This seems to get no press anymore, but we still have banks failing at a record rate. Tonight we have 3 more bank failures, Republic Federal Bank out of Miami, Solutions Bank out of Overland Park KS and Valley Capital Bank out of Mesa AZ. Last week we had 6 bank failures and year-to-date we have a total of 133 banks that have failed. Nothing to see here, everything is fine so keep buying stocks as there is no risk. Even though we have the smart money, the credit markets, keeping short-term treasuries near zero.
I am sorry, but when the smart money is saying. pay me nothing for up to 6 months and we are having banks fail at a record rate there is a problem. Retail sales may be up, we may have a stimulus induced GDP pump, mostly because of a devalued dollar, which is coming to an end quickly here, but there is no real recovery. The employment reports are showing zero hiring as the average worker is looking for work, and giving up, after a record 27+ weeks and is either removed from the labor force or placed on the EUC and no longer counted. These are all signs that something is about to happen.
Today’s Failures:
Bank
State
Assets
Deposits
Republic Federal Bank
FL
$433M
$352M
Solutions Bank
KS
$511.1
$421.3M
Valley Capital Bank
AZ
$40.3M
$41.3M
Total
1
$984.4M
$814.6M
Estimated FDIC Losses, including loss-share agreements:
Immediate Loss
$252.1M
Loss-share agreement
$651.5M
Total
$903.6M
Not bad for an organization that is already running in the red. I guess it is a good thing Congress just decided to raise the debt ceiling by $1.8T to just about $14T altogether. It is shocking that the dollar actually went up in value today, but it is merely short covering and once people realize that Ben will never raise interest rates, see failed bank list total above, ever again I am sure the dollar will come down again.
Finally, we have the 99th 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.
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 30th the FDIC is bust, technically, but we still had closures up until October 2nd. 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?
The failures started early today with the FDIC reporting 2 closures, both the same bank, but in teo different states, by 5:00 PM today. These 2 closures means that 94 banks have closed this year, with is astounding. The FDIC is also, basically, broke and is considering getting more cash from the Treasury, they have a $500 billion line of credit and I think they will need a good portion of that in the near future.
On another note, sorry for the lack of posts this week, I am working on a project which is taking a lot of time right now.
Irwin Bank had branches in Kentucky and Ohio, so it was reported weird, but I will use the total number of deposits and assets below.
Irwin Union Bank____KY______________$3.1B________________$2.5B
The FDIC estimates a loss of $850 million and entered into a loss-share agreement with First Financial Bank, the acquirer, of $2.5 billion. Basically, we know they lost $850 million for sure, but the FDIC will surely realize some losses on the $2.5 billion loss-share agreement.
The size of the bank closures are getting larger, in case you have not noticed as the closures are not reported on the evening news anymore. I guess the failure of the banking system is somehow not important enough for the news outlets to cover. More later as the closures come in.
Irwin Union Bank:
Federal and state regulators today closed Irwin Union Bank, F.S.B., Louisville, Kentucky, and Irwin Union Bank and Trust Company, Columbus, Indiana, respectively. The institutions are banking subsidiaries of Irwin Financial Corporation, Columbus, Indiana. The regulators immediately named the Federal Deposit Insurance Corporation (FDIC) as the receiver for the banks. To protect depositors, the FDIC entered into a purchase and assumption agreement with First Financial Bank, National Association, Hamilton, Ohio, to assume all of the deposits of the two banks.
Irwin Union Bank and Trust Company, Columbus, Indiana, was closed by the Indiana Department of Financial Institutions. As of August 31, 2009, it had total assets of $2.7 billion and total deposits of approximately $2.1 billion. Irwin Union Bank, F.S.B., Louisville, Kentucky, was closed by the Office of Thrift Supervision. As of August 31, 2009, it had total assets of $493 million and total deposits of approximately $441 million.
For the second week in a row there was an additional closure after the 6:00 PM cutoff date. The new is 3 banks tonight and 72 for the year. The resent victim of our recovery is Community First Bank in Oregon. Community First Bank had total assets of $209 million and total deposits of approximately $182 million. The FDIC entered into a loss-share transaction on approximately $155 million of Community First Bank’s assets.
This brings the total potential losses of all 3 banks to $598 million for this week. The closures are still gaining in velocity, approaching 300% of 2008 closures, which is not a good sign. I will consolidate the information tomorrow.
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