by Calculated Risk on 8/14/2009 03:00:00 PM

This is an unofficial list of Problem Banks. (Note: Reports are Colonial will be seized this afternoon)

The list is compiled from regulator press releases or from public news sources (see Enforcement Action Type link for source). The FDIC data is released monthly with a delay. The Fed and OTC data is more timely, and the OCC a little lagged. Credit: surferdude808.

Changes from last week (from surferdude808): The institution count is higher by three this week, with five additions and two deletions. Assets are $6.3b higher. About 60% of the increase in assets is due to the addition of Riverside National Bank of Florida, Fort Pierce, FL, which actually was placed under formal action during 2008q4 but it was not included in last week's list.

The other four additions included 2 institutions headquartered in Georgia, and one each in Florida and Kansas. The Georgia banks are based in metro Atlanta, where commercial real estate or construction & developement lending continue to weigh heavilly on the sector. Since August 2008, 21 banks in Georgia have failed.

There are 32 georgia-based institutions on this week's problem bank list, which represents the largest share (8.2%) of this week's total. The next highest shares include california at 7.7% and florida at 7.1%. The two removals from the problem bank list this week were the failures -- Community First Bank, Prineville, OR and Community National Bank of Sarasota, Venice, FL -- that closed on friday, August 7th.

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.

See description below table for Class and Cert (and a link to FDIC ID system).

The table is wide - use scroll bars to see all information!

NOTE: Columns are sortable - click on column header (Assets, State, Bank Name, Date, etc.)





Class: from FDIC

The FDIC assigns classification codes indicating an institution's charter type (commercial bank, savings bank, or savings association), its chartering agent (state or federal government), its Federal Reserve membership status (member or nonmember), and its primary federal regulator (state-chartered institutions are subject to both federal and state supervision). These codes are:

N National chartered commercial bank supervised by the Office of the Comptroller of the Currency

SM State charter Fed member commercial bank supervised by the Federal Reserve

NM State charter Fed nonmember commercial bank supervised by the FDIC

SA State or federal charter savings association supervised by the Office of Thrift Supervision

SB State charter savings bank supervised by the FDIC

Cert: This is the certificate number assigned by the FDIC used to identify institutions and for the issuance of insurance certificates. You can enter the certificate number in the Institution Directory (ID) system "which will provide the last demographic and financial data filed by the selected institution".

by Calculated Risk on 8/14/2009 01:03:00 PM

Yesterday I posted some data from Campbell Communications (National Data: Distressed Sales and Types of Buyers)

Here is a repeat of the graph by buyer type:

According to the Campbell survey first-time buyers accounted for 43% of sales in Q2 (investors another 29%).

Source: Summary Report--Real Estate Agents Report on Home Purchases and Mortgages, Campbell Communications, June 2009 (excerpted with permission)

These numbers are higher than the numbers reported by NAR for Q2:

"An NAR practitioner survey in June showed first-time buyers accounted for 29 percent of transactions, unchanged from May ..."

However I believe the Campbell numbers are closer to actual.

I've talked with several people - and there is a buying frenzy right now. First-time homebuyers, especially those with a limited downpayment, are desperate.

From the Chicago Tribune: First-time buyers race to beat credit deadline

With a growing sense of urgency, first-time buyers are searching for homes, worried that time is running out on an $8,000 federal tax credit.

Real estate agents say they're seeing a surge of first-timers who want to close on a property by Nov. 30, the deadline for the credit. The rush has set off bidding wars and stirred up a normally quiet August market.

"We're inundated," said Paula Clark, an agent with Coldwell Banker.

To meet the Nov. 30 deadline, buyers need to have a contract by around Sept. 30, because inspections, mortgage approvals and other details typically take about two months.

Also from Reuters: Race is on as U.S. home buyer tax credit nears end

"I am willing to settle for something" to finish buying quickly, said 20-year old Kielar, who works at the Denver County Jail, and is a part-time student. The tax credit carrot "is speeding up the process," she said, adding that "$8,000 could help remodel the house, redo carpets and cabinets."

For loans backed by the Federal Housing Administration (FHA), which require a minimum 3.5 percent downpayment, the $8,000 can be also be applied upfront toward the purchase rather than later on tax returns like other mortgages.

