this month included The First National Bank of Albany, Albany, TX ($614 million); The City National Bank of Colorado City, Colorado City, TX ($180 million); Amory Federal Savings and Loan Association, Amory, MS ($79 million); and Transact Bank, National Association, Denver, CO ($21 million). Removals included Texas Champion Bank, Corpus Christi, TX ($393 million); The First National Bank and Trust Company of Vinita, Vinita, OK ($285 million); Business Bank of Texas, N.A., Austin, TX ($100 million); The Farmers Bank, Carnegie, OK ($76 million); The First National Bank of Tahoka, Tahoka, TX ($57 million); and State Bank of Nauvoo, Nauvoo, IL ($34 million).

On May 26, 2021, the FDIC released first quarter results and provided an update on the Official Problem Bank List. In that release, the FDIC said there were 54 institutions with assets of $55 billion on the official list, little changed from the 55 institutions with assets of $54 billion a quarter earlier.

With the conclusion of the second 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, 1,777 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 1,712 institutions have transitioned through the list. Departure methods include 1,008 action terminations, 411 failures, 274 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 23.1 percent of the 1,777 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.