by Calculated Risk on 11/18/2011 07:09:00 PM

Unfortunately
These recent Occupied banks
Are not on Wall Street
by Soylent Green is People
From the FDIC: Grinnell State Bank, Grinnell, Iowa, Assumes All of the Deposits of Polk County Bank, Johnston, Iowa

As of September 30, 2011, Polk County Bank had approximately $91.6 million in total assets and $82.0 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $12.0 million. ... Polk County Bank is the 89th FDIC-insured institution to fail in the nation this year, and the first in Iowa.

From the FDIC: First NBC Bank, New Orleans, Louisiana, Assumes All of the Deposits of Central Progressive Bank, Lacombe, Louisiana

As of September 30, 2011, Central Progressive Bank had approximately $383.1 million in total assets and $347.7 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $58.1 million. ... Central Progressive Bank is the 90th FDIC-insured institution to fail in the nation this year, and the first in Louisiana.

A first this year for both states.

by Calculated Risk on 11/18/2011 04:02:00 PM

From economist Tom Lawler:

Based on my regional tracking, I estimate that existing home sales as measured by the National Association of Realtors ran at a seasonally adjusted annual rate of about 4.86 million in October, down 1.0% from September’s pace, and up 11% from last October’s pace. Compared to a year ago sales showed little growth (or actual declines) in a number of northeast and mid-Atlantic areas.

Active listings were clearly down again in October from September, with my “best guess” nationwide being a drop of 3.5%. NAR’s inventory numbers don’t often track publicly-available listings, but I’d guess NAR’s numbers will show a similar monthly drop. If that were the case, the NAR’s existing home inventory number would show a YOY decline of about 13.1% (less than publicly-available listings data would suggest, but that has been the case for a while.)

On the median sales price side, a larger % of realtor groups/MLS/etc. reported YOY declines in median sales prices in October than was the case in September, and in many others reported larger YOY % declines in October than in September. Based on the data I have, I estimate that the NAR will show an October median existing home sales price that is about 5.2% lower than last October. In September the NAR’s MSP showed a YOY drop of 3.5%.

CR Note: The NAR is scheduled to release their October existing home sales report on Monday November 21st at 10 AM ET. The consensus is for sales of 4.80 million (close to Tom's estimate). With a 3.5% decline in inventory, this would give 8.3 months of supply, down from the reported 8.5 months in September. Also - the NAR might announce the release of the "benchmark revisions" that are expected to show downward revisions for sales and inventory since 2006 or so.

by Calculated Risk on 11/18/2011 01:30:00 PM

By request, the following graphs show the percent of loans delinquent by loan type: Prime, Subprime, FHA and VA. First a table comparing the number of loans in 2007 and Q3 2011 so readers can understand the shift in loan types.

Both the number of prime and subprime loans have declined over the last four years; the number of subprime loans is down by about one-third. Meanwhile the number of FHA loans has increased sharply.

Note: There are about 50 million total first-lien loans - the MBA survey is about 88% of the total.

MBA National Delinquency Survey Loan Count
	Q2 2007	Q3 2011	Change	Q3 2011 Seriously Delinquent
Prime	33,916,830	31,302,080	-2,614,750	1,734,135
Subprime	6,204,535	4,193,659	-2,010,876	1,077,351
FHA	3,030,214	6,594,478	3,564,264	553,277
VA	1,096,450	1,436,140	339,690	66,493
Survey Total	44,248,029	43,526,357	-721,672	3,431,256

Click on graph for larger image in graph gallery.

First a repeat: This graph shows the percent of loans delinquent by days past due. Loans 30 days delinquent decreased to 3.19% from 3.46% in Q2. This is the lowest level since early 2007.

Delinquent loans in the 60 day bucket decreased slightly to 1.30% from 1.37% last quarter. This is the lowest level since Q1 2008. There was a decrease in the 90+ day delinquent bucket too. This decreased to 3.50% from 3.61% in Q2 2011. This is the lowest level since 2008. This decrease was probably due to the pickup in foreclosure actions.

The percent of loans in the foreclosure process was unchanged at 4.43%.

Note: Scale changes for each of the following graphs.

The second graph is for all prime loans.

This is the key category now ("We are all subprime!", Tanta).

Since there are far more prime loans than any other category (see table above), about half the loans seriously delinquent now are prime loans - even though the overall delinquency rate is lower than other loan types.

This graph is for subprime. This category gets most of the attention - mostly because of all the terrible loans made through the Wall Street "originate-to-distribute" model and sold as Private Label Securities (PLS). Not all PLS was subprime, but the worst of the worst loans were packaged in PLS.

Although the delinquency rate is still very high, the number of subprime loans had declined sharply.