In addition $8,000 to the Federal tax credit, there are some state programs, as a nexample from Newsday.com: NYS rolls out tax credit for first-time home buyers - but most of the frenzy is being driven by the Federal Tax credit.

A few key points:

This has boosted existing home sales, and will continue to boost existing home sales (reported at close of escrow) through November.

This will put upward price pressure on low-to-mid level homes during this period. This is the also the target price range for most cash-flow investors.

At the same time, the foreclosure moratoriums and modification programs have limited supply - especially in the low-to-mid priced areas.

This level of first-time buyers is completely unsustainable - even if another tax credit is enacted. There was significant pent up demand from potential first-time buyers who were priced out of the market in 2004-2006, and then were afraid to buy as prices fell. But demand from these buyers will wane.

This doesn't help the mid-to-high priced market because a large percentage of sales are distressed (REOs or short sales), and there is no seller to move up.

Expect a surge in existing home sales (and some new home sales) over the next few months. Expect prices at the low end to rise (simple supply and demand). Expect all kinds of reports that the bottom has been reached.

Expect the frenzy to end ...

by Calculated Risk on 8/14/2009 11:23:00 AM

Update: BB&T Said to Be Taking Colonial in Year’s Biggest Bank Failure

BB&T Corp. ... is taking over offices and deposits of Colonial BancGroup Inc., according to a person familiar with the matter.

Colonial, Alabama’s second-largest bank, is being closed by regulators today, the person said, becoming the largest U.S. bank failure of 2009 ...

A call to Colonial spokeswoman Merrie Tolbert wasn’t immediately returned. “The FDIC does not comment on open institutions,” agency spokesman David Barr said in an e-mail.

by Calculated Risk on 8/14/2009 10:55:00 AM

From Bloomberg: Toxic Loans Topping 5% May Push 150 Banks to Point of No Return (ht Brian, Mike, James)

More than 150 publicly traded U.S. lenders own nonperforming loans that equal 5 percent or more of their holdings, a level that former regulators say can wipe out a bank’s equity and threaten its survival.

The number of banks exceeding the threshold more than doubled in the year through June, according to data compiled by Bloomberg, as real estate and credit-card defaults surged. Almost 300 reported 3 percent or more of their loans were nonperforming ...

Missed payments by consumers, builders and small businesses pushed 72 lenders into failure this year, the most since 1992. More collapses may lie ahead as the recession causes increased defaults and swells the confidential U.S. list of “problem banks,” which stood at 305 in the first quarter. ...

Chicago- based Corus Bankshares Inc., Austin-based Guaranty Financial Group Inc. and Colonial BancGroup Inc. in Montgomery, Alabama, each with ratios of at least 6.5 percent, said in the past month that they expect to be shut.

Excluding the stress-test list, banks with nonperformers above 5 percent had combined deposits of $193 billion, according to Bloomberg data. That’s almost 15 times the size of the FDIC’s deposit insurance fund at the end of the first quarter.

From Floyd Norris at the NY Times: Teetering on Failure, but Meeting Standards

It appears that Colonial BancGroup, which Mr. Lowder started with the acquisition of a small bank in Alabama in 1981, may soon become the largest bank failure of 2009, with more than $25 billion in assets.
...
If Colonial does fail, it will call into question both the effectiveness of the regulation of rapidly growing banks, and of the capital standards regulators use. Even now, Colonial claims to be adequately capitalized. As recently as March, it met the criteria for being “well capitalized,” the highest designation.

How could a bank be well capitalized and facing government orders to find more capital? One reason is that the government’s rules allow banks to ignore the declines in market value of many loans and other assets in computing how much capital they have. Had Colonial been forced to count the losses it had already acknowledged, its capital situation would have appeared dire earlier than it did.
...
By the end of 2006, 41 percent of Colonial’s $15 billion in lending was for construction, with most of that in Florida. An additional 28 percent was in commercial real estate, with Florida again dominating the book of loans.

