FDIC Bank Failure Report (12 March 2010)

On 11 March and 12 March 2010, the Federal Deposit Insurance Corporation closed four banks: LibertyPointe Bank, New York, NY; Park Avenue Bank, New York, NY; Old Southern Bank, Orlando, FL; and Statewide Bank, Covington, LA. The assets of the closed banks were $1,288,600,000 and insured deposits were $1,232,500,000. The cost to the FDIC is estimated at $1,020,050,000. The closure data is available here, at the FDIC website.

According to our methodology, the recoverable value of the banks was only 79.16% of declared asset value. This makes the recoverability of this week's closures well above the cumulative recoverability since December of 2007, which stands at 57.68% (up sharply from 57.63%). This means that the failed banks' assets were worth approximately 79.16¢ on the dollar; overall, all closures since December of 2007 were worth approximately 57.68¢ on the dollar.

Cumulative cost to the FDIC to close all 191 banks (since December of 2007) was brought to $61,347,720,000. These closures bring the total declared assets of failed institutions to $562,753,780,000, and total FDIC-insured deposits to $385,967,840,000. The recoverable value of all failed banks was only $324,620,130,000 (57.68% of the declared value).

* * *

Stress in a State's banking system can be best seen in how costly that State's cumulative closures were to the FDIC. Below is the list of those States which likely have the most stressed banks, calculated by comparing that State's total FDIC cost of closures to their share of United States population. Only those States which have two or more closures are considered.

1. Alabama
2. Georgia
3. Nevada
4. California
5. Florida
6. Illinois

* * *

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, representing those States which have the most overvalued banking system assets. Only those States which have had two or more closures are considered in this analysis.

1. Florida (40.91%, up from 40.50%)
2. Colorado (42.80%)
3. Michigan (43.53%)
4. California (45.47%)
5. Nevada (50.22%)
6. Ohio (50.84%)
7. Washington (54.17%)
8. Georgia (55.33%)
9. North Carolina (56.70%)
10. Utah (58.13%)

* * *

The Frugal Scotsman's FDIC Cash Burn Through O'Meter gets adjusted with a subtraction of $1,020,050,000. The value now stands at $33,791,020,000. This is our estimate of how much money the FDIC has remaining from its special assessment of approximately $45 billion (click here to read the FDIC press release about the assessment). Every week since December of 2009, we subtract that week's cost of bank closures to the FDIC from the standing total.

FDIC Bank Failure Report (05 March 2010)

On 26 February and 05 March 2010, the Federal Deposit Insurance Corporation closed six banks: Rainier Pacific Bank, Tacoma, WA; Carson River Community Bank, Carson City, NV; Sun American Bank, Boca Raton, FL; Bank of Illinois, Normal, IL; Waterfield Bank, Germantown, MD; and Centennial Bank, Ogden, UT. The assets of the closed banks were $1,887,100,000 and insured deposits were $1,497,490,000. The cost to the FDIC is estimated at $419,710,000. The closure data is available here, at the FDIC website.

According to our methodology, the recoverable value of the banks was only 57.11% of declared asset value. This makes the recoverability of this week's closures well below the cumulative recoverability since December of 2007, which stands at 57.63% (essentially unchanged from 57.64%). This means that the failed banks' assets were worth approximately 57.11¢ on the dollar; overall, all closures since December of 2007 were worth approximately 57.63¢ on the dollar.

Cumulative cost to the FDIC to close all 191 banks (since December of 2007) was brought to $61,735,260,000. These closures bring the total declared assets of failed institutions to $561,465,180,000, and total FDIC-insured deposits to $384,735,340,000. The recoverable value of all failed banks was only $323,600,080,000 (57.63% of the declared value).

* * *

Stress in a State's banking system can be best seen in how costly that State's cumulative closures were to the FDIC. Below is the list of those States which likely have the most stressed banks, calculated by comparing that State's total FDIC cost of closures to their share of United States population. Only those States which have two or more closures are considered.

1. Alabama
2. Georgia
3. Nevada
4. California
5. Florida
6. Illinois

* * *

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, representing those States which have the most overvalued banking system assets. Only those States which have had two or more closures are considered in this analysis.

1. Florida (40.50%, up from 39.95%)
2. Colorado (42.80%)
3. Michigan (43.53%)
4. California (45.47%)
5. Nevada (50.22%, up from 49.81%)
6. Ohio (50.84%)
7. Washington (54.17%, down from 55.25%)
8. Georgia (55.33%)
9. North Carolina (56.70%)
10. Utah, replacing Maryland (58.13%)

* * *

The Frugal Scotsman's FDIC Cash Burn Through O'Meter gets adjusted with a subtraction of $419,710,000. The value now stands at $34,811,070,000. This is our estimate of how much money the FDIC has remaining from its special assessment of approximately $45 billion (click here to read the FDIC press release about the assessment). Every week since December of 2009, we subtract that week's cost of bank closures to the FDIC from the standing total.

Commentary on the FDIC Bank Failure Report (19/02/10)

La Jolla Bank was quite a nasty one, with the assets only apparently worth around 53.27 cents on the dollar. Quite a painful affair, as that is after the bondholders and shareholders have already been wiped out financially. Considering that the FDIC had to kick in another $1.9 billion or so to make the failed bank whole is very telling as well: the U.S. banking system is not in pretty shape.

In fact, it's in horrible shape. Over the two-plus years since the beginning of the ongoing Depression, the recoverability of banks is only 57 cents on the dollar. This means that, if the entire banking system were to be immediately liquidated, in some Keynesian nightmare come alive, the market value of all assets would see a 40% haircut or so - and that is a best-case. Of course, such a liquidation is not going to happen all at one, but it is certainly happening piecemeal, as the FDIC steadily dismantles the small-to-medium sized banks in the U.S. Such as the other three banks which the FDIC closed this week, representing only a bit over $586 million all together. We will bet dollars to doughnuts (we'll even make the doughnuts, mind you) that there are quite a few more La Jolla Banks out there, than the FDIC's closure patterns might suggest.

Be that as it may, the stress information given by our analysis of the States' shares of the total cost to the FDIC for bank closures is quite enlightening. Overall, those States which have suffered bank closures are actually not all that badly off, relative to population. The six States listed in the report (Alabama, Georgia, Nevada, California, Florida, Illinois) are really the only States which are even remotely out of line with statistical expectations - i.e. how close their share of the total cost is, to their share of the total U.S. population.

The rest, interestingly enough, are lower - at times, much lower - than the State's population would suggest. Now, that of course could be because some State banking systems are healthier than others, such as North Dakota's. However, that would suggest the United States is not in, overall, terrible shape. We would object very strongly to such an intimation, because all economic indicators we'd care to consult are showing exactly the opposite.

