FDIC shuts down AmTrust Bank and 5 others to bring total to 130 in 2009

December 7, 2009 by · Leave a Comment
Filed under: Bank Failure 

Having AmTrust fail is pretty major being they had $12 billion in asset when the FDIC put them into receivership.   According to the AP release, AmTrust losses were connected to exposure to loans connected to land deals and construction developments.  FDIC has been telling Congress that its deposit insurance fund is dangerously low if not already negative.  This failure alone is going to cost the fund $2 billion dollars. According to the release, the FDIC still has $21 billion in a separate reserve fund and a $500 billion dollar credit line from the U.S. Treasury.

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U.S. Bank Failures Hit 105 in 2009

October 23, 2009 by · Leave a Comment
Filed under: Bank Failure 

We are not out of the woods yet.  We crossed the 100 bank failure mark this year.  A total of seven banks had their door shut this Friday according to the FDIC.  As of August, the FDIC still has 416 banks on their “watch list” so it is likely we will see more failures in 2009 and 2010 if not longer.  Here is a troubling statement made in this Bloomberg article that discusses the term “zombie bank” which refers to a bank that is basically insolvent but have still not been shut down.

The number of bank closings would likely be higher this year if the FDIC’s fund wasn’t depleted and if the agency had more bank examiners, RBC’s Cassidy said. The agency shrank under President George W. Bush before adding employees in the Obama administration. The FDIC has about 6,000 employees now, compared with 21,000 during the savings-and-loan crisis in 1991, he said. “We certainly know there are hundreds and hundreds of zombie banks out there,” Cassidy said. “The only alternative for them is to be seized and it’s only a matter of manpower and money before they get to it.”

Lately, the FDIC has had its deposit insurance stressed because of these numerous bank failures, they have raised the premiums they charged banks to securing part of their deposits.

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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