As I noted last night, court records indicate the FDIC issued a new Cease & Desist order to Colonial on August 11th. Among other restrictions, this new order required pre-approval of all "material transactions" - very rare.

by Calculated Risk on 8/14/2009 09:15:00 AM

The Federal Reserve reported:

Industrial production increased 0.5 percent in July. Aside from a hurricane-related rebound in October 2008, the gain in July marked the first monthly increase since December 2007. Manufacturing output advanced 1.0 percent in July; most of the increase was due to a jump in motor vehicle assemblies from an annual rate of 4.1 million units in June to 5.9 million units in July. Excluding motor vehicles and parts, manufacturing production edged up 0.2 percent. The output of utilities fell 2.4 percent, reflecting unseasonably mild temperatures in July, and the output of mines increased 0.8 percent. At 96.0 percent of its 2002 average, total industrial production was 13.1 percent below its level of a year earlier. In July, the capacity utilization rate for total industry edged up to 68.5 percent, a level 12.4 percentage points below its 1972-2008 average.
emphasis added

Click on graph for larger image in new window.

This graph shows Capacity Utilization. This series is up slightly from the record low set in June (the series starts in 1967). Capacity Utilization had decreased in 17 of the previous 18 months.

Note: y-axis doesn't start at zero to better show the change.

Much of the increase in industrial production was auto related. Also, there is little reason for investment in new production facilities until capacity utilization recovers.

by Calculated Risk on 8/14/2009 08:34:00 AM

From the BLS: Consumer Price Index Summary

On a seasonally adjusted basis, the CPI-U was unchanged in July following a 0.7 percent increase in June ... The index for all items less food and energy [Core] rose 0.1 percent in July following a 0.2 percent increase in June.
...
The index for shelter fell 0.2 percent and the household energy index declined 0.3 percent. Within the shelter group, the indexes for rent and owners' equivalent rent were both unchanged in July after rising 0.1 percent in June. The index for lodging away from home turned down in July, falling 2.1 percent after increasing 0.3 percent in June, and has fallen 8.9 percent over the past 12 months.

Not only is the index for lodging off sharply, but the BLS measures for rent declined slightly (rounded to flat). Owners' equivalent rent (OER) is the largest component of CPI, and even though rents have been falling in most areas, OER was still increasing. The decline in July OER was very small, but it is a start.

Over the last 12 months, CPI has fallen 2.1 percent, the largest 12 month decline since 1950.

by Calculated Risk on 8/13/2009 10:36:00 PM

Form Bloomberg: Bank of America Wins Order on Colonial Bank Assets

U.S. District Judge Adalberto Jordan in Miami issued the order after Bank of America sued Colonial yesterday in Miami, claiming Colonial is holding the cash and loans as a custodian for Ocala Funding Inc. The order notes that the suit relates to more than 6,000 mortgages worth more than $1 billion.

“To the extent that the interests of the public are implicated in this case, they weigh in favor of requiring Colonial to honor its contractual obligations and avoiding what would amount to a $1 billion heist,” the judge said in an order posted online today.

In another action, from Ocala.com: Judge ties up over $4 million in Taylor Bean account

[Henley Holdings LLC] filed suit in the U.S. District Court for the Middle District of Florida, accusing Taylor Bean of breach of contract. It also sought temporary injunctive relief, asking the court to force Taylor Bean to immediately deposit the $4.7 million into an account at a separate bank.

Henley was worried because Taylor Bean had essentially shut its doors, and because if Colonial failed, only $250,000 of Henley money would be covered by FDIC insurance.

That same day, a federal judge granted Henley's request and ordered at least $4.4 million of the company's funds put into an interest-bearing account within the court registry.

Court records show that Taylor Bean turned over that amount the next day.

What is interesting about the second action is that apparently Colonial Bank disclosed a new FDIC Cease & Desist order dated Aug. 11th. I'm told the FDIC order instructs Colonial to obtain FDIC approval for most activities, requires "prompt and unrestricted access" to all bank documents and employees, and requires proceduces to prevent the destruction of any bank documents.

by Calculated Risk on 8/13/2009 08:50:00 PM

In early April, a Homeowner Protection Act was signed into law in Illinois that delayed foreclosures for a short period. Foreclosure filings plummeted for a couple of months, but filings are now increasing again.

From the Chicago Tribune: Foreclosure actions delayed in spring move into system in summer

Initial notices of default, the first legal step in the foreclosure process, dropped substantially in the six-county Chicago area during the past three months, largely because of a 70 percent drop in filings over a 30-day period begun in early April, according to a midyear report from Chicago-based think tank Woodstock Institute. However, foreclosure efforts appear to again be on the rise.

