FDIC Bank Failure Report

On 8/01/10, the Federal Deposit Insurance Corporation rang in the New Year closing one bank: Horizon Bank of Bellingham, Washington.The assets of the closed bank were $1,300,000,000 and deposits were $1,100,000,000. The cost to the FDIC is estimated at $539,100,000.

According to our methodology, the recoverable value of the bank was only 43.15% of the declared asset value. This makes the recoverability of this week's closure distinctly below the cumulative recoverability since December of 2007, which stands at 57.63% (down slightly from last report's 57.66%).

Cumulative cost-to-FDIC so far in the Depression was brought to $56,923,690,000. These closures bring the total declared assets of FDIC-failed banks (since December of 2007) to $545,760,780,000, and total FDIC-insured deposits to $371,446,650,000. The recoverable value of all failed banks was only $314,522,960,000 (57.63% of the declared value).

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It appears Santa Claus has not fixed the US banking system, after all. This week's closed bank was a particularly putrid affair and we consider it a bad omen for the rest of the year.

The Federal Reserve system laid a sulfurous egg this week too, announcing that bank consumer lending is declining at an 8 1/2 percent annual rate as of November. Revolving credit, primarily credit card lending is declining at a whopping annual rate of 18.5 percent! There is clearly no recovery in bank lending. We suspect that is in part due to the sorry state of household finances, but more so due to the utter insolvency of the banking system as a whole. The credit unions and banks out there that are still solvent enough to lend just cannot pick up the slack from the collapse of the system.

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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 account of 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. Kansas
5. Minnesota
6. Utah
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, up from #9 (50.62% down from 56.18%)
7. Ohio (50.84%)
8. Georgia (54.64%)
9. Utah (55.45%)
10. North Carolina (56.70%)

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The Frugal Scotsman's FDIC Cash Burn Through O'Meter gets adjusted with a subtraction of $539,100,000. The value now stands at $39,020,890,000.