99th U.S. Bank Failure of 2009 Strikes with San Joaquin Bank of Bakersfield California

October 18, 2009 by · Leave a Comment
Filed under: Bank Failure 

More losses from sub-prime home loans and defaulting commercial real estate loans are becoming a common theme.  Sub-prime loan defaults are to be expected with many of those properties having mortgages written at a value that reflects the real estate bubble of 2003-07.  Many of those borrowers did not have the income to support the increased value of those homes and were using the sale or “flipping” of the home as their exit strategy. What is more troublesome is the increasing theme of banks that hold commercial paper on their books causing them to fail.

During the same period, many bank wrote construction loans and a large amount were for condominiums and retail shopping centers.  If you have seen how consumer spending has decreased and many condo projects are being foreclosed on, it makes sense that this type of loan along with others are dragging down on the banks.  The stock may be up but the more I look at the numbers, a “double-dip” recession can not be ruled out.  The consumer needs to come back at large to maintain the earning expectations that we have priced in at this point.  I’ll keep you posted.

Reuters, Washington D.C. – One more U.S. bank was shuttered on Friday, as the tally of failures so far this year inched closer to 100.

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U.S. regulators close failed Corus Bank with $7 billion in assets to bring 2009 total to 92

September 12, 2009 by · Leave a Comment
Filed under: Bank Failure 

This is the 4th largest bank failure of 2009.   According to the FDIC, Corus Bank will cost their deposit insurance fund $1.7 billion dollars.  Corus Bank had a lot of exposure to commercial real estate and construction loans.  Looks like this was its undoing.  I will be watching as more banks fail to see if we keep seeing more exposure to this type of paper just like in 2008 it was subprime loans and home equity loans.

Reuters, New York – U.S. regulators seized Corus Bank on Friday in the fourth-largest bank failure this year and sold its deposits to MB Financial Bank.  Long controlled by the Glickman family, Chicago-based Corus Bank crumbled under the pressure of bad loans on commercial real estate and condominium developments in Arizona, southern California, southern Florida and Nevada. The seizure of Corus and the failure of two smaller banks announced on Friday brought to 92 the number of shuttered banks in 2009.

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FDIC closes an additional 5 U.S. banks to bring total to 69 failed banks for 2009

August 1, 2009 by · Leave a Comment
Filed under: Bank Failure 

Wow, the U.S. bank failures are picking up speed in 2009.  We should see premiums increase in the coming months or some other emergency action to bring more backing to the FDIC fund.  Just in these closure alone we have approximately $1 billion more in deposits.

Many of these banking institutions are holding commercial, home-builder, equity lines along with normal loans.  Many of these deals were not setup to survive a protracted downturn and only because of lax lending standards they made sense and were approved.  This debt needs to default and get pushed through the system so we can achieve balance.  So every time I hear one of these announcements it tells me we are one step closer to a “real” recovery.

News (Reuters):

Bank regulators closed five banks on Friday, bringing the number of failures so far this year to 69 as the struggling economy and falling home prices take their toll on financial institutions.

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Guaranty Financial Group told to turn over to FDIC for receivership

July 27, 2009 by · Leave a Comment
Filed under: Bank Failure 

Interesting little article on the 2nd largest bank in Texas being shut down.  From the article, it looks like they made a number of loans to home-builders during the recent housing bubble.  Many of these are now into default, reducing their capital level below the prescribed regulation.   This is a large failure, the bank had $16 billion in assets at last check.  That is going to put more draw on the FDIC’s already limited resources with the multitude of bank failure in 2008 & 2009.  What I did like about this is the fact that the bank was first given some time to bring itself into regulation before it was ultimately shut down, that is the trend I want to see.   I don’t like having banks play around with the accounting rules when they have obviously have too much liability for themselves and their depositors.  Strong banks must survive and the weak one will be consolidated.

News (Bloomberg):

Guaranty Financial Group Inc., the Texas bank spun off in 2007 by a forest products company, may become the biggest lender to collapse this year, wiping out investments by billionaire Carl Icahn’s funds and Omni Hotels owner Robert Rowling.

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Seven more U.S. banks fail going into the holiday weekend, brings total to 52 for 2009

July 3, 2009 by · Leave a Comment
Filed under: Bank Failure 

The market does not like this news. The Dow down over 2.5% at the time of this writing. This does seem to be accelerating and that does not bode well as a sign for future events to pass.  We are going to see more regional and local banks go bust as the loans on their books go into default and that make their capital reserve inadequate  for what regulators are requiring.  This also is putting a severe strain on the FDIC and its funds.  It already has had raise rates this year to cover the number of banks that went bust in 2008.

News (Bloomberg):

Six banks in Illinois and one in Texas were seized by regulators as the deepening financial crisis pushed the toll of failed U.S. lenders this year to 52, the most since 1992.

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