Failure Friday, October 16, 2009 – Updated

Posted by Ray on October 16, 2009 under Main | Read the First Comment

Finally, we have the 99^th bank closure of the year with San Joaquin Bank closing down tonight. It is still odd that the US is on a run rate of about 3-4 bank closures per week all year long then all of a sudden, right after the FDIC admits its insolvency, we get none and then a trickle of closures. It’s not that I am disappointed that we are not getting failures it is that there is no way the government is being honest with us when the troubled banks list has increased 50% and closures just magically stop. If they are not going to be honest with us about this issue then they aren’t going to be honest about the bigger things that are going on.

Bank________________State_______________Assets______________Deposits

San Joaquin Bank_______CA________________$775M_______________$631M

The FDIC estimates it will lose $103M on the closure and the agency entered into a loss-share agreement for $683M with Citizens Business Bank, who assumed deposits of San Joaquin Bank.

The total potential loss to the FDIC, including the loss-share agreement, is estimated to be $786M.

San Joaquin Bank:

San Joaquin Bank, Bakersfield, California, was closed today by the California Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Citizens Business Bank, Ontario, California, to assume all of the deposits of San Joaquin Bank.

The five branches of San Joaquin Bank will reopen on Monday as branches of Citizens Business Bank. Depositors of San Joaquin Bank will automatically become depositors of Citizens Business Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branch until they receive notice from Citizens Business Bank that it has completed systems changes to allow other Citizens Business Bank branches to process their accounts as well.

Seriously, 2 weeks in a row and no failures? Give me a break. There are 416 banks on the FDIC watch list and Georgian Bank was not even on that list when it collapsed a couple weeks back, with a couple billion in assets. We know as of September 30^th the FDIC is bust, technically, but we still had closures up until October 2^nd. Now, we could still have failures later tonight, but its 6PM and nothing. Are we really supposed to believe all is well? Please… By the way, I bought March 2010 90 SPY puts and June 2010 89 SPY puts, so guess where I think things are heading?