This graph is for FHA loans. The delinquency rate decreased in Q3 and has mostly been declining the last couple years. Some of the decline is because most of the FHA loans were made in the last few years, not in the 2004 to 2006 period like subprime.

Another reason for the improvement was eliminating Downpayment Assistance Programs (DAPs). These were programs that allowed the seller to give the buyer the downpayment through a 3rd party "charity" (for a fee of course). The buyer had no money in the house and the default rates were absolutely horrible. HUD mentioned this in the annual review of the FHA financial status.

The last graph is for VA loans.

All four categories saw a decrease in overall delinquencies Q3.

There are still quite a few subprime loans that are in distress, but the real keys going forward are prime loans and FHA loans.

All current mortgage delinquency graphs.

by Calculated Risk on 11/18/2011 10:52:00 AM

Another bright spot for the economy has been the recovery in heavy truck sales (see graph below).

First, here is an early forecast for November light vehicle sales from J.D. Power and Associates:

November new-vehicle retail sales are projected to come in at 791,900 units, which represents a seasonally adjusted annualized rate (SAAR) of 11.3 million units—the highest monthly selling rate in three and a half years.

Total light-vehicle sales in November are expected to come in at 975,600 units, which is 8 percent higher than in November 2010. Fleet sales are expected to decrease by 6 percent compared with November 2010, but will account for 19 percent of total sales.

Their total sales forecast would be 13.4 million (SAAR), and that would be the highest sales rate since August 2008 (excluding cash-for-clunkers in August 2009).

Growth in auto sales should make a nice positive contribution to Q4 GDP. Sales in Q3 averaged 12.45 million SAAR, and just looking at October and this forecast for November, sales will be up close to 7% in Q4 over Q3 (over 30% annualized).

Click on graph for larger image.

This graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is current estimated sales rate.

Heavy truck sales really collapsed during the recession, falling to a low of 175 thousand in April 2009 on a seasonally adjusted annual rate (SAAR). Since then sales have almost doubled and hit 346 thousand (SAAR) in October 2011.

This is the highest level since June 2007 (over 4 years ago). And this is still below the average of the last 20 years - and well below the peaks - so there is probably more growth in sales to come.

by Calculated Risk on 11/18/2011 09:01:00 AM

It has been a long time since I posted a few indicators of credit stress.

First - I want to reiterate that the U.S. economic data has looked better recently and Q4 U.S. GDP should be OK (more sluggish growth). I think the most likely path is no U.S. recession in 2012. However there are downside risks - especially from the European financial crisis (and apparently European recession) and also from more fiscal tightening the U.S..

The somewhat improved economy in the U.S. has led Macroeconomic Advisers to up their Q4 GDP forecast to 3.2%, and for Merrill Lynch to up their Q4 forecast to 3.0%. From Neil Irwin at the WaPo:

Putting all the recent evidence together, forecasting firm Macroeconomic Advisers projects that the economy will have grown at a 3.2 percent annual rate in the final three months of 2011 ...

And from Bloomberg (ht sum luk):

Economists at JPMorgan Chase & Co. (JPM) in New York now see gross domestic product rising 3 percent in the final quarter, up from a previous prediction of 2.5 percent. Macroeconomic Advisers in St. Louis increased its forecast to 3.2 percent from 2.9 percent at the start of November, while New York-based Morgan Stanley & Co. boosted its outlook to 3.5 percent from 3 percent.

That is still sluggish growth with all the slack in the system, but an improvement over Q3 and the event driven weakness earlier this year.

Here are a few indicators of credit stress:

• Here is a screen shot of the TED spread from Bloomberg.

The TED spread is at 0.49, and has been rising recently (top graph). The 5 year graph shows that recent increase in comparison to the U.S. financial crisis in 2008.

Click on graph for larger image.

The peak was 4.63 on Oct 10th. A normal spread is around 0.5.

• The three month LIBOR has increased:

Data from the British Bankers' Association showed the three-month dollar London Interbank Offered Rate, or Libor, rose to 0.47944% from 0.47111% Wednesday.

The three-month LIBOR rate peaked during the crisis at 4.81875% on Oct 10, 2008. This is rising again, but still low.

• The A2P2 spread as at 0.49. This spread has increased slightly over the last few days, but far lower than the peak of the financial crisis of 5.86.

This is the spread between high and low quality 30 day nonfinancial commercial paper. Right now quality 30 day nonfinancial paper is yielding close to zero.

• The two year swap spread screen shot from Bloomberg. This spread is just over 51.

This spread peaked at near 165 in early October 2008.

By these indicators, credit stress is rising, but it is still very low compared to the levels reached in September 2008.