In April, default notices were recorded on 5,539 homes in the Chicago area. After plummeting to 1,694 notices in May, default filings rose to 3,468 in June, Woodstock found.
...
Woodstock's data also shows that lower-income areas continue to have a higher raw number of foreclosures, but more-affluent areas are posting the bigger percentage gains in foreclosure activity. ...

Last month [according to RealtyTrac], 14,524 Illinois properties, 35 percent more than in June, received notices of initial default, sheriff sale and bank repossessions. During July, 6,770 Illinois homeowners were served with initial notices of default. That compares with 3,648 default notices in June, 3,139 notices in May and 6,407 notices in April. Bank repossessions, which increase the number of foreclosed homes for sale, also jumped. Lenders repossessed 3,700 Illinois homes last month.

The low end areas will always have the most foreclosures, but foreclosure activity is picking up in the mid-to-high end areas. But where will the buyers come from in the mid-to-high end areas?

First time buyers in affluent areas? I don't think so.

Investors looking for cash flow? The number don't work.

Move-up buyers selling their homes? A large number of sellers at the low-to-mid end are lenders ...

by Calculated Risk on 8/13/2009 06:05:00 PM

The First American CoreLogic Negative Equity Report for June 2009 is available on line. You have to sign up to read the report.

More than 15.2 million U.S. mortgages or 32.2 percent of all mortgaged properties were in negative equity position as of June 30, 2009 according to newly released data from First American CoreLogic. June’s negative equity share was slightly lower than the 32.5 percent as of the end of March 2009 and it reflects the recent flattening of monthly home price changes. As of June 2009, there were an additional 2.5 million mortgaged properties that were approaching negative equity and negative equity and near negative equity mortgages combined account for nearly 38 percent of all residential properties with a mortgage nationwide.

The aggregate property value for loans in a negative equity position was $3.4 trillion, which represents the total property value at risk of default. In California, the aggregate value of homes that are in negative equity was $969 billion, followed by Florida ($432 billion), New Jersey ($146 billion), Illinois ($146 billion) and Arizona ($140 billion). Los Angeles had over $310 billion in aggregate property value in a negative equity position, followed by New York ($183 billion), Miami ($152 billion), Washington DC ($149 billion) and Chicago ($134 billion).

... Nevada (66 percent) had the highest percentage with nearly two‐thirds of mortgage borrowers in a negative equity position. In Arizona (51 percent) and Florida (49 percent), half of all mortgage borrowers were in a negative equity position. Michigan (48 percent) and California (42 percent) round out the top five states.

Click on graph for larger image in new window.

This graph shows the percent of households with mortgages underwater by state (and near negative equity defined as with less than 5% equity).

UPDATE: States with no data from CoreLogic: Louisiana, Maine, Mississippi, South Dakota, Vermont, West Virginia, Wyoming.

The high population states of California and Florida account for almost 35% of all borrowers underwater, but this graph shows the problem is widespread.

by Calculated Risk on 8/13/2009 04:28:00 PM

Update: Actual statement from Chiang: " ... to stop issuing IOUs on September 4, almost one month earlier than expected. ... the Controller will ask the board to approve a redemption date of September 4, which is almost one month earlier than the October 2 maturity date printed on the IOUs."

From Tom Petruno at the LA Times: California plans to pay off IOUs beginning Sept. 4

California expects to begin redeeming outstanding IOUs on Sept. 4, a month earlier than expected, thanks to cash savings from budget cuts, state Controller John Chiang announced today.

He said the state also will need $10.5 billion in short-term loans from investors to get through the fiscal year ending next June 30.
...
The borrowing plan and the savings from the slashed state budget "should provide sufficient cash to meet all of California’s payment obligations through the fiscal year," Chiang said in a statement.

And by popular request ...

Click on graph for larger image in new window.

Instead of comparing the markets from the peak (See: the Four Bad Bears), Doug Short matched up the market bottoms for four crashes (with an interim bottom for the Great Depression).

Note that the Great Depression crash is based on the DOW; the three others are for the S&P 500.