Unemployment has increased year-over-year in all 50 States and the District of Columbia, for example. According to the Federal Reserve, assets of nonfarm nonfinancial corporations have shrunk year-over-year by 7% in the third quarter of 2009; household and nonprofit assets fell by 5.3%; if we pretend that private entrepreneurs are meaningful anymore, nonfarm noncorporate business assets collapsed by 13.8%. Is the picture grim enough, yet, dear Reader? We don't feel we need to continue to make the point: banks are reliant upon the health of the rest of the so-called economy. That economy is taking a face-plant, ergo banks are not in good straits.

Bank closures, to summarise, should not only be accelerating, but they will be getting worse. Since that factor is not apparent in the short-term of our present data set, we suspect that the FDIC has a modus operandi which has nothing to do with safe-guarding the health of the banking system, nor protecting depositors.

Rather, it seems more plausible that the FDIC is carrying on some sort of psychological management of the U.S. public. This assertion arises from our observation that the closures which the FDIC perform appear to be planned around some calculation of weekly assets, and perhaps total estimated cost to the FDIC. We can't necessarily prove this, of course, but it is our opinion on the matter.

The end of such a psychological management, at least from the perspective of both the banking system, and the Federal Government, is to keep the Citizenry from panicking. The last thing which both the Government and banks want right now is a full-scale bank run, as that would be a very difficult thing to have in concert with the 'ongoing recovery' incantations of the press.

* * *

This week's project for us will be to integrate pre-Depression (i.e. before December of 2007) bank closure data into our analysis. Our intention is to see the changes in recoverability over the early 2000's, leading up to the Depression.

FDIC Bank Failure Report

On 19/02/10, the Federal Deposit Insurance Corporation closed four banks: La Jolla Bank, FSB, La Jolla, CA; George Washington Savings Bank, Orland Park, IL; The La Costa National Bank, La Costa, CA; and Marco Community Bank, Marco Island, FL. The assets of the closed banks were $4,186,300,000 and insured deposits were $3,363,400,000. The cost to the FDIC is estimated at $1,068,740,000. The closure data is available here, at the FDIC website.

According to our methodology, the recoverable value of the banks was only 54.81% of the declared asset value. This makes the recoverability of this week's closures well below the cumulative recoverability since December of 2007, which stands at 57.64% (down from 57.66%). This means that the failed banks' assets were worth approximately 54.81¢ on the dollar; overall, all closures since December of 2007 were worth approximately 57.64¢ on the dollar.

Cumulative cost to the FDIC to close all 185 banks (since December of 2007) was brought to $60,715,560,000. These closures bring the total declared assets of failed institutions to $559,578,080,000, and total FDIC-insured deposits to $383,237,850,000. The recoverable value of all failed banks was only $322,522,290,000 (57.66% of the declared value).

* * *

Due to the increasing depth of data we have on hand, we have retired the bank closures to population analysis as a measure of stress. Instead, we will use analysis based on the cost of closures to the FDIC by State, in order to demonstrate which States are likely the most economically stressed in the United States. Only those States which have two or more bank closures are considered. Presently only six States are over our 'stressed' threshold.

1. Alabama
2. Georgia
3. Nevada
4. California
5. Florida
6. Illinois

* * *

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 (39.95%, up from 39.81%)
2. Colorado (42.80%)
3. Michigan (43.53%)
4. California (45.47%, up from 45.13%)
5. Nevada (49.81%)
6. Ohio (50.84%)
7. Washington (55.25%)
8. Georgia (55.33%)
9. North Carolina (56.70%)
10. Maryland (56.90%)

* * *

The Frugal Scotsman's FDIC Cash Burn Through O'Meter gets adjusted with a subtraction of $1,068,740,000. The value now stands at $35,230,780,000. This is our estimate of how much money the FDIC has remaining from its special assessment of approximately $45 billion (click here to read the FDIC press release about the assessment). Every week since December of 2009, we subtract that week's cost of bank closures to the FDIC from the standing total.

Commentary on the FDIC Bank Failure Report (05/02/10)

Because the basic FDIC Report is getting quite technical, we've decided to separate out our commentary from the body of data. Both will continue to be published, and when something is particularly shocking, we'll make a point of it, both in the commentary, and the Report proper.

* * *

The bank closed last week was both small, and relatively well-invested, considering how attractive a 72% recoverability is, compared to the overall recoverability of 52%. However, this still is terrible news: a bank should not be so malinvested, that its assets take such a spectacular hit. And that is presumably after the stockholders and bondholders have already been wiped out, as well. It is imminently possible that the closure was far worse than what the FDIC's numbers, after our crunching of them, would suggest.

We would posit that a recoverable value around 75% is a very hopeful case, and it would be unwise for an individual with funds in an American bank to expect such a glowing number. If the FDIC should be rendered impotent, perhaps through utter collapse of the Deposit Insurance Fund and the Treasury credit line, this means that the best a depositor could hope for, all other things being equal, is the recovery of 75¢ on the dollar. A worst-case scenario, such as IndyMac, would result only in 22¢ on the dollar; average is hovering presently around 56¢ on the dollar.

Needless to say, if it weren't for the FDIC making depositors whole, there would be massive destruction of savings and deployable real capital throughout the United States. This makes the FDIC indespensible for maintaining public faith in the U.S. banking system... faith that, we think, is already too much.

On a technical front, we believe we now have sufficient depth of data to begin comparing assets of closed banks to the population of their State of domicile. This will allow us to retire the comparision of raw number of bank closures to State population. We expect to have this ready for next week's closures, assuming that the FDIC can dig itself out of the snowbanks.

FDIC Bank Failure Report

Well, what can we say. We forgot to do last week's closure. There were no closures by the FDIC this week, presumably caused by the massive snowstorm which has shut down most of the East Coast. However, we're confident the banking system will limp along just fine without the fine folks at the FDIC.

* * *

On 05/02/10, the Federal Deposit Insurance Corporation closed one bank: 1st American State Bank of Minnesota, Hancock, MN. The assets of the closed bank were $18,200,000 and insured deposits were $16,300,000. The cost to the FDIC is estimated at $3,100,000. The closure data is available here, at the FDIC website.

According to our methodology, the recoverable value of the bank was only 72.53% of the declared asset value. This makes the recoverability of this week's closures strikingly above the cumulative recoverability since December of 2007, which stands at 57.66% (unchanged from last report). This means that the failed bank's assets were worth approximately 72.53¢ on the dollar; overall, all closures since December of 2007 were worth approximately 57.66¢ on the dollar.

