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Thursday, September 30, 2021

Q3 2021 Update: Unofficial Problem Bank list Decreased to 59 Institutions

by Calculated Risk on 9/30/2021 03:29:00 PM

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 September 27, 2021. Since the last update at the end of June 2021, the list decreased by six to 59 institutions after two additions and eight removals. Assets increased by $3.1 billion to $54.9 billion, with the change entirely from nearly a $5.0 billion increase from updated asset figures through June 30, 2021. A year ago, the list held 64 institutions with assets of $52.4 billion. Additions this month included The Anna-Jonesboro National Bank, Anna, IL ($268 million) and First Savanna Savings Bank, Savanna, IL ($11 million). Removals because of action termination included Patriot Bank, National Association, Stamford, CT ($963 million); CFSBank, Charleroi, PA ($545 million); Metropolitan Capital Bank & Trust, Chicago, IL ($245 million); South LaFourche Bank & Trust Company, Larose, LA ($145 million); AllNations Bank, Calumet, OK ($48 million); and Sainte Marie State Bank, Sainte Marie, IL ($16 million). Removals through unassisted merger included Jackson County Bank, Black River Falls, WI ($205 million) and Towanda State Bank, Towanda, KS ($11 million). On September 8, 2021, the FDIC released second quarter results and provided an update on the Official Problem Bank List. In that release, the FDIC said there were 51 institutions with assets of $46 billion on the official list, down from the 54 institutions with assets of $55 billion in the first quarter of 2021.

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, 1,779 institutions have appeared on a weekly or monthly list since then. Only 3.3 percent of the banks that have appeared on a list remain today as 1,720 institutions have transitioned through the list. Departure methods include 1,014 action terminations, 411 failures, 276 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 1,779 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.