Unofficial Problem Bank List Reaches 844

Calculated Risk maintains an unofficial problem bank list compiled from publicly available records. The latest list contains 844 names with a total of $412 billion in assets. The FDIC announced this week that they have (as of June 30) an official count of problem institutions at 829 with assets of $403 billion. The FDIC just releases a count quarterly, but no names.

The Calculated Risk list has tracked the FDIC count reasonably well over the past year (click to enlarge images):

The trend line tightly matches the data since last August, with a slope of +33 banks/month. Although no curve has been drawn for the FDIC data points, it is easy to see that there possibly is a slight concave curvature (downward) to that data. One might infer that the rate of problem bank counting by the FDIC might be slowing ever so slightly. Such a slowing of problem bank creation is not evident in the Calculated Risk data.

There is a clear indication that more smaller banks are coming onto the problem bank list than are leaving. Banks leave either by resolution of deficiency or failure, overwhelmingly the latter in the past three years. On August 7, 2009 there were 389 banks with assets totaling $276 billion on the unofficial problem bank list. Thirteen months later, the number of banks is 2.2 times larger, but the total of assets is only 1.5 times as large. The average assets per problem list bank in August 2009 was $720 million; now the number is $490 million per bank.

So far in this crisis, the FDIC has closed 286 banks. At the current rate of closures, another 80 may be closed by the end of the year and the problem bank list may reach 1,000. That would put over 1,360 banks in trouble or already closed at the end of 2010. That is getting closer to the number of troubled banks estimated at close to 1,900 by banking analyst Chris Whalen over a year ago, but is still far short of the nearly 3,000 troubled banks estimated by Elizabeth Warren's Congressional Oversight Panel in February this year.

If the analysis done by the references given is accurate, the 286 banks closed thus far in this crisis is not only far short of the total failures to be expected. The number 286 is probably far short of half of the bank failures we will see.

Disclosure: No positions.