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Bank Failure Friday – There were three bank failures last Friday, and one Tier One Bank (TONE) of Lincoln Nebraska was on the ValuEngine List of Problem Banks. The FDIC Deposit Insurance Fund (DIF) ended the first quarter of 2010 in arrears by $20.7 billion and so far in the second quarter $10.6 billion has been used to bailout another 40 banks. The cumulative loss year to date is $31.3 billion.
  • Only 25 banks failed in 2008, as the FDIC was slow closing community and regional banks.
  • There were 140 bank failures in 2009 with a peak of 50 in the third quarter.
  • In the first quarter of 2010 there were 41 failures, and so for in Q2 the total is 40 for a year to date total of 81.
  • At this pace bank closures in 2010 will be at the high end of my 150 to 200 estimate.
  • Since the end of 2007, the FDIC has closed 245 banks on the way to my predicted 500 to 800 by the end of 2012 into 2013.
Tier One Bank (TONE) had $2.8 billion in assets with overexposures to Construction & Development Loans and Commercial Real Estate Loans with risk ratios of 367% for C&D and 995.7% for CRE well above the 100% and 300% regulatory guidelines that were set at the end of 2006 and ignored by the US Treasury, Federal Reserve and FDIC ever since. The bank’s real estate loan pipeline was 100% funded. This bank was trading between $32 and $34 when I first flagged it as a Domino Bank in 2006.
In the summer of 2008 Tier One Bank was one of six community banks I wrote about in an Equities Magazine column called, “The Great Credit Crunch”.
click to enlarge
TONE joins OTCPK:FTBK and CORS as failed banks. The other three remain on the ValuEngine List of Problem Banks.
UCBIThis stock traded as high as $6.20 on April 23rd and closed Friday at $4.25 down 31.5%. Since the summer of 2008 assets have declined to $7.8 billion from $8.4 billion with C&D loans declining to $1.3 billion from $2.3 billion. C&D and CRE ratios have declined to 175.8% and 406.7% of risk-based capital but with the real estate loan pipeline slightly more stressed at 88.7% from 83.8%. The bank is trying to get its act in order, but needs to write down more troubled assets and raise additional capital to bring their C&D and CRE assets back within regulatory guidelines.
OTC:FSNMThis stock traded as high as $1.36 on April 23rd and closed at 46 cents per share on Friday, down 66%. Assets have declined to $2.9 billion from $3.5 billion in the summer of 2008. Their real estate loan exposures have increased to 372% C&D and 966.9% CRE and the loan Pipeline has been stressed to 95.5% from 7.2%. This bank is clearly under-capitalized.
BANRThis stock traded as high as $8.15 on April 23rd and closed at $4.00 on Friday, down 51%. Assets increased to $4.6 billion from $4.4 billion as additional capital reduced real estate loan exposures to 142.3% for C&D and 389.2% for CRE loans as C&D loans decline to $685 million from $983 million. While this is progress the Pipeline is more stressed at 88.2% versus 76.2% in the summer of 2008.
In December 2008 in Equities Magazine I described “The Dirty Dozen of Troubled Banks” and five of the twelve banks have since failed. Only one has been removed from the ValuEngine List of Problem Banks by eliminating their overexposures to C&D and CRE loans.
Courtesy of FDIC
OTCPK:HRZBNow a failed bank.
OTC:FSNMI covered this bank on my summer 2008 list.
CACBStill on the VE List of Problem Banks. Assets have declined to $2.1 billion from $2.4 billion as C&D loans declined to $247 million from $695 million. The C&D ratio fell to 258.5% from 271.3%, but the Pipeline stress increased to 94% from 76.6%. Stock was at $1.70 on April 26th and ended Friday at 56 cents down 67%.
CADEStill on the VE List of Problem Banks. Assets declined slightly to $1.9 billion from $2.0 billion as C&D loans declined to $156 million from $399 million. The C&D ratio fell to 136.2% from 251%, but the Pipeline stress increased to 90% from 72.5%. Stock was at $4.80 on April 23rd and ended Friday at $1.73 down 64%.
CNBNow a failed bank.
BOFL – Failed on the last Friday of May.
PRWTStill on the VE List of Problem Banks. Assets are about unchanged at $1.5 billion but the bank’s C&D loans declined to $191 million from $317 million with the C&D down to 184.1% from 202.2%. The Pipeline stress remains high at 89.1% versus 88.1%. This stock has burned through TARP money and has reneged on TARP dividend payments. The stock declined from $1.38 on April 26th to 60 cents last Friday down 57%.
MCBCStill on the VE List of Problem Banks. Assets have declined to $1.7 billion from $2.1 billion with the bank’s C&D loans down to $169 million from $359.4 million. The C&D loan ratio declined to 140.2% from 185.9%, but the Pipeline stress increased to 86% from 78.5%. The stock declined from $3.23 on April 27th to $1.75 on Friday down 46%.
AMFINow a failed bank.
BPFHStill on the VE List of Problem Banks. Assets have declined to $5.8 billion from $6.9 billion with the bank’s C&D loans declined to $301 million from $887 million with the risk ratio down to 64.4% from 156.1%. While this is below the 100% risk guideline the bank is still overexposed to CRE loans with Pipeline stress at 83.4% versus 85.4%. The stock has been upgraded to HOLD from SELL. The stock declined from $8.96 on April 26th to $6.62 on Friday down 26%.
MBHINow a failed bank. This was the first publicly-traded bank failure that reneged on TARP divided payments.
HBANNo longer overexposed to C&D or CRE lending and is no longer on the VE List of Problem Banks. The Pipeline stress has increased however to 81.2% from 66.6%. The stock is unrated by ValuEngine and the stock is down 21.2% from $7.40 on April 26th to $5.83 on Friday.
Courtesy of Thomson / Reuters
That’s today’s Four in Four. Have a great day.
Disclosure: No Positions
Source: Predicting Bank Failures Using FDIC data and ValuEngine Screening