The number of failed banks reached 157 as regulators closed six banks in Florida, Georgia, Arkansas and Minnesota.
The six failed banks this week had a total of $1.2 billion in assets and resulted in a loss to the FDIC Deposit Insurance Fund of $267.6 million. The total loss to the depleted FDIC Deposit Insurance fund for the year now amounts to approximately $22 billion. The total loss for 2009 amounted to $37.4 billion when much larger institutions failed. Total assets of failed institutions in 2009 amounted to $169.7 billion compared to total assets of failed banks in 2010 of $95.3 billion.
During 2010, however, there were still a significant number of institutions with over $1 billion dollars in total assets that failed, indicating that the large banks have still not fully recovered from the real estate crash and harsh economic recession. During 2009 a total of 27 banks with over $1 billion in assets failed compared to a total of 19 banking failures with over $1 billion in assets in 2010.
Despite the slowdown in the size of banking failures, the number of failed banks is a cause for concern. The 157 banking failures in 2010 exceed last year’s total of 140 and is at the highest level since the savings and loan crisis of the early 1990’s. In addition, the FDIC is projecting that “over the period 2010 through 2014, the (DIF) fund could incur approximately $50 billion in failure-resolution costs. The FDIC projects that most of these costs will occur in 2010 and 2011.”
Since the cost of banking failures for 2010 amounted to $22 billion, the FDIC projection implies that the cost of banking failures in 2011 will approximate $28 billion, a 27% increase over 2010. With over 10% of all FDIC insured institutions on the Problem Bank List, the pace of banking failures does not look likely to subside anytime soon.
As of the latest report released by the FDIC there were 860 problem banks at September 30, 2010 up from 702 at the beginning of the year. Total assets held by the troubled institutions is $403.0 billion, a slight decrease from $431 billion in the previous quarter.
Making the problem even worse, the FDIC Deposit Insurance Fund has been completely depleted and now has a negative fund balance of $8 billion at September 30, 2010 and a fund reserve ratio of -.15% . The depleted FDIC insurance fund provides insurance protection for over $5 trillion in banking deposits. In the event of additional unexpected banking failures, the FDIC would quickly be forced to draw down on their $100 billion line of credit with the US Treasury.
Deposit Insurance Reserve Ratio
Details of this week’s banking failures:
Please click on the links below for detailed information on each bank closing.
The Bank of Miami, Florida – Banking Failure #152
Chestatee State Bank, Georgia – Banking Failure #153
Appalachian Community Bank, Georgia – Banking Failure #154
United Americas Bank, Georgia – Banking Failure #155
First Southern Bank, Arkansas – Banking Failure #156
Community National Bank, Minnesota – Banking Failure #157
How are you compiling your bank data (Total Assets, Total FDIC Loss, etc.)? Are you manually pulling it from the individual press releases or does the FDIC make this available in a downloadable format? Thanks!
Total assets of failed banks is available on the FDIC website under Historical Statistics on Banking. Deposits and assets of each failed bank are listed but the FDIC only releases estimated loss on bank closings for prior years, not the current year.