Must be Friday 4/30 - 175 bank branches shut down today

derryb

Seven banks with a total of 175 branches were closed today by the FDIC.

Puerto Rico took a big hit making up three of the banks with a total of 97 branches. Westernbank bore the brunt of that with 46 branches.
Frontier bank in Everett, WA had all 51 of its branches closed.

Here's the info on FDIC website, you have to click on the press release for each bank to get details:

FDIC bank closing information

For the first time that I can recall the FDIC is not providing, in the press release, the cost of each closure to the FDIC. Instead they are stating "The FDIC and XXX Bank entered into a loss-share transaction on X million of XXX Banks' assets. YYY (receiving bank) will share in the losses on the asset pools covered under the loss-share agreement."

You can bet with 175 branches closing the FDIC closure fund took a very big hit. Could explain why the new finance bill under consideration includes raising the FDIC's credit limit from $30 Million to $500 Billion (yes, billion):

Bill seeks to let FDIC borrow $500 Billion

Folks, if there ever was a time to be worried about our banking system and to be fully invested in PMs, it is now.

Wingsrule

From the Yahoo Finance headlines:

WASHINGTON (AP) -- Regulators on Friday shut down three banks in Puerto Rico, two in Missouri and one in Michigan, bringing the number of U.S. bank failures this year to 63.

The Federal Deposit Insurance Corp. took over the banks: Westernbank Puerto Rico, based in Mayaguez, with about $11.9 billion in assets; R-G Premier Bank of Puerto Rico, based in Hato Rey, with around $5.9 billion in assets; and San Juan-based Eurobank, with $2.5 billion in assets.

The FDIC also seized CF Bancorp, based in Port Huron, Mich., with about $1.6 billion in assets; Champion Bank, of Creve Coeur, Mo., with $187.3 million in assets; and BC National Banks, of Butler, Mo., with $67.2 million in assets.

Banco Popular de Puerto Rico agreed to acquire Westernbank's deposits and about $9.4 billion of its assets. The FDIC will keep the remainder for eventual sale. Scotiabank de Puerto Rico agreed to buy all the assets and deposits of R-G Premier Bank. And Oriental Bank and Trust is acquiring all the assets and deposits of Eurobank. The three healthier acquiring banks are based in San Juan, the Puerto Rican capital.

The three failed banks together held more than one-fifth of the total bank assets on the U.S. Caribbean territory. They had struggled to stay afloat during Puerto Rico's grinding, four-year recession.

It was Puerto Rico's largest bank consolidation in more than two decades as well as one of the FDIC's biggest resolutions of failed banks in the financial crisis that struck in fall 2008.

In addition, the FDIC and Banco Popular agreed to share losses on $8.8 billion of Westernbank's loans and other assets. The agency and Scotiabank agreed to share losses on $5.4 billion of R-G Premier Bank's assets, while the FDIC and Oriental Bank and Trust are to share losses on $1.6 billion of Eurobank's assets.

The failure of Westernbank is expected to cost the deposit insurance fund $3.3 billion; the failure of R-G Premier Bank is expected to cost $1.2 billion; that of Eurobank, $743.9 million.

First Michigan Bank, based in Troy, Mich., agreed to assume the deposits and about $870 million of the assets of CF Bancorp. BankLiberty, based in Liberty, Mo., agreed to acquire the deposits and $152.6 million of the assets of Champion Bank, while Community First Bank of Butler, Mo., is acquiring all the assets and deposits of BC National Banks.

In addition, the FDIC and First Michigan Bank agreed to share losses on $808.1 million of CF Bancorp's assets. The agency and BankLiberty agreed to share losses on $113.5 million of Champion Bank's assets, while the FDIC and Community First Bank are to share losses on $37.9 million of BC National Banks' assets.

The failure of CF Bancorp is expected to cost the deposit insurance fund $615.3 million; the failure of Champion Bank is expected to cost $52.7 million; that of BC National Banks, $11.4 million.

sinin1

I have a $25 savings account in Frontier bank - Washington/Oregon -47 bank branches


I was looking at their financials and could not make heads or tails out of the assets and liabilities
is a loan considered a bank asset and a deposit a liability?

tincup

One thing for everyone to think about......

We often hear that these recent bank failures are nothing compared to what happened in the Great Depression. But I don't think we are getting the whole story.

In the thirties, banks did not have the branches that we do now. Each community had its own bank, with its own name. So going by the names of the banks that closed, the number would appear to be larger than what are closing now. However, when you consider the branches of the banks that are now closing (the branches would be the equivilent of the local independent community bank in the thirties), the number would be......? I suspect the comparison could be an eye opener.

If you compare the number of banks closing now (including all branches) to the closings in the thirties, perhaps they are closer than we think. I have no idea what the numbers are, since I am sure we will not see that number in any of the mainstream media. I'm sure it can be tallied up though for anyone who wants to do the looking and arithmetic.

Just like the manipulated unemployment figures, and the inflation figures, the magnitude of the bank failures are not being presented to the American people.

Some may say "So what? The FDIC will step in and no one will lose any money". Well, true, but it appears the FDIC is for all practical purposes broke, since their borrowing limit is probably going to be greatly increased. And, borrow from where? Why, the Magic Money Machine of course.

The bank failures are not over with, there are many more to come. If I recall reading somewhere, it is expected there will be more this year than last.

derryb

<< <i>I have a $25 savings account in Frontier bank - Washington/Oregon -47 bank branches


I was looking at their financials and could not make heads or tails out of the assets and liabilities
is a loan considered a bank asset and a deposit a liability? >>



Yes. Problem is the $25 liability they have with you was turned into thousands of dollars in assets that didn't get repaid to the bank. This is the primary reason banks fail. It's called fractional lending and it got way out of control with regulators asleep or watching porn on their government computers.

