Bank Failure Friday, Talking Colonial & DIF update

August 14, 2009

Five bank failures tonight, bringing the total for the year to 77.  See below for a video clip and for details about the Deposit Insurance Fund’s resources.

#73

  • Failed Bank: Dwelling House S&L, Pittsburgh PA
  • Acquiring Bank: PNC Bank, Pittsburgh PA
  • Vitals: At 3/31/09, assets of $13.4 million, deposits of $13.8 million
  • Estimated DIF damage: $6.8 million

#74

  • Failed Bank: Colonial Bank, Montgomery AL
  • Acquiring Bank: BB&T, Winston-Salem NC
  • Vitals: At 6/30/09, assets of $25 billion, deposits of $20 billion
  • Estimated DIF damage: $2.8 billion

#75

  • Failed Bank: Union Bank, Gilbert AZ
  • Acquiring Bank: MidFirst Bank, Oklahoma City, OK
  • Vitals: At 6/12/09, assets of $124 million, deposits of $112 million
  • Estimated DIF damage: $61 million

#76

  • Failed Bank: Community Bank of Arizona, Phoenix AZ
  • Acquiring Bank: MidFirst Bank, Oklahoma City, OK
  • Vitals: At 6/30/09, assets of $159 million, deposits of $144 million
  • Estimated DIF damage: $26 million

#77

  • Failed Bank: Community Bank of Nevada, Las Vegas
  • Acquiring Bank:  None.  FDIC establishes “Deposit Insurance Bank” to resolve this failure.
  • Vitals: At 6/30/09, assets of $1.52 billion, deposits of $1.38 billion
  • Estimated DIF damage: $782 million

And earlier today, I chatted with Carrie Lee about the Colonial news.*

DIF Update

Now’s as good a time as any to update vital statistics for the Deposit Insurance Fund.

At 3/31/09, the DIF had $41.5 billion worth of reserves to handle bank failures, a total that included $28.5 billion of reserves for future failures along with the $13.0 billion balance remaining in the fund after subtracting liabilities from assets.

At the end of Q2, FDIC charged banks a special assessment that they estimated would raise an additional $5.6 billion.

Since the end of Q1, there have been 51 bank failures, which in total the FDIC estimates will cost the DIF $16.1 billion. This includes the bank failures above.

Loosely figured, that puts the DIF’s resources at $31.0 billion.

The next big tests to come will be Corus and Guaranty, with $7.2 billion and $11.7 billion worth of deposits respectively.

Just so folks are clear, when a bank fails, there isn’t a 100% loss rate on deposits.  For example, though Colonial had $20 billion of deposits, FDIC estimates it will only cost the DIF $2.8 billion.  That’s because the bank has significant assets that FDIC will be able to sell.

The bottom line, though, is that the DIF is in tough shape.  It’s quite possible FDIC will have to draw down a portion of its credit line at Treasury before this banking crisis is over.

What are the total deposits backed by the DIF?  Officially, $4.8 trillion.  But if you include “temporary” increases in deposit insurance limits—-individual accounts up to $250,000, and transaction accounts unlimited—-the total jumps to $6.3 trillion.

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*One quick correction on the video: FDIC seized Colonial Bank, not the holding company Colonial BancGroup.

Comments

How about that AP interview Sheila gave yesterday basically telling the Administration its regulatory plan was DOA!

Posted by sangellone | Report as abusive
 

And yet, another article also dated yesterday says only 3 banks have failed, and it doesn’t even mention Colonial.

http://www.reuters.com/article/ousiv/idU STRE57E06C20090815

Posted by Terri | Report as abusive
 

Nice report.

Way back in 2008, BankImplode.com created this unofficial list that has been analogous to a hurricane tracker to those who are interested in following this:

http://bankimplode.com/list/troubledbank s.htm

Of the top 10, 4 are left.
Of the top 20, 8
Of the top 50, 28.
A total of 492 banks are listed.

If you believe in statistics, and review the list, it’s pretty easy to follow the progression because these banks do not fail in a vacuum, the D.I.C. does not cover 100% of the losses and the foreclosure rate reached a New record last month, July 2009.

http://www.publicbroadcasting.net/njn/ne ws.newsmain/article/0/0/1542064/Business  /U.S..home.foreclosures.set.another.rec ord.in.July

 

I believe that the bank failures are inevitable and that an orderly take over is better than running out of cash. I do think that someone with banking experience should take over the failed bank. I think it will take some time to shake out the market as there is still a lot of bad paper out there.

Posted by f belz | Report as abusive
 

At least the good news is finally Media is reports concrete things, instead of crucial details like viability of DIF.

 

This is nice reporting from our journalists
Instead of good banking reports from U.S.A.,we are getting bad financial results.
What happened to banks balance sheets?
what happened fixed assets of these banks?
what happened annual audit reports.
Now,American depositors,customers had to accept that the above bank top officials had not projected actual financial results.
Still have plenty of time to correct these bad managements.
Better to have very quick bail out packages from state governments,appointing best experienced finance professionals and fully transparent audit mechanism,supervision on regular basis
If the above mentioned corrective measures be implemented,future investors confidence,trust,profits will be emerged in future years.

 

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