by Calculated Risk on 4/16/2011 08:29:00 AM

Note: this is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for Apr 15, 2011.

Changes and comments from surferdude808:

The FDIC remembered how to close banks by shuttering six this Friday and the OCC released its enforcement actions through mid-March 2011, which contributed to many changes to the Unofficial Problem Bank List.

In all, there were 13 removals and nine additions that leave the Unofficial Problem Bank List with 978 institutions and assets of $429.4 billion this week, compared to 982 institutions and assets of $433.2 billion last week.

Only five of the six failures were on the list and it is interesting how three years into the current crisis institutions are failing wherein a formal enforcement action may not be found in the public domain. The removals because of failure include Superior Bank, Birmingham, AL ($3.0 billion Ticker: SUPR); Nexity Bank, Birmingham, AL ($794 million Ticker: NXTYQ); Bartow County Bank, Cartersville, GA ($330 million); Heritage Banking Group, Carthage, MS ($226 million); and Rosemount National Bank, Rosemount, MN ($38 million). The two failures in Georgia push total failures in that state to 59, which have an estimated resolution cost of $8.3 billion. Perhaps if the FDIC Atlanta Region was more diligent in its supervision of the out-sized construction lending exposures during the boom the number and cost of these failures in Georgia could have been lower.

The other eight removals resulted from action terminations or unassisted mergers. Actions were terminated against First National Bank of Platteville, Platteville, WI ($127 million); and Congaree State Bank, West Columbia, SC ($121 million). The following were removed because of unassisted mergers: Maryland Bank and Trust Company, National Association, Lexington Park, MD ($348 million); and First National Bankers Bank, Alabama, Homewood, AL ($224 million). Premier Financial Bancorp, Inc. merged two of its subsidiaries on the list, Adams National Bank, Washington, DC. ($284 million) and Consolidated Bank and Trust Company, Richmond, VA, (77 million) into the newly named Premier Bank, Inc. Also, the multi-bank holding company Metropolitan Bank Group, Inc., which has seven subsidiaries on the list, merged two subsidiaries -- The First Commercial Bank, Chicago, IL ($269 million) and Edens Bank, Wilmette, IL ($249 million) – into North Community Bank, Chicago, IL ($499 million).

Among the nine new additions are Suburban Bank & Trust Company, Elmhurst, IL ($623 million); The Kishacoquillas Valley National Bank of Belleville, Belleville, PA ($554 million Ticker: KISB); The First National Bank of Polk County, Cedartown, GA ($163 million Ticker: SCSG); and Chino Commercial Bank, N.A., Chino, CA ($114 million Ticker: CCBC). The other notable change this week is a Prompt Corrective Action order issued by the Federal Reserve against First Chicago Bank & Trust, Chicago, IL ($1.0 billion).

by Calculated Risk on 4/15/2011 09:54:00 PM

From the LA Times: Syria protests swell as tens of thousands turn out

Antigovernment demonstrations sweeping Syria appeared to have crossed a threshold in size and scope, with protesters battling police near the heart of the capital and the protest movement uniting people from different regions, classes and religious backgrounds against the regime.

Tens of thousands of people turned out across the country Friday, dismissing minor concessions offered a day earlier by President Bashar Assad. The demonstrators called for freedom, the release of political prisoners and, in some instances, the downfall of the government, echoing demands for change across the Arab world.

Momentum seemed to be with the protesters.

We live in interesting times.

Earlier:
• Industrial Production, Capacity Utilization increased in March
• From the Empire State Manufacturing Survey indicates faster growth in April
• From Bloomberg: Greece May Need Debt Restructuring, Schaeuble Tells Die Welt
• First Look at 2012 Cost-Of-Living Adjustments and Maximum Contribution Base

by Calculated Risk on 4/15/2011 07:36:00 PM

Fresh Bayou bailout
Mississippi burning cash
Delta blues for bank.
by Soylent Green is People

Heritage Banking Group, Carthage, Mississippi

As of December 31, 2010, Heritage Banking Group had approximately $224.0 million in total assets and $196.2 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $49.1 million. ... Heritage Banking Group is the 34th FDIC-insured institution to fail in the nation this year, and the first in Mississippi.

That makes six today ...

by Calculated Risk on 4/15/2011 06:16:00 PM

Amazing Georgia
Hot money banks drop like flies
All pits and no peach.

Doom broom sweeps Eastward.
Two South and one North bank fails
West crest approaching?
by Soylent Green is People
Bartow County Bank, Cartersville, Georgia

As of December 31, 2010, Bartow County Bank had approximately $330.2 million in total assets and $304.1 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $69.5 million. ... Bartow County Bank is the 29th FDIC-insured institution to fail in the nation this year, and the seventh in Georgia.

New Horizons Bank, East Ellijay, Georgia

As of December 31, 2010, New Horizons Bank had approximately $110.7 million in total assets and $106.1 million in total deposits ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $30.9 million. ... New Horizons Bank is the 30th FDIC-insured institution to fail in the nation this year, and the eighth in Georgia.

Nexity Bank, Birmingham, Alabama

As of December 31, 2010, Nexity Bank had approximately $793.7 million in total assets and $637.8 million in total deposits ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $175.4 million. ... Nexity Bank is the 31st FDIC-insured institution to fail in the nation this year, and the first in Alabama.

Superior Bank, Birmingham, Alabama

As of December 31, 2010, Superior Bank had approximately $3.0 billion in total assets and $2.7 billion in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $259.6 million. ... Superior Bank is the 32nd FDIC-insured institution to fail in the nation this year, and the second in Alabama.

Rosemount National Bank, Rosemount, Minnesota

As of December 31, 2010, Rosemount National Bank had approximately $37.6 million in total assets and $36.6 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $3.6 million. ... Rosemount National Bank is the 33rd FDIC-insured institution to fail in the nation this year, and the first in Minnesota.