Cumulative cost-to-FDIC so far in the Depression was brought to $59,646,820,000. These closures bring the total declared assets of all 181 FDIC-failed banks (since December of 2007) to $555,391,780,000, and total FDIC-insured deposits to $379,874,450,000. The recoverable value of all failed banks was only $320,227,630,000 (57.66% of the declared value).

* * *

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. Minnesota (up from #4)
4. Illinois (down from #3)
5. Utah
6. Kansas
7. Oregon
8. Missouri
9. Florida
10. Washington

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 (39.81%)
2. Colorado (42.80%)
3. Michigan (43.53%)
4. California (45.13%)
5. Nevada (49.81%)
6. Ohio (50.84%)
7. Washington (55.25%)
8. Georgia (55.33%)
9. North Carolina (56.70%)
10. Maryland (56.90%)

* * *

The Frugal Scotsman's FDIC Cash Burn Through O'Meter gets adjusted with a subtraction of $3,100,000. The value now stands at $36,299,520,000. This is our estimate of how much money the FDIC has remaining from its special assessment of approximately $45 billion (click on the Meter's link to read the FDIC press release). Every week since December of 2009, we subtract that week's cost of bank closures to the FDIC from the standing total.

FDIC Bank Failure Report

On 29/01/10, the Federal Deposit Insurance Corporation closed six banks: First National Bank of Georgia, Carrollton, GA; Florida Community Bank, Immokalee, FL; Marshall Bank, N.A., Hallock, MN; Community Bank & Trust, Cornelia, GA; First Regional Bank, Los Angeles, CA; and American Marine Bank, Bainbridge Island, WA. The assets of the closed banks were $5,531,200,000 and insured deposits were $4,896,600,000. The cost to the FDIC is estimated at $1,875,760,000.

According to our methodology, the recoverable value of the banks was only 54.61% of the declared asset value. This makes the recoverability of this week's closures distinctly below the cumulative recoverability since December of 2007, which stands at 57.66% (down slightly from last report's 57.69%).

Cumulative cost-to-FDIC so far in the Depression was brought to $59,643,720,000. These closures bring the total declared assets of FDIC-failed banks (since December of 2007) to $555,373,580,000, and total FDIC-insured deposits to $379,858,150,000. The recoverable value of all failed banks was only $320,214,430,000 (57.69% of the declared value).

* * *

Once again the FDIC has pulled out a new trick: this week is was an "equity appreciation instrument," taken as "consideration for the transaction" of Florida Community Bank. We assume this means stock. If we're right, then it is simply another method by which the FDIC is extending store credit to acquiring institutions. What makes the situation seem all the more strange, is that the acquirer of Florida Community was a bank which was formed just last week: Premier American Bank, N.A., which purchased the failed Premier American Bank, with a "cash participant instrument" in the transaction.

Hmm... We have not heard back from the FDIC on our enquiry about the terms of the cash participant instrument, so we cannot conjecture about what exactly is going on. In general, however, we have to seriously question what the hell the FDIC is thinking: it is not only extending credit, but extending it to a newly-formed bank in two different forms within two weeks, potentially involving upwards of $850 million in assets. If the FDIC gave generous credit to Premier American - for example, only 10% downpayment or so - that's a lot of leverage for an institution, whose predecessor showed itself less than reliable.

We will still try to get more information from the FDIC about these instruments thrown about recently. If we do get something useful, we'll try to make better sense of the situation.

* * *

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
5. Utah
6. Kansas
7. Oregon
8. Missouri
9. Florida
10. Washington (replacing 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 (39.81%, up from 39.38%)
2. Colorado (42.80%)
3. Michigan (43.53%)
4. California (45.13%, up from 45.06%)
5. Nevada (49.81%)
6. Ohio (50.84%)
7. Washington (55.25%, up from 54.11%)
8. Georgia (55.33%, up from 54.64%)
9. North Carolina (56.70%)
10. Maryland (56.90%)

* * *

The Frugal Scotsman's FDIC Cash Burn Through O'Meter gets adjusted with a subtraction of $1,875,760,000. The value now stands at $36,302,620,000.

FDIC Bank Failure Report - Extra Late Edition

On 22/01/10, the Federal Deposit Insurance Corporation closed five banks: Premier American Bank, Miami, FL; Bank of Leeton, Leeton, MO; Charter Bank, Santa Fe, NM; Evergreen Bank, Seattle, WA; and Columbia River Bank, The Dalles, OR. The assets of the closed banks were $3,159,500,000 and insured deposits were $2,637,600,000. The cost to the FDIC is estimated at $546,210,000.

According to our methodology, the recoverable value of the banks were only 66.19% of the declared asset value. This makes the recoverability of this week's closures distinctly above the cumulative recoverability since December of 2007, which stands at 57.69% (up slightly from last report's 57.64%).

Cumulative cost-to-FDIC so far in the Depression was brought to $57,767,960,000. These closures bring the total declared assets of FDIC-failed banks (since December of 2007) to $549,842,380,000, and total FDIC-insured deposits to $374,961,550,000. The recoverable value of all failed banks was only $317,193,590,000 (57.69% of the declared value).

* * *

We noticed with a handful of these latest closures, that the FDIC has "acquire[d] a cash participant instrument," adding that "[t]his instrument serves as additional consideration for the transaction." At present we assume this means the FDIC is providing financing for the acquiring bank; in essence, the Government is giving store credit for the assets of dead banks. How this is a good idea, we really don't know, but we can only assume the regulatory geniuses at the FDIC have a firm grasp on things.

If indeed the FDIC is extending store credit to acquirers, we posit this means the bank catastrophe in the United States has entered a new phase of... well, catastrophe. Not only did the assets of Evergreen and Premier American start rotting when exposed to oxygen, they were so horrible the FDIC had to give financing to get rid of the muck. "Here, take the assets for awhile and give them a try in your books," the regulators must have told the acquirers; "we're so confident you'll love them, you don't even have to give us a down-payment." If those acquiring bank had had any self-respect, they would have run away screaming.

Once again we can't help but to think that the FDIC is setting itself up for a world of hurt. By extending store credit - if indeed that is what the "cash participant instrument" is - the FDIC is betting that a recovery will help strengthen the acquiring institutions sufficiently, that sucking up the full cost of the filth they bought on credit will not, in turn, cause them to croak. Instead, we're quite convinced by this move that a major bank failure is in the works, whether or not the FDIC is aware of it. If bank assets have gotten to the point where they have to be force-fed, then there's a big bank out there loaded to the gunwales with toxic sludge. The questions are: which bank, and when? Alas, dear Reader, we have no answers.

