by Calculated Risk on 10/25/2014 11:01:00 AM

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for Oct 24, 2014.

Changes and comments from surferdude808:

It was the fourth time in 2014 for the FDIC to close a bank on back-to-back weeks. Other than the failure, two other removals pushed the Unofficial Problem Bank List count down to 423 institutions with assets of $133.4 billion. A year ago, the list held 670 institutions with assets of $234 billion.

Northwestern Bank, Traverse City, MI ($849 million) and The First National Bank of Wyoming, Wyoming, DE ($302 million) found their way off the list through unassisted mergers.

The National Republic Bank of Chicago, Chicago, IL ($994 million) failed after operating under a formal action since April 2010 and a Prompt Corrective Action order since July 2014. This is the fifth bank headquartered in Illinois to fail this year and the 61st failure in the state since the onset of the Great Recession. Acquiring the bank in the assisted transaction was State Bank of Texas, Dallas, Texas, with has assets of $413 million. Usually the FDIC does not like an acquirer to be so much smaller than and this far away geographically from the failed bank. So it looks like these issues were deemed not as important as maintaining the minority ownership status of the failed assets.

Next week, we anticipate the FDIC to release an update on its enforcement action activities through September 2014.

CR Note: The first unofficial problem bank list was published in August 2009 with 389 institutions. The list peaked at 1,002 institutions on June 10, 2011, and is now down to 423.

by Calculated Risk on 10/25/2014 08:11:00 AM

Excerpts from a research piece by economist Kris Dawsey at Goldman Sachs:

US data have generally been solid since the last FOMC meeting, with a few exceptions. However, concern about downside risks to global growth increased—echoed by Fed communications—while financial market volatility rose considerably. The market-implied date of the first rate hike shifted out by roughly a quarter to 2015 Q4.

Our analysis suggests that recent developments should have a limited effect on the Fed’s baseline expectation for growth in the near-term, although downside risks to inflation are more pronounced. The FOMC will probably acknowledge recent foreign developments in the October statement, but an explicit shift in the balance of risks for the US outlook to the downside would be a dovish surprise. Other changes to the statement will likely include a slight upgrade to the language on the labor market.

St. Louis Fed President Bullard’s suggestion that QE could be extended past the October meeting garnered a lot of attention, but this seems unlikely to us. ...

We think the “considerable time” forward guidance will only be adjusted slightly at the October meeting, removing the reference to the end of asset purchases. The September meeting minutes suggested that any major changes are most likely at a meeting with a press conference, such as December. ...
emphasis added

by Calculated Risk on 10/24/2014 08:50:00 PM

From Merrill Lynch:

The October FOMC meeting is likely to see the end of QE3 buying, as the Fed tapers the final $15bn in asset purchases. ... Tapering has been largely contingent on an improving labor market, and that has generally continued. The FOMC also has indicated multiple times that they are likely to end QE3 in October. Thus, it would take a significant adverse shock to change that plan, in our view.

As for the statement language, we expect the “significant underutilization” language to once again remain in place — although we see a modest chance that is downgraded, say to “elevated underutilization.” Meanwhile, the likelihood of changing the “considerable time” language is much more evenly split. Our base case remains no change in October, largely because there is no urgent need to revise, especially with the increase in downside risks to the outlook and heightened market volatility since the last meeting. However, there is general dissatisfaction on the FOMC with this phrase, and Fed officials have had another month and a half to consider alternatives. With no press conference scheduled after this meeting, the Committee may opt for re-examining the forward guidance language more comprehensively at their December meeting.

Perhaps most notable at this meeting may be the number and nature of dissents. We see a high probability of hawkish dissents from Dallas’s Fisher and Philadelphia’s Plosser. In our view, there is some chance the FOMC statement will note a bit more concern about downside risks to inflation — a reflection of recent data, the drop in breakevens, the strong US dollar, and disinflationary forces abroad. Should the Committee opt not to add such language, a dovish dissent from Minneapolis’s Kocherlakota becomes a risk. ... We continue to recommend focusing on the statement language and prepared remarks from Chair Yellen and other key Fed officials to understand the views of the majority of voters, who favor a patient and gradual exit process.

I'll post a preview this weekend, but it seems QE3 will end ... and the FOMC statement will be shorter!

by Calculated Risk on 10/24/2014 06:41:00 PM

From the FDIC: State Bank of Texas, Dallas, Texas, Assumes All of the Deposits of the National Republic Bank of Chicago, Chicago, Illinois

As of June 30, 2014, The National Republic Bank of Chicago had approximately $954.4 million in total assets and $915.3 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $111.6 million. ... The National Republic Bank of Chicago is the 16th FDIC-insured institution to fail in the nation this year, and the fifth in Illinois.

Bank failure friday two weeks in a row!

by Calculated Risk on 10/24/2014 03:30:00 PM

From housing economist Tom Lawler:

Census “guesstimated” that new SF home sales ran at a seasonally adjusted annual rate of 467,000 in September, up 0.2% from August’s downwardly-revised (by 7.5% to 466,000) pace. Sales estimates for June and July were also revised downward (by 2.4% and 5.4%, respectively). Not surprisingly (see LEHC, 9/24/2014), the biggest downward revision in sales for August was in the West region, where sales were revised downward by almost 20%.

Census also estimated that the inventory of new SF homes for sale at the end of September was 207,000 on a seasonally adjusted basis, up 1.5% from August’s upwardly revised (to 204,000 from 203,000) level and up 13.1% from a year ago. Census estimated that the median new SF home sales price last month was $259,000, down 4% from last September.

Census Estimates of New SF Home Sales in August (SAAR)
	Preliminary	First Revision	% Difference
US	504,000	466,000	-7.5%
Northeast	31,000	30,000	-3.2%
Midwest	58,000	57,000	-1.7%
South	262,000	256,000	-2.3%
West	153,000	123,000	-19.6%

Here are Census’ estimates of new SF home sales for the first nine months of 2014 compared to the first nine months of 2013 (not seasonally adjusted).

Census Estimates of New SF Home Sales, Jan - Sep (NSA)
	2014	2013	% Change*
US	337,000	331,000	1.7%
Northeast	21,000	24,000	-12.5%
Midwest	47,000	47,000	-1.2%
South	187,000	175,000	6.8%
West	82,000	85,000	-3.2%
*Note: Census only shows home sales rounded to the nearest thousand, but % changes are reported based on unrounded estimates

New SF home sales so far this year have fallen well short of consensus industry expectations at the beginning of the year. A major reason appears to be weakness sales to first-time home buyers, partly because of tight credit, partly because of financial “issues” for many younger adults, but also partly because many builders have trouble meeting their high return targets for communities with smaller, lower-price homes that would normally be targeted for first-time buyers.

As an example, home builder Pulte noted this morning that given its return targets “most” of its current land development was going to communities focused on the move-up and active adult markets, as in many areas there is not enough “pricing power” in the first-time buyer market for the company to meet its return targets.