Sunday, February 22, 2009

Silverton Falls. Bank or Citi Next?

Another bank went bust this weekend. This time, it was Silverton Falls Bank of Silverton, OR.

This closing was actually kind of sad, because unlike other institutions, this one fought hard to stay alive. But, ultimately, it wasn't enough. Undercapitalized and with no way to improve their cash situation, regulators closed it.

Only one bank closing this weekend was surprising. In light of last weekends record four closings, I thought we'd see more.

On the other hand, the elephants have entered the room once again, as Bank of America and CitiBank are now denying there is anything to worry about.

When there is nothing to worry about, there is nothing to talk about. But when people start telling you not to worry - watch out.

Saturday, February 14, 2009

Bank Closures Accelerating

Today is Friday the 13th. So, it is strangely appropriate that the FDIC closed 4 more banks today, bringing the grand total for the year to 13 failed banks.

That's a lot of failed banks.

In 2005, there were 0 bank failures.
In 2006, there were 0 bank failures.
In 2007, there were 3 bank failures.
In 2008, there were 25 bank failures.
In 2009, there have been 13 bank failures so far.

In two months, we have racked up over half the number of failures we had all of last year. And last year was a bad year.

To look at it another way, in 2007, a bank failed every 4 months. In 2008, about two banks failed each month. But right now, we are looking at over 8 banks failing each month.

If that number holds, we could be looking at 100 banks this year. But the year has just gotten started, and the list of 'sick' banks has way more than 100 names on it.

Four closures (pun intended) in a day sets a modern record. But, if things take a turn for the worse, we could end up seeing a lot more damage each weekend than that.

Sunday, February 01, 2009

Another Three Bite the Dust

Three more banks failed this weekend.

Ocala National Bank out of Florida was seized because it was about to run out of money. Regulators cited 'unsafe and unsound' lending practices as one of the reasons that the bank was closed.

Suburban Federal Savings Bank of Crofton, Maryland became the first Maryland bank casualty since 1993. According to reports, the bank implemented an aggressive lending program that required little to no proof of the borrower's salary or ability to pay.

It is a BIG surprise this bank failed. Luckily, they found a buyer.

MagnetBank out of Utah wasn't so fortunate. Closed because it was declared insolvent, the FDIC asked over 320 different bidders to purchase the bank, with not one of them interested. That's pretty bad.

But even though the bank is closed, the depositors will be getting checks in the mail, courtesy of the US gov. Don't you love picking up the bill for incompetent (at best) management?

More info at Bank Closure Map.