Superior was a pretty big bank ...

by Calculated Risk on 4/15/2011 04:58:00 PM

The BLS reported this morning: "The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 3.0 percent over the last 12 months to an index level of 220.024 (1982-84=100). For the month, the index rose 1.1 percent ..."

CPI-W is the index that is used to calculate the Cost-Of-Living Adjustments (COLA). Here is an explanation ...

The calculation dates have changed over time (see Cost-of-Living Adjustments), but the current calculation uses the average CPI-W¹ for the three months in Q3 (July, August, September) and compares to the average for the highest previous average of Q3 months. Note: this is not the headline CPI-U, and not seasonally adjusted.

• In 2008, the Q3 average of CPI-W was 215.495. In the previous year, 2007, the average in Q3 of CPI-W was 203.596. That gave an increase of 5.8% for COLA for 2009.

• In 2009, the Q3 average of CPI-W was 211.013. That was a decline of 2.1% from 2008, however, by law, the adjustment is never negative so the benefits remained the same in 2010.

• In 2010, the Q3 average of CPI-W was 214.136. That was an increase of 1.5% from 2009, however the average was still below the Q3 average in 2008, so the adjustment was zero.

Click on graph for larger image in graph gallery.

This graph shows CPI-W since January 2000. The red lines are the Q3 average of CPI-W for each year.

The COLA adjustment is based on the increase from Q3 of one year from the highest previous Q3 average. So a 2.3% increase was announced in 2007 for 2008, and a 5.8% increase was announced in 2008 for 2009.

In Q3 2009, CPI-W was lower than in Q3 2008, so there was no change in benefits for 2010. And CPI-W in Q3 2010 was also lower than in Q3 2008, so once again there was no change in benefits.

Currently CPI-W is above the Q3 2008 average. The recent increase is mostly because of the surge in oil prices. CPI-W could be very volatile this year - and will depend on energy prices - but if the current level holds, COLA would be around 2.1% for next year (the current 220.024 divided by the Q3 2008 level of 215.495).

This is very early - if oil prices fall sharply, COLA might be zero again.

Contribution and Benefit Base

The law prohibits an increase in the contribution and benefit base if COLA is not greater than zero. However if the there is even a small increase in COLA, the contribution base will be adjusted using the National Average Wage Index.

From Social Security: Cost-of-Living Adjustment Must Be Greater Than Zero

... ... any amount that is directly dependent for its value on the COLA would not increase. For example, the maximum Supplemental Security Income (SSI) payment amounts would not increase if there were no COLA.

... if there were no COLA, section 230(a) of the Social Security Act prohibits an increase in the contribution and benefit base (Social Security's maximum taxable earnings), which normally increases with increases in the national average wage index. Similarly, the retirement test exempt amounts would not increase ...

This is based on a one year lag. The National Average Wage Index is not available for 2010 yet, but wages probably didn't change much from 2009. If wages increased back to the 2008 level in 2010, and COLA is positive (seems likely right now), then the contribution base next year will be increased to around $109,000 from the current $106,800.

Remember - this is an early look. What matters is CPI-W during Q3 (July, August and September).

⁽¹⁾ CPI-W usually tracks CPI-U (headline number) pretty well. From the BLS:

The Bureau of Labor Statistics publishes CPIs for two population groups: (1)the CPI for Urban Wage Earners and Clerical Workers (CPI-W), which covers households of wage earners and clerical workers that comprise approximately 32 percent of the total population and (2) the CPI for All Urban Consumers (CPI-U) ... which cover approximately 87 percent of the total population and include in addition to wage earners and clerical worker households, groups such as professional, managerial, and technical workers, the self- employed, short-term workers, the unemployed, and retirees and others not in the labor force.

by Calculated Risk on 4/15/2011 01:55:00 PM

• Possible Greece default.

From Bloomberg: Greece May Need Debt Restructuring, Schaeuble Tells Die Welt

German Finance Minister Wolfgang Schaeuble said Greece may have to seek debt restructuring if an audit in June questions its ability to pay creditors, Die Welt reported, citing an interview.

Greece would have to negotiate to ease its debt burden since creditors can’t be forced to take losses until Europe’s permanent rescue system for the euro starts up in mid-2013, the Berlin-based newspaper cited Schaeuble as saying in comments published today.

And from Bloomberg: Germany Would Back Greece Debt Restructuring, Hoyer Says

“A haircut or a restructuring of the debt would not be a disaster,” said Hoyer, a member of the Free Democratic Party that’s the junior partner in Chancellor Angela Merkel’s government. If Greece’s creditors agreed that talks with the Greek government “would be helpful toward a restructuring of the debt, then of course this would be supported by us.”
...
The remarks by Hoyer were the most explicit by a European official showing a 110 billion-euro ($159 billion) bailout for Greece may fail to prevent the first default by a euro country.

It seems like a matter of when, not if. The 2 year bond yields for Greece, at 18.5%, suggest this will happen fairly soon. If haircuts are coming, the sooner the better for the people of Greece.

• And from the WSJ: Moody's Downgrades Ireland

Moody's Investors Service Inc. downgraded Ireland's government debt by two notches Friday, taking the country to the brink of junk status, and kept its outlook negative.

The agency, cutting Ireland's bond ratings to Baa3, one notch above junk, from Baa1, said it was responding to a likely deterioration in Ireland's fiscal position due to weak prospects for economic growth and higher borrowing costs as a result of rate rised by the European Central Bank.

Here are the ten year yields for Greece at 13.8%, Ireland at 9.7%, Portugal at 9.0%, and Spain at 5.4%.

If Greece defaults, will Portugal and/or Ireland be far behind?