* * *

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
5. Utah
6. Kansas
7. Oregon (up from #9)
8. Missouri
9. Florida (down from #7)
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 (39.38%, up from 38.89%)
2. Colorado (42.80%)
3. Michigan (43.53%)
4. California (45.06%)
5. Nevada (49.81%)
6. Ohio, up from #7 (50.84%)
7. Washington, down from #6 (54.11%, up from 50.62%)
8. Georgia (54.64%)
9. North Carolina (56.70%)
10. Maryland (56.90%)

* * *

The Frugal Scotsman's FDIC Cash Burn Through O'Meter gets adjusted with a subtraction of $546,210,000. The value now stands at $38,178,380,000.

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).

* * *

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!

* * *

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%)

* * *

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.

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).

* * *

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.

* * *

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%)

* * *

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.

FDIC Bank Failure Report

On 18/12/09, the Federal Deposit Insurance Corporation closed seven banks: Rockbridge Commercial Bank of Atlanta, Georgia; Peoples First Community Bank of Panama City Florida; Citizens State Bank of New Baltimore, Michigan; New South FSB of Irondale, Alabama; Independent Bankers' Bank of Springfield, Illinois; Imperial Capital Bank of La Jolla, California; and First Federal Bank of California in Santa Monica, California. The total assets of the closed bank were $14,448,100,000, and total deposits were $11,157,130,000. The cost to the FDIC is estimated at $1,827,420,000.

According to our methodology, the recoverable value of the banks was only 64.57% of the declared asset value. This makes the recoverability of this week's closures distinctly above the cumulative recoverability since December of 2007, which stands at 57.66% (up slightly from last report's 57.48%).

Cumulative cost-to-FDIC so far in the Depression was brought to $56,384,590,000. These closures bring the total declared assets of FDIC-failed banks (since December of 2007) to $544,460,780,000, and total FDIC-insured deposits to $370,346,650,000. The recoverable value of all failed banks was only $313,962,060,000 (57.66% of the declared value).

* * *

This week's closures were definitely not typical, as there were a number of straight out liquidations; three, to be exact. One of those liquidations (Rockbridge) will be complete by Monday! We pity the customers whose outstanding checks will be bouncing next week. We suspect a bit of year-end housekeeping on the part of the FDIC, as they will be kicking back between the 24th and 28th of December. Further closures this year are doubtful due to the upcoming holiday; perhaps Santa Claus has made the banking system all better.

* * *

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 (up from #8)
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%, up from 36.65%)
2. Colorado, up from #4 (42.80%)
3. Michigan (43.53% up from 42.78%)
4. California, down from #2 (45.06% up from 42.28%)
5. Nevada (49.81%)
6. Ohio (50.84%)
7. Georgia (54.64% up from 54.62%)
8. Utah (55.45%)
9. Washington (56.18%)
10. North Carolina (56.70%)

* * *

The Frugal Scotsman's FDIC Cash Burn Through O'Meter gets adjusted with a subtraction of $1,827,420,000. The value now stands at $39,559,990,000.

FDIC Bank Failure Report - Updated

This report is current as of 11 December. The report for this weekend's closures will follow.

Well, 158 FDIC press releases later, we've finished updating our information. We'll work on historical data (i.e. before the past two weeks) in the near future.

* * *

On 11/12/09, the Federal Deposit Insurance Corporation closed three banks: SolutionsBank, of Overland Park, KS; Valley Capital Bank, of Mesa AZ; and Republic Federal Bank, of Miami, FL. The total assets of the closed bank were $984,400,000, and total deposits were $815,300,000. The cost to the FDIC is estimated at $257,160,000.

According to our methodology, the recoverable value of the banks were $558,140,000, or only 56.70% of the declared asset value. This makes this week's closures distinctly below the cumulative recoverability since December of 2007, which stands at 57.48% (unchanged from last report's revised recoverability of 57.48%).

Cumulative cost-to-FDIC so far in the Depression was brought to $54,557,170,000. These closures bring the total declared assets of FDIC-failed banks (since December of 2007) to $530,012,680,000, and total FDIC-insured deposits to $359,189,520,000. The recoverable value of all failed banks was only $304,632,350,000 (57.48% of the declared value).

* * *

The changes we made to our analysis (i.e. taking into account premiums/discounts which acquiring banks paid for failed banks' insured deposits) made a distinct difference. A difference of 0.08% - the difference between the revised recoverability (57.48%), and the unrevised (57.56%) - might not seem like much, but applied to the assets of all banks closed so far, the assets loose an additional $424 million in value. Isn't leverage a beautiful thing, dear Reader?

We don't have much to say about these three closures, however; the seem fairly average... which is probably a problem. We still feel in the FDIC is managing its closures to pick and choose its cost. A question occures to us as we write: does the FDIC pick their cost first, and then close the banks which fit within the cost they selected beforehand? Inquiring minds want to know.

* * *

Because of the revisions we made to our data, we are updating the Frugal Scotsman's Ten Nastiest Bank Closures To Date. Here are the Gruesome Tensome:

1. IndyMac (CA) - 22.99%
2. BankUnited FSB (FL) - 28.91%
3. First Bank of Idaho - 37.10%, revised down from 37.39%
4. Community Bank of Nevada - 39.10%
5. Franklin Bank (TX) - up from #10 at 39.94%, revised down from 41.18%
6. Sherman County Bank (NE) - new to list, 40.06%
7. Horizon Bank (MN) - up from #8, 40.39%, revised down from 40.98%
8. First Bank of Beverly Hills (CA) - down from #6, 40.39%
9. Riverside Bank of the Gulf Coast (FL) - new to list, 40.60%
10. Century Bank FSB (FL) - down from #5, 40.72%, revised up from 39.42%

* * *

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 (up from #6)
5. Minnesota (down from #4)
6. Utah (down from #5)
7. Missouri
8. Florida (up from #9)
9. Oregon (down from #8)
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 (36.65%, up from 36.13%)
2. California (42.28, revised down from 42.43%)
3. Michigan, up from #4 (42.78%, revised down from 43.18%)
4. Colorado down from #3 (42.80, revised up from 42.76%)
5. Nevada (49.81, revised down from 50.13%)
6. Ohio (50.84. revised down from 50.91%)
7. Georgia (54.62%, revised down from 54.75%)
8. Utah (55.45%. revised up from 55.39%)
9. Washington, up from #10 (56.18%)
10. North Carolina, new to list (56.70%)

* * *

Due to the revisions, the FDIC did not spend as much money as we thought previously (it's complicated, don't ask). The Frugal Scotsman's FDIC Cash Burn Through O'Meter gets adjusted with a subtraction of $257,160,000, and also revised upward. The value stands at $41,387,410,000.

