June 2020: Unofficial Problem Bank list Decreased to 64 Institutions

The FDIC’s official problem bank list is comprised of banks with a CAMELS rating of 4 or 5, and the list is not made public (just the number of banks and assets every quarter). Note: Bank CAMELS ratings are also not made public.

CAMELS is the FDIC rating system, and stands for Capital adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to market risk. The scale is from 1 to 5, with 1 being the strongest.

As a substitute for the CAMELS ratings, surferdude808 is using publicly announced formal enforcement actions, and also media reports and company announcements that suggest to us an enforcement action is likely, to compile a list of possible problem banks in the public interest.

DISCLAIMER: This is an unofficial list, the information is from public sources and while deemed to be reliable is not guaranteed. No warranty or representation, expressed or implied, is made as to the accuracy of the information contained herein and same is subject to errors and omissions. This is not intended as investment advice. Please contact CR with any errors.

Here is the unofficial problem bank list for June 2020.

Here are the monthly changes and a few comments from surferdude808:

Update on the Unofficial Problem Bank List for June 2020. During the month, the list dropped by one to 64 institutions after three removals and two additions. Assets increased by $3.9 billion to $52.4 billion, with all of the increase centered in updated quarterly financials that added $4.2 billion. A year ago, the list held 73 institutions with assets of $55.0 billion. Added this month was The Fowler State Bank, Fowler, KS ($81 million) and Towanda State Bank, Towanda, KS ($11 million). Removals through merger included KEB Hana Bank USA, National Association, Fort Lee, NJ ($243 million); Ben Franklin Bank of Illinois, Arlington Heights, IL ($97 million); and First Citizens Bank of Polson, National Association, Polson, MT ($17 million), which made its appearance on the first list we published way back in 2009.

This month the OCC did not release a public update on its enforcement action activity. Usually, the OCC releases an update on the first Thursday after the 15th of a month. The last update from the OCC was on May 21st. The FDIC provided first quarter results and an update on the Official Problem Bank List on June 16th. In that release, the FDIC said there were 54 institutions with assets of $44.5 billion on the official list.

With the conclusion of the second quarter, we bring an updated transition matrix to detail how banks are transitioning off the Unofficial Problem Bank List. Since we first published the Unofficial Problem Bank List on August 7, 2009 with 389 institutions, 1,765 institutions have appeared on a weekly or monthly list since then. Only 3.1 percent of the banks that have appeared on a list remain today as 1,701 institutions have transitioned through the list. Departure methods include 1,002 action terminations, 410 failures, 270 mergers, and 19 voluntary liquidations. Of the 389 institutions on the first published list, only 4 or 1.0 percent, still have a troubled designation more than ten years later. The 410 failures represent 23.2 percent of the 1,765 institutions that have made an appearance on the list. This failure rate is well above the 10-12 percent rate frequently cited in media reports on the failure rate of banks on the FDIC’s official list.

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