The FDIC reported 24 bank failures for the second quarter of 2009, and now there are 44 in the third quarter for a total of 89 year to date in 2009.
One of the failed banks was publicly traded Vantus Bank (FFSX), a $458 million bank on our list of problem banks. So far in 2009, 23 failures were on our list.
The FDIC Deposit Insurance Fund is below zero so the FDIC is likely tapping that extra $22 billion that they found in their coffers.
Is the ICBA Stating the Truth?
The Independent Community Bankers of America reiterated that over 8,000 community banks, those with assets less than $1 billion are operating in good standing and outperforming bank industry averages.
I challenge the ICBA – There are 7,500 community banks with assets under $1 billion, and of the total 8,195 banks at the end of the second quarter, 3071 or 37.5% are overexposed to C&D and CRE loans.
Most of the 114 bank failures since the end of 2007 were small community banks with less than $1 billion in assets. I stand by my prediction that 500 to 800 banks will fail through 2011 / 2012.
The America’s Community Bankers’ Index (ABAQ) has a positive chart, but it’s down 22.8% year to date.
Michael Menzies, ICBA Chairman and president and CEO of Easton Bank and Trust in Easton, Maryland says,
Community banks lend locally, know their customers and continue to stick to traditional lending practices—all of which contribute to the continued stability and strength of the community banking sector.
Easton bank is no Poster Child for community banks as they are overexposed to C&D and CRE loans with risk ratios of 108% and 438% versus regulatory risk guidelines of 100% and 300% of risk-based capital.
The ICBA opined that