FDIC Bank Failure Report - Insanely Late Edition

This past weekend, the Federal Deposit Insurance Corporation closed six banks: Buckhead Community Bank of Atlanta, Georgia; First Security Bank of Norcross, Georgia; Tattnall Bank of Reidsville, Georgia; AmTrust Bank of Cleveland, Ohio; Benchmark Bank of Aurora, Illinois; and Greater Atlantic Bank of Reston, Virginia. The total assets of the closed bank were $13,424,600,000, and total deposits were $9,368,300,000. The cost to the FDIC is estimated at $2,386,400,000.

According to our methodology, the recoverable value of the banks were $6,981,900,000, or only 52.01% of the declared asset value. This makes this week's closures distinctly below the cumulative recoverability since December of 2007, which stands at 57.56% (down from last report's 57.70%).

Cumulative cost-to-FDIC so far in the Depression was brought to $53,886,900,000. These closures bring the total declared assets of FDIC-failed banks (since December of 2007) to $529,028,280,000, and total FDIC-insured deposits to $358,374,220,000. The recoverable value of all failed banks was only $304,487,320,000 (57.56% of the declared value).

* * *

As if to make up for the prior two weeks, the FDIC went to town. Following its usual pattern, it muted the failure of a moderately large regional bank - AmTrust - by closing it along with several smaller banks. AmTrust was a particularly sad case with a recoverable value according to our method of only 50% of assets. It had been on a death watch for over a year having received a cease-and-desist order from the Office of Thrift Supervision in the fall of 2008. One wonders how much extra the FDIC's dithering cost the Deposit Insurance Fund.

* * *

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. Minnesota
5. Utah
6. Kansas
7. Missouri
8. Oregon
9. Florida
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 (36.13%)
2. California (42.43%)
3. Colorado (42.76%)
4. Michigan (43.18%)
5. Nevada (50.13%)
6. Ohio (50.91%) - new to the list due to now having two closures
7. Georgia (54.75% up from 53.79%)
7. Utah (55.39%)
8. Arizona (56.08%)
9. Washington (56.18%)

* * *

The Frugal Scotsman's FDIC Cash Burn Through O'Meter gets adjusted with a subtraction of $2,386,400,000. The value stands at $41,600,600,000.

FDIC Bank Failure Report - Super Late Edition

We're very late on this one; apologies. We saw the FDIC had closed only one bank on Friday evening, and thought "naw, they wouldn't close only one bank." Well, they did, and we forgot to write about it.

* * *

This past weekend, the Federal Deposit Insurance Corporation closed one bank: Commerce Bank of Southwestern Florida, Fort Myers, FL. The total assets of the closed bank were $79,700,000, and total deposits were approximately $76,700,000. The cost to the FDIC is estimated at $23,600,000.

According to our methodology, the recoverable value of the bank was $53,100,000, or only 66.62% of the declared asset value. This makes this week's closures distinctly above the cumulative recoverability since December of 2007, which stands at 57.70% (unchanged from last week).

Cumulative cost-to-FDIC so far in the Depression was brought to $51,500,500,000. This closure brings the total declared assets of FDIC-failed banks (since December of 2007) to $515,603,680,000, and total FDIC-insured deposits to $349,005,920,000. The recoverable value of all failed banks was only $297,505,320,000 (57.70% of the declared value).

* * *

We're not quite sure what the FDIC is thinking, but perhaps they don't either. Even so, it is interesting that Florida saw the only bank failure, despite the relative smallness of the closure. We really don't know what to say about that, because we're fairly confident the United States' banking system has not enjoyed the 'laying on of hands' over the past week. Sickness is still in the system, and it appears the FDIC would prefer to let the sickness spread.

* * *

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. Minnesota
5. Utah
6. Kansas
7. Missouri
8. Oregon
9. Florida
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 (36.13, up from 36.00%)
2. California (42.43%)
3. Colorado (42.76%)
4. Michigan (43.18%)
5. Nevada (50.13%)
6. Georgia (53.79%)
7. Utah (55.39%)
8. Arizona (56.08%)
9. Washington (56.18%)
10. North Carolina (56.7%)

* * *

The Frugal Scotsman's FDIC Cash Burn Through O'Meter gets adjusted with a subtraction of $26,600,000. The value stands at $43,987,000.

FDIC Bank Failure Report

This weekend, the Federal Deposit Insurance Corporation closed three banks: Century Bank, FSB of Sarasota, Florida; Orion Bank of Naples, Florida; and Pacific Coast National Bank of San Clemente, California. The total assets of the closed banks were $3,562,400,000, and total deposits were approximately $2,861,900,000. The cost to the FDIC is estimated at $968,400,000.

According to our methodology, the recoverable value of the banks was $1,875,500,000, or only 52.65% of the declared asset value. This makes this week's closures distinctly below the cumulative recoverability since December of 2007, which stands at 57.70% (down from last week's 57.73%).

Cumulative cost-to-FDIC so far in the Depression was brought to $51,476,900,000. This closure brings the total declared assets of FDIC-failed banks (since December of 2007) to $515,523,980,000, and total FDIC-insured deposits to $348,929,220,000. The recoverable value of all failed banks was only $297,452,320,000 (57.70% of the declared value).

***

The closures in Florida confirm our model of Florida as the state with the poorest quality assets. Century Bank had a recoverable value by our model of only 39.42% - the 5th worst so far in the Depression. In keeping with the spirit of poor quality of assets, we are introducing the Frugal Scotsman's Ten Nastiest Bank Closures To Date. We will be updating this list as newer, nastier closures occur. We are quite confident that this will be a regular feature, given the trend in place of deteriorating bank asset quality.

1. IndyMac (CA) - 22.99%
2. BankUnited FSB (FL) - 28.91%
3. First Bank of Idaho - 37.39%
4. Community Bank of Nevada - 39.10%
5. Century Bank FSB (FL) - 39.42%
6. First Bank of Beverly Hills (CA) - 40.39%
7. Bank of Clark County (WA) - 40.81%
8. Horizon Bank (MN) - 40.98%
9. Union Bank (AZ) - 41.13%
10. Franklin Bank (TX) - 41.18%

***

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. Minnesota
5. Utah
6. Kansas
7. Missouri
8. Oregon
9. Florida (up from #11)
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 (36.00, up from 32.44%)
2. California (42.43%, up from 42.37%)
3. Colorado (42.76%)
4. Michigan (43.18%)
5. Nevada (50.13%)
6. Georgia (53.79%)
7. Utah (55.39%)
8. Arizona (56.08%)
9. Washington (56.18%)
10. North Carolina (56.7%)

***

The Frugal Scotsman's FDIC Cash Burn Through O'Meter gets its first adjustment now with a subtraction of 986,400,000. The value stands at 44,013,600. Forty-four weeks to go!

