FDIC Bank Failure Report - Late Edition

On 15/01/10, the Federal Deposit Insurance Corporation closed three banks: Town Community Bank & Trust, Antioch, IL; St. Stephen State Bank, St. Stephen, MN; and Barnes Banking Company, Kaysville, UT.The assets of the closed banks were $922,100,000 and insured deposits were $877,300,000. The cost to the FDIC is estimated at $296,300,000.

According to our methodology, the recoverable value of the bank was only 63.01% of the declared asset value. This makes the recoverability of this week's closure distinctly above the cumulative recoverability since December of 2007, which stands at 57.64% (essentially unchanged from last report's 57.63%).

Cumulative cost-to-FDIC so far in the Depression was brought to $57,221,740,000. These closures bring the total declared assets of FDIC-failed banks (since December of 2007) to $546,682,880,000, and total FDIC-insured deposits to $372,323,950,000. The recoverable value of all failed banks was only $315,102,210,000 (57.64% of the declared value).

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We don't have much to say about these closures, other than to note that the FDIC was forced to create a Deposit Insurance National Bank to facilitate the liquidation of the failed Barnes Banking Company. What this means, of course, is that Barnes was so rank the FDIC could not possibly slather enough perfume on it to cover up the stench. No other institutions found Barnes to be agreeable as a dance partner, as it were, so the FDIC was left with the corpse. We suspect that Barnes' assets will end up in a future Multibank Structured Transaction, like the $1.02 billion of rotting assets recently auctioned off, for 22 cents on the dollar.

We'd love to see the entire U.S. banking system priced as realistically as that MST!

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On the basis of the ratio of bank closures to population (i.e. simply the number of failures in each State, with no weighting with assets or deposits), the ten most afflicted States are listed here. Only those States which have two or more closures are considered.

1. Georgia
2. Nevada
3. Illinois
4. Minnesota (up from #5)
5. Utah (up from #6)
6. Kansas (down from #4)
7. Florida
8. Missouri
9. Oregon
10. Arizona

The recoverable value represents how much of declared assets are worth by our estimate on the open market. The following are the ten States with the lowest recoverable value; only those States which have had two or more closures are considered in this analysis.

1. Florida (38.89%)
2. Colorado (42.80%)
3. Michigan (43.53%)
4. California (45.06%)
5. Nevada (49.81%)
6. Washington (50.62%)
7. Ohio (50.84%)
8. Georgia (54.64%)
9. North Carolina, up from #10 (56.70%)
10. Maryland, new to list (56.90%)

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The Frugal Scotsman's FDIC Cash Burn Through O'Meter gets adjusted with a subtraction of $296,300,000. The value now stands at $38,724,590,000.