July 31st, 2011
Econintersect: The number of banks in trouble keeps growing, although the rate at which banks are falling into that condition has been slowing. In the past 12 months the number of troubled banks has increased by approximately 200. In the preceding 12 months the number grew by about 400. Of course, the number of banks that leave the list subtracts from the growth rate, and that has totaled 356 since the beginning of 2009. This year the failure rate appears to be slowing, with 59 failures administered by the FDIC through July. That is an annual rate of 101 failures, less than the 140 for 2009 and 157 for 2010. Follow up:
Follow up:Calculated Risk maintains a list of problem banks compiled entirely from public records. The list has now grown to 995 banks with listed assets of 415.4 billion. This list has steadily grown. About one year ago there were just under 800 banks listed. In July 2009, after the recession had officially ended, there were less than 400.
The FDIC releases a number for the banks that they considered to be in difficulty. The number was 888 as of March 31, 2011. An article in Seeking Alpha last year discussed how closely the Unofficial Problem Bank list number from Calculated Risk has tracked the official number from the FDIC.
The bottom line is that, although the rate of growth of the problem bank list is slowing, that is partly due banks failing being subtracted from the list. Adding the 356 bank failures since the start of 2009 to the current problem bank list gives a total of approximately 1,250 troubled banks, up more than 1,000 in 2 ½ years. The dotted line in the graph above extrapolates to about 1,200 in July 2011.
The number 1,250 is approximately 16% of the 7,657 insured depository institution members reported by the FDIC in their 2010 annual report.