FDIC Bank Failure Report

This week, the Federal Deposit Insurance Corporation closed five banks: United Security Bank, of Sparta, GA; Home Federal Savings Bank, of Detroit, MI; Prosperan Bank, of Oakdale, MN; Gateway Bank of St. Louis, of St. Louis, MO; and United Commercial Bank, of San Francisco, CA. The total assets of the closed banks were $11,599,100,000, and total deposits were approximately $7,866,300,000. The cost to the FDIC is estimated at $1,532,700,000.

According to our methodology, the recoverable value of the banks was $6,333,600,000, or only 54.60% of the declared asset value. This makes this week's closures distinctly below the cumulative recoverability since December of 2007, which stands at 57.73% (down from last week's 57.81%).

Cumulative cost-to-FDIC so far in the Depression was brought to $50,490,500,000. This closure brings the total declared assets of FDIC-failed banks (since December of 2007) to $511,961,580,000, and total FDIC-insured deposits to $346,067,320,000. The recoverable value of all failed banks was only $295,576,820,000 (57.73% of the declared value).

***

The situation with United Commercial Bank (UCB) is an interesting one, as it marks a degree of cooperation previously unseen in the banking world. UCB, UCB of Hong Kong, and UCB-China in Shanghai were all closed by the FDIC's actions, in cooperation with the Hong Kong government and the China Banking Regulatory Commission. Although it's a moment to wave the non-existent flag of international fellowship and all that, we would like to point out just how bad this looks to us.

The FDIC's actions show just how interconnected the financial systems of the World are, and how terribly difficult it is to find any sort of separation across national borders; this will make sorting failed banks like UCB very difficult, especially if non-US agencies are not quite as cooperative as they were this time. In addition, it's all well and good, as far as the average U.S. Citizen is concerned, that the FDIC took over banks in China; what happens if and when China starts taking over banks in the United States?

But leaving that aside, we have a loose prediction for the general trend of future, weekly FDIC closures: they will likely consist of a handful of minor community banks, and one large-ish bank. This week's format is a good example of what we're walking about, as the banks other than UCB were quite small indeed. Since we are fully convinced the FDIC is effectively out of money, this would suggest that the banks which the FDIC manages to scrape up the cash to close are the worst imaginable banks in the United States... leaving aside such cesspools as Citibank, Wells Fargo, Bank of America, JPMorgan Chase, et al.

***

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. Minnesota
5. Utah
6. Kansas
7. Missouri (up from #8)
8. Oregon (down from #7)
9. Arizona
10. Colorado

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 (32.44%)
2. California (42.37%, up from 40.11%)
3. Colorado (42.76%)
4. Michigan (43.18%, up from 43.07%)
5. Nevada (50.13%)
6. Georgia (53.79%, up from 53.74%)
7. Utah (55.39%)
8. Arizona (56.08%)
9. Washington (56.18%)
10. North Carolina (56.7%)

***

We're very pleased with how these two lists have shaped up; the movement from week to week is becoming very slight, so we're pretty confident this gives a relatively accurate idea of how badly off these various States and the banks within them are. Of course, our analysis only reflects those States which have had over two bank failures, so that leaves a good portion of the Union (and its... extensions) not reflected in our report.

Nevertheless, these five States - Georgia, Utah, Arizona, Nevada, and Colorado, in no particular order - are likely to be among the worst-off, as they are represented in both the preceeding lists. We really can't say which of those is the king of the dung heap, as it were, because we still haven't figured out how to compare apples and oranges.

FDIC Bank Failure Report

This week, the Federal Deposit Insurance Corporation closed nine banks, a record number in the 2007 Depression: Bank USA, N.A., of Phoenix, AZ; California National Bank, of Los Angeles, CA; San Diego National Bank, of San Diego, CA; Pacific National Bank, of San Francisco, CA; Park National Bank, of Chicago, IL; Community Bank of Lemont, of Lemont, IL; North Houston Bank, of Houston, TX; Madisonville State Bank, of Madisonville, TX; and Citizens National Bank, of Teague, TX. The total assets of the closed banks were $19,400,000,000, and total deposits were approximately $15,400,000,000. The cost to the FDIC is estimated at $2,500,000,000.

According to our methodology, the recoverable value of the bank was $12,900,000,000, or only 66.49% of the declared asset value. This makes this week's closures distinctly above the cumulative recoverability since December 2007, which stands at 57.81% (up noticeably from last week's 57.46%).

Cumulative cost-to-FDIC was brought to $48,957,800,000. This closure brings the total declared assets of FDIC-failed banks (since December of 2007) to $500,362,480,000, and total FDIC-insured deposits to $338,201,020,000. The recoverable value of all failed banks was only $289,243,220,000 (57.81% of the declared value).

***

A couple milestones to remember on this day, dear Reader: nine banks closed in one day, beating out the eight closed on February 7th of this year; and over a half-trillion dollars in bank assets passed through the FDIC's mangy paws! Let us pause in a moment of silence, to commemorate that $0.5 trillion, because this is probably the last time that quantity of dollars will seem like much money. The horror of that $0.5 trillion is that it was only worth about $0.2 trillion... ouch. Again, we think that's only going to get worse. If the U.S. banking system is anywhere near as insolvent as our methodology suggests it is, there are many, many more banks out there with thoroughly rotten balance sheets.

Speaking of rotten balance sheets, the acquiring bank for all nine failures was US Bank, of Minneapolis, MN. It looks like US Bank is on track to become what we'd like to call hyper-regional, because regional does not quite seem to cover a Midwest bank with 115 branches in California, and five in Texas. It seems to us that the animal spirits have possessed this bank, too, and they're 'positioning themselves for the recovery' with a vengeance. We're not sure what's in the water in US Bank's Minneapolis HQ, but it must be some impressively potent stuff. They see the same falling household incomes as we do, but our first though would not have been "that's great news, let's blow $13 billion!" We have to conclude that US Bank is putting their head on the block, because when - not if - the next market nosedive hits, they will probably find themselves extremely overreached. Then again, if they are reaching for 'too-big-to-fail' status, they are on exactly the right course.

Unfortunately, the FDIC did not provide a break-down of its cost-to-DIF for each individual bank (separate assets and deposits were provided, though). So, we will not be able to include this week's closures in our recoverability by State analysis, because the lack of detailed closure data would skew our analysis quite severely. As an aside, a cohort of ours contacted the FDIC, requesting the information, but the FDIC spokesperson said they didn't have the info on hand, and to file a Freedom of Information Act request for the same... Feel the love!