Justacommeman

From a JS reader

Dear Jim,

The following are some additional thoughts on the seven bank failures announced by the FDIC on Friday, April 30, 2010.

1. Perspective on Losses

This week's losses were extremely serious, a fact belied by the virtual absence of press coverage. They were the largest in any single week since the failure of IndyMac Bank on July 11, 2008.

IndyMac had assets of about $32 billion and deposits of $19 billion. Its failure cost the FDIC an estimated $8 billion.

The seven banks that failed this week had combined assets of about $25.8 billion and deposits of $19.6 billion. These failures cost the FDIC an estimated $7.33 billion.

Prior to this week, the FDIC's estimated losses from 57 bank failures in 2010 stood at about $8.6 billion. This week's failures practically doubled that figure, to $15.93 billion.

This information cannot be reconciled with the MOPE that states the banking sector has recovered. To the contrary, these failures speak of deeply-rooted problems in the banking sector that appear to be getting worse over time.

2. Status of the Deposit Insurance Fund

According to an AP article posted Friday (cited below), the FDIC's deposit insurance fund "fell into the red last year, hitting a $20.9 billion deficit as of [Dec. 31, 2009]." With this year's losses, the fund's deficit has grown to at least $36.8 billion. In addition, the FDIC has a huge exposure for worse-than-expected losses on some $165 billion of assets taken over by acquiring banks.

That pretty much wipes out the $45 billion the FDIC announced it was going to raise by requiring banks to pre-pay premiums for the period, 2010 through 2012. Obligations of the FDIC will soon become obligations of the U.S. taxpayer, adding billions of dollars each year to already out-of-control federal deficits.

3. More FASB-Blessed Fantasy Valuations

Each of the FDIC's press releases provides vital information about the true market value of the failed banks' assets versus the values assigned them by bank management. This gives some insight into the extent of over-valuations across the banking sector in the wake of the Financial Accounting Standards Board ("FASB") having suspended fair value accounting rules last year.

The FASB's capitulation has given bank management far too much leeway to value assets at levels far beyond what they could fetch in the open market, resulting in banks' balance sheets becoming increasingly less reliable indicators of their true financial health.

Looking at the five largest failures this week:

Westernbank Puerto Rico of Mayaguez, Puerto Rico, had stated assets of $11.94 billion and deposits of $8.62 billion. On paper, it was an extremely healthy bank; yet the FDIC's loss estimate for its closure is $3.31 billion. Based on that estimate, the real market value of its assets is only $5.31 billion. Bank management had over-valued these assets by 125%.

R-G Premier Bank of Puerto Rico of Hato Rey, Puerto Rico, had stated assets of $5.92 billion and deposits of $4.25 billion. The FDIC's loss estimate for its closure is $1.23 billion. Based on that estimate, the real market value of its assets is $3.02 billion, and had been over-valued by 96%.

Frontier Bank of Everett, WA, had stated assets of $3.5 billion and deposits of $3.13 billion. Its loss estimate is $1.37 billion. Based on that estimate, its assets are really worth $1.76 billion, and had been over-valued by 99%.

Eurobank of San Juan, Puerto Rico had stated assets of $2.56 billion and deposits of $1.97 billion. Its loss estimate is $744 million. Based on that estimate, its assets are really worth $1.226 billion, and had been over-valued by 109%.

CF Bankcorp of Port Huron, MI, had stated assets of $1.65 billion and deposits of $1.43 billion. Its loss estimate is $615 million. Based on that estimate, its assets are really worth $815 million, and had been over-valued by 102%.

Here again, these bank failures are being reported free of any allegations of fraud or even negligence on the part of bank management. Absent any such allegations, it stands to reason that these over-valuations, ranging from 96% to 125%, are considered to be in line with reasonable accounting practices sanctioned by the FASB at the time it suspended fair value requirements.

4. AP Article Covering Failures

Linked below is an AP article that provided some better-than-average coverage of this week's failures and the status of the FDIC's finances. Interestingly, the article was originally published at about 8:15 pm EST on Friday, April 30, 2010, but had to be re-posted at 10:00 pm EST following the FDIC's release of additional information late in the evening.

Focusing on the three banks that failed in Puerto Rico, the AP noted they "together held more than one-fifth of the total bank assets on the U.S. Caribbean territory."

Here's some food for thought. Puerto Rico's GDP is about $76 billion, about 21% of the size of Greece's ($356 billion). What is more relevant to the concerns of U.S. citizens, the fact that Greece is experiencing budget problems, or that FDIC-insured banks controlling one-fifth of the value of the assets on Puerto Rico failed in one week?

What possible explanation could there be for the fact that the Greek "crisis" has been dominating headlines in the U.S. press for months, while matters such as these horrendous bank failures and the impending failures of the majority of U.S. States barely get a mention?

Can you say, Manipulation of Perspective Economics?

Respectfully yours,
CIGA Richard B.

derryb

History will show the FASB mark to market fantasy a big part of the coming collapse of the US economy. These changes in accounting rules have allowed the entire financial industry to live in a make believe world of valuable assets so that you and I won't run down to the bank and take our money back. It is the only thing keeping a lot of worthless banks and other financial enterprises from declaring bankruptcy.

For those that don't know what this is here's a quick explanation:
In order for bank balance sheets to show a rosier picture, Congress (with a lot of push/money from lobbyists) forced the FASB (who sets US accounting standards) to change the rules to allow banks to assign a much higher value to real estate that has actually dropped considerably in value. It is literally the only thing keeping many financial businesses afloat.

sinin1

mark to market is only as good as the people saying what the market is.

if Enron says their electrical generation plant in India is worth what it can value all production for the next 10 years out of the plant, without any sales - there will be problems