by Calculated Risk on 7/09/2010 07:11:00 PM

New Century Bank?
Customer First / U.S.A.?
Who's in control here?

Home, Bank on the range
Where Bair, and the banksters play....
Cloudy sky ahead.
by Soylent Green is People
From the FDIC: New Century Bank, Phoenixville, Pennsylvania, Assumes All of the Deposits of USA Bank, Port Chester, New York

As of March 31, 2010, USA Bank had approximately $193.3 million in total assets and $189.9 million in total deposits.
...
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $61.7 million. Compared to other alternatives, ... USA Bank is the 89th FDIC-insured institution to fail in the nation this year, and the third in New York. The last FDIC-insured institution closed in the state was The Park Avenue Bank, New York, on March 12, 2010.

From the FDIC: RCB Bank, Claremore, Oklahoma, Assumes All of the Deposits of Home National Bank, Blackwell, Oklahoma

As of March 31, 2010, Home National Bank had approximately $644.5 million in total assets and $560.7 million in total deposits.
...
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $78.7 million. ... Home National Bank is the 90th FDIC-insured institution to fail in the nation this year, and the first in Oklahoma. The last FDIC-insured institution closed in the state was First State Bank of Altus, Altus, on July 31, 2009.

by Calculated Risk on 7/09/2010 05:10:00 PM

Bay National... zip
Ideal Federal... whoosh
A trifecta miss : - (
by Soylent Green is People
From the FDIC: FDIC Approves the Payout of the Insured Deposits of Ideal Federal Savings Bank, Baltimore, Maryland

As of March 31, 2010, Ideal Federal Savings Bank had approximately $6.3 million in total assets and $5.8 million in total deposits.
...
he cost to the FDIC's Deposit Insurance Fund is estimated to be $2.1 million. Ideal Federal Savings Bank is the 88th FDIC-insured institution to fail in the nation this year, and the third in Maryland. The last FDIC-insured institution closed in the state was Bay National Bank, Baltimore, earlier today.

Pretty small. Not ideal.

by Calculated Risk on 7/09/2010 04:36:00 PM

From the FDIC: Bay Bank, FSB, Lutherville, Maryland, Assumes all of the Deposits of Bay National Bank, Baltimore, Maryland

As of March 31, 2010, Bay National Bank had approximately $282.2 million in total assets and $276.1 million in total deposits.
...
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $17.4 million. .. Bay National Bank is the 87th FDIC-insured institution to fail in the nation this year, and the second in Maryland. The last FDIC-insured institution closed in the state was Waterfield Bank, Germantown, on March 5, 2010.

A quick start ...

by Calculated Risk on 7/09/2010 04:00:00 PM

This has been a light week for economic news, but the pace will pick up again next week ... I guess no news is good news for the stock market:

Here is a graph from Doug Short of dshort.com (financial planner).

Click on graph for interactive version in new window.

The graph has tabs to look at the different bear markets - "now" shows the current market - and there is also a tab for the "four bears".

by Calculated Risk on 7/09/2010 01:38:00 PM

The following article confuses "liar loans" with underwriting based on the "Three C's": creditworthiness, capacity, and collateral.

From Forbes: 'Liar Loans' Make a Comeback

Did you think the housing collapse killed off "liar loans"--those infamous bubble-era mortgages for which people were allowed to get creative in portraying their ability to make the payments? Well, they're back, and that may be a good thing.

First, this article doesn't provide evidence that liar loans have made a comeback, although low-doc loans based on collateral are being offered. And, second, if "liar loans" were coming back that would be a BAD BAD thing.

From the article:

Case in point: One of [Dave] Dessner's people is toiling now on a loan application from a hedge fund manager wishing to borrow $800,000 against a $4 million home purchase. The hedge's fund did poorly last year, so as a sign of good faith for his investors he's drawing no salary. Good for his business, perhaps, but rotten for a conventional mortgage application.

This guy made $5 million in 2007 and 2008. He's liquid for $10 million, and he's borrowing 20% LTV (loan-to-value)," says Dessner. A no-doc loan to that kind of borrower shouldn't be political dynamite ...

This is not stated income (liar loan) or even no-doc. The lender has apparently verified the borrower's collateral (a 20% LTV), and has verified the borrower's capacity ("liquid for $10 million"), and I assume the borrower's credit is solid.

The above example sounds like solid underwriting.