***

On the basis of the ratio of bank closures to population (i.e. simply the number of failures in the 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. Minnesota (up from #6)
5. Utah (down from #4)
6. Kansas (down from #5)
7. Oregon
8. Missouri
9. Arizona (new to list)
10. Colorado (down from #9)

The recoverable value represents how much of declared assets are actually worth 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. [Note: this week's closures are not reflected in this data, so it remains unchanged from last week].

1. Florida (32.44%)
2. California (40.11%)
3. Colorado (42.76%)
4. Michigan (43.07%)
5. Nevada (50.13%)
6. Georgia (53.74%)
7. Utah (55.39%)
8. Arizona (56.08%)
9. Washington (56.18%)
10. North Carolina (56.7%)

***

So much for Florida; we have to rescind all our back-patting from last report, because Arizona has stolen the Sunshine State's lustre. We fully expect to see more of Florida, sometime in the future. Just don't ask us when, because we really don't know. This is, of course, influenced by the rather jittery movements of the FDIC's closures; they do not seem to be focusing on any one State in particular to try and clean up that State's banking system. If a concerted effort to get the U.S. banking system sound does develop, perhaps this problem will be alleviated. Additional data clarity could also come from the FDIC being forced to close banks more often than just weekly.

Arizona will probably end up being a pretty ugly case, in and of itself. In the long term we fully expect that State to be far worse off that Florida, but only by a question of degrees: Florida will be in ruins, but Arizona will be abandoned and in ruins. For the meanwhile, though, Florida's financial woes will probably come to the fore more so than any other State, because of the extremely-overvalued nature of the Florida banking system's assets.

FDIC Bank Failure Report - Impossibly Late Edition

Apologies to all, but it's been a busy week. We're wrapping up our summer efforts, and save a few last projects we will soon have more time to devote to this blog.

***

This week, the Federal Deposit Insurance Corporation closed seven banks: Partners Bank, of Naples, FL; American United Bank, of Lawrenceville, GA; Hillcrest Bank Florida, of Naples, FL; Flagship National Bank, of Bradenton, FL; Bank of Elmwood, of Racine, WI; Riverview Community Bank, of Otsego, MN; and First Dupage Bank, of Westmont, IL. The total assets of the closed banks were $1,163,900,000, and total deposits were approximately $1,032,100,000. The cost to the FDIC is estimated at $356,700,000.

According to our methodology, the recoverable value of the bank was $675,400,000, or only 58.03% of the declared asset value. This makes this week's closure slightly above the cumulative recoverability since December, which stands at 57.46% (essentially unchanged from last week's 57.45%).

Cumulative cost-to-FDIC was brought to $46,457,800,000. This closure brings the total declared assets of FDIC-failed banks (since December of 2007) to $480,962,480,000, and total FDIC-insured deposits to $322,801,020,000. The recoverable value of all failed banks was only $276,343,220,000 (57.46% of the declared value).

***

First off, we welcome Wisconsin to the 2007 Depression; the Land of Cheese has enjoyed the scent of its first - of many - bank failures. Additionally, we pat ourselves on the back, because at long last Florida is receiving the attention we predicted it would (see the commentary at the end of our piece). We called it almost a month ago, so please pardon us while we feel terribly smart. At any rate, Florida is in for a very, very painful time, have no doubt; the whole State's banking system is a morass of ultimate financial doom. We don't know if this is the beginning of that pain, or just a blip, but we're quite confident that Florida is going to see vast numbers of banks falling dead in their tracks from toxic mortgages, et cetera.

We noticed a surprising trend with this week's closures: a large percentage (95.27%) of the assets of all closed banks were successfully sold off, either outright or under a loss-share agreement between the FDIC and the acquiring institution. We don't have much back data (we'll work on that), so this might be a fluke of the week... but we wonder if the Federal Government's calling the recession over is actually working. Call us crazy, but we're just not feeling the love on this one. If the 'great recession' were actually over, we would expect to see that in improving quality of bank's assets. They have definitely not improved.

However, is seems that acquiring institutions feel the economy will be improving in the future, so they're happy to snap up most of the assets of the failed banks, no matter how toxic. The frisky animal spirits have possessed them at last, so they put on their war paint, do a victory dance, and march off to position themselves for the 'great recovery.' Apparently these acquiring institutions have forgotten they are akin to wolves; wolves can only consume fresh meat, and it seems these predators haven't noticed their prey is rotten. We don't know when the nasty effects of bad assets will start to bother the predator banks, but when the effects start it will be exciting. If acquiring institutions start to be closed by the FDIC, expect the U.S. to take the mother of all nosedives.

***

On the basis of the ratio of bank closures to population (i.e. simply the number of failures in the 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. Minnesota (up from #6)
5. Utah (down from #4)
6. Kansas (down from #5)
7. Oregon
8. Missouri
9. Colorado
10. Florida (new to list)

The recoverable value represents how much of declared assets are actually worth 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 (32.44%)
2. California (40.11%)
3. Colorado (42.76%)
4. Michigan (43.07%)
5. Nevada (50.13%)
6. Georgia (53.74%, down from 53.76%)
7. Utah (55.39%)
8. Arizona (56.08%)
9. Washington (56.18%)
10. North Carolina (56.7%)

***

Well, shucks, more back-patting for us: Florida is now officially on both lists. We fully expect the State to ratchet up to the #1 spot on closures-to-population, and stay firmly in the lead on the recoverable value scale. The collapse of Florida's finances will likely be coupled with the final catastrophic implosion of the vast majority of well-off senior citizens' own finances. Why? We suspect that most of the elderly retirees in Florida have a big portion of their wealth in over-valued real estate, and when the State's real estate bubble pops and that value goes down, down, down, those seniors are not going to have much to fall back on. Social Security will not be enough to support them in the style to which they've become accustomed, and they will be forced out of their homes and into the homes of their children.

That's, of course, making the rash assumption that their children still have homes of their own. If the Baby Boomers have taken the hit at around the same time, the United States is going to see a large indigent population of elderly and Baby Boomers, whinging about how it isn't fair. No one in power will be listening, we suspect; the ear of the Federal Government is firmly owned by banks. Indeed, at that point the Government might not have any money at all to throw around - at least, no money that can actually buy anything.

The question rattling around in our mind is this: is Florida the first domino in a really big economic catastrophe? Or will it be another California, and simply be a bigger sag in the overarching, slow-motion collapse of the U.S. economy? We really don't know, but we could certainly see it either way. We'll be pondering that thought for a later blog post.

FDIC Bank Failure Report - Late Edition

This week, the Federal Deposit Insurance Corporation closed three banks: Warren Bank of Warren, MI; Jennings State Bank of Spring Grove, MN; and Southern Colorado National Bank of Pueblo, CO. Total declared asset value of the closed banks was approximately $633,800,000, and total deposits were approximately $585,300,000. The cost to the FDIC is estimated at $293,300,000.

According to our methodology, the recoverable value of the three banks was $292,000,000, or only 46.07% of the declared asset value. This makes this week's closures distinctly below the cumulative recoverability since December, which stands at 57.44% (down from last week's 57.45%).

Cumulative cost-to-FDIC was brought to $45,998,100,000. This closure brings the total declared assets of FDIC-failed banks (since December of 2007) to $479,023,580,000, and total FDIC-insured deposits to $321,137,920,000. The recoverable value of all failed banks was only $275,139,820,000 (57.44% of the declared value).

***

This week's closures were rather piddly, as you can see, with cumulative declared assets below $1 billion. Perhaps the insurance premium cheques got lost in the mail, so the board of directors had to 'pass the plate,' as it were. Frankly, we really don't see how these three little banks were the worst to be found in the U.S. bank system this week. The numbers, although bad, are not at the bottom... or the top, depending if your glass is half-empty or half-full.

We still stand by our concern that the FDIC is the proud owner of a Ponzi-style pyramid scheme, masquerading as deposit insurance. The recent news that the FDIC's forcing banks to pay ahead three years on their premiums is credence to this thought. Why, other than being desperate for liquid cash, would the FDIC force the ailing banking system to cough up around $45 billion in 'premiums?' The only scenario which makes any sense to us is that the FDIC is wholly dependent on its incoming premium payments to maintain a facade of its operations... such as this week's closures.

"In choosing this path, it should be clear to the public that the industry will not simply tap the shoulder of the increasingly weary taxpayer. This proposal is a vote of confidence for the banking industry's resilience, and it will continue to recover its strength as we work through the significant challenges ahead."

So said Sheila Bair, Chairwoman of the FDIC. We're not quite sure where she gets her ideas, as the U.S. Treasury extended the FDIC the $500 billion line of credit awhile back... perhaps she isn't aware that the Treasury plays with the weary taxpayer's money? And how is forcing banks to pay out three years' worth of premiums a vote of confidence, other than confidence that said banks are in deep trouble and the FDIC is out of money?

Ms. Bair makes no sense, in our humble opinion. We're beginning to think that she is, perhaps, just a pretty face (cough, cough), rather than the head honcho of a lean, mean, deposit-insurin' machine. But maybe that's just us.

***

On the basis of the ratio of bank closures to population (i.e. simply the number of failures in the 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. Utah
5. Kansas
6. Minnesota (up from #7)
7. Oregon (down from #6)
8. Missouri
9. Colorado (new to list)
10. Washington (down from #9)

The recoverable value represents how much of declared assets are actually worth 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 (31.89%)
2. California (39.74%)
3. Colorado (42.76%)
4. Michigan (43.07%)
5. Nevada (50.13%)
6. Georgia (53.76%)
7. Utah (55.39%)
8. Arizona (56.08%)
9. Washington (56.18%)
10. North Carolina (56.7%)

***

We find it interesting that Georgia, which is the worst-off State by number of closures, is actually only number six on the recoverable value list. Perhaps even more interesting is Florida's besting of California for king of the dung heap. This suggests several things to us:

First is perhaps obvious: Georgia is receiving undue punishment to its banking system, as it is no where near as insolvent as Florida's system. In fact, we will go on record here stating that Florida should have a banking holiday all its own, because it's just that special. Why Georgia is being singled out for a perhaps disproportionate number of failures is unclear to us, but we posit that it is likely politically-motivated; Georgia must have seriously pissed someone off. We can't imagine how or why.

Second is less so, and more subjective: California is getting a lot of press on its bullet-time collapse into fiscal doom, but perhaps the focus is misplaced. California's numbers were squewed by the terrific implosion of IndyMac, and removal of that bank leaves California's recoverable value at 59.49%. This would suggest that Florida is much, much deeper into financial trouble than California, but yet we haven't seen as much gnashing of teeth about how Florida is heading for a sovereign default. Hmmm... why that is, we really don't know, but we expect that Florida will probably have an 'unexpected rise' to the headlines when the State catastrophically implodes.

FDIC Bank Failure Report

This week, the Federal Deposit Insurance Corporation closed only one bank: Georgian Bank of Atlanta, Georgia. Total declared asset value of the closed bank was approximately $2,000,000,000, and total deposits were approximately $2,000,000,000. The cost to the FDIC is estimated at $892,000,000. According to our methodology, the recoverable value of Georgian Bank was $1,108,000,000, or only 55.40% of the declared asset value.

Cumulative cost-to-FDIC was brought to $45,704,800,000. This closure brings the total declared assets of FDIC-failed banks (since December of 2007) to $478,389,780,000, and total FDIC-insured deposits to $320,552,620,000. This includes the assets and deposits of Washington Mutual, which can now be included in data analysis due to our new methodology. The recoverable value of all failed banks was only $274,847,820,000, or 57.45% of the declared value.

***

This week's closure was below the national average of failed banks, but it is far from attractive. Such a low recoverable value is a sign of some serious problems within the U.S. banking system; problems which have not, by any stretch of the imagination, been worked out or 'TARPed' from existence.

Since there is a distinct likelihood that a good chunk of the banking system is overvalued to about this degree (e.g. 55% recoverability or so), we can only assume that the FDIC is purposefully dragging its feet on closing those banks which are in the worst shape. This would make sense, especially considering if approximately half of the entire banking system's assets are toxic waste!

Given that scenario, though, a serious problem arises: it means that the FDIC's exhaulted insurance is nothing but a Ponzi scheme. If indeed the banking system is that insolvent, or even approxmiately that insolvent, then the money paid out on FDIC closures is simply the money which has been recently paid in by banks for the deposit insurance. Perhaps the FDIC chooses which bank to close, not based on how insolvent or zombiod it is, but rather how much money is on hand to cover deposits...

***

On the basis of the ratio of bank closures to population (i.e. simply the number of failures in the State, with no account of assets or deposits), the ten most afflicted states are:

1. Georgia
2. Nevada
3. Illinois
4. Utah
5. Kansas
6. Oregon
7. Minnesota
8. Missouri
9. Washington
10. Florida

We are replacing the losses-to-assets analysis by State, with a recoverable value analysis by State. However, we are still retooling our data, but we expect that we will be ready to provide this analysis with next week's closures.