Tanta explained why there is no need for stated income better than I can (see below), but low-doc based on collateral are not "liar loans". The article even quotes Dessner on this distinction:

Dessner insists it would be a mistake to associate the loans GuardHill and its bank network are originating with the doomed liar loans ... "I'd be on my soapbox railing against those loans," says Dessner. "The people in government who are now screaming about liar loans aren't looking at the quality of the loans we're making."

He isn't making stated income loans, so I'm not sure why the headline and lead paragraph are so misleading.

From Tanta:

Just Say No To Stated Income

Reflections on Alt-A

by Calculated Risk on 7/09/2010 11:22:00 AM

From HotelNewsNow.com: STR: US results for week ending 3 July 2010

In year-over-year measurements, the industry’s occupancy increased 10.0 percent to 63.4 percent. Average daily rate rose 1.3 percent to US$96.65. Revenue per available room jumped 11.5 percent to US$61.32.

The following graph shows the four week moving average for the occupancy rate by week for 2008, 2009 and 2010 (and a median for 2000 through 2007).

Click on graph for larger image in new window.

Notes: the scale doesn't start at zero to better show the change.

On a 4-week basis, occupancy is up 7.5% compared to last year (the worst year since the Great Depression) and 4.1% below the median for 2000 through 2007.

This as close to "normal" as the occupancy rate has been all year.

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 7/09/2010 09:02:00 AM

From Sharon Bernstein at the LA Times: Jobs outlook for small businesses may be getting bleaker

Intuit Inc., which provides payroll services for small employers, says the nation's tiniest companies had fewer new hires last month than any time since October.
...
To calculate its estimate of national hiring, Intuit uses payroll information from its 56,000 small-business customers. The company defines small businesses as those with fewer than 20 employees.

Intuit's data show that small businesses hired just 18,000 additional workers last month. That's still positive territory, but it's less than a third of the 60,000 that were added in February, when it seemed that an employment recovery was imminent. Additional hiring dropped steadily during the spring, to 40,000 in April and 32,000 in May. Another payroll company, Automatic Data Processing Inc., painted an even gloomier picture, saying that small businesses lost 1,000 jobs nationwide in June.

According to surveys by the National Federation of Independent Business (NFIB), the problem isn't lack of financing or government regulation - the problem is a "shortage of customers".

NFIB chief economist Bill Dunkelberg recently said: “What small businesses need are customers, giving them a reason to hire and make capital expenditures and borrow to support those activities.”

by Calculated Risk on 7/08/2010 11:54:00 PM

From David Streitfeld at the NY Times: Biggest Defaulters on Mortgages Are the Rich

More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.

By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.
...
The CoreLogic data measures serious delinquencies, which means the borrower has missed at least three payments in a row.

Were these borrowers really "rich"? Or did they just buy more home than they could really afford?

The "movin' on up" theme for distressed properties is something we've been discussing for some time. We're all subprime now!

Obviously more distressed sales will put downward pressure on prices in these areas.

by Calculated Risk on 7/08/2010 10:56:00 PM

For a little light reading: Zoltan Pozsar, Tobias Adrian, Adam Ashcraft and Hayley Boesky (now at BofA) of the NY Fed have written a new Staff Report: Shadow Banking

From the authors:

Our monograph “Shadow Banking” documents the origins, evolution and economic role of the shadow banking system. Its aim is to aid regulators and policymakers globally to reform, regulate and supervise the process of securitized credit intermediation in a market-based financial system.

It is hard to summarize this paper, but here are a couple of excerpts:

At the eve of the financial crisis, the volume of credit intermediated by the shadow banking system was close to $20 trillion, or nearly twice as large as the volume of credit intermediated by the traditional banking system at roughly $11 trillion.
...
Some segments of the shadow banking system have emerged through various channels of arbitrage with limited economic value ...

by Calculated Risk on 7/08/2010 06:51:00 PM

The Federal Reserve reports:

Consumer credit decreased at an annual rate of 4-1/2 percent in May 2010. Revolving credit decreased at an annual rate of 10-1/2 percent, and nonrevolving credit decreased at an annual rate of 1-1/2 percent.

Click on graph for larger image in new window.

This graph shows the year-over-year (YoY) change in consumer credit. Consumer credit is off 3.9% over the last 12 months.

Revolving credit (credit card debt) is off 14.9% from the peak. Non-revolving debt (auto, furniture, and other loans) is off 1.5% from the peak. Note: Consumer credit does not include real estate debt.

Still working down the debt ... also the previously reported slight increase in April was revised to a $14.9 billion decrease in credit.