It's Friday - Has your bank failed today?

NEW -> Contingent Buyer Assistance Program
The Shareholders of "DSL" Downey voted with their feet today.

Stock was @ 2.10 on Monday. Today Closed at $ 1.57. -25% OUCH.



Not so good for the Bonds either.

Moody's downgraded the senior unsecured ratings of Downey Financial to B3 from B1. All Downey ratings are under review for downgrade.



Looks like the water in the Porcelin Fixture is spinning rapidly at this time.

I cant imagine anyone would risk having more than the FDIC limit in this institution.
 
One of those institutions has over a billion dollars in uninsured

deposits. That's a lot of clueless people. Maybe some of them

will take foreclosure McMansions in satisfaction of their deposits--but

wait---it doesn't work that way.
 
<a href="http://www.bloggingstocks.com/2008/08/13/is-white-house-pushing-bank-failures-onto-the-next-administratio/?icid=100214839x1207711311x1200407297">300 banks could fail</a>



<em>The Washington Post reports that the number of bank failures has been surprisingly low. But the crunch count is likely to grow <strong>as the problem bank list triples from 90 to 300 over the next three years</strong>. Meanwhile, the Federal Deposit Insurance Corporation (FDIC) could run out of money to pay off depositors of future failed banks unless it raises its deposit insurance rates from their current 5.4 cents per $100 deposits.</em>
 
Man... Friday just can get here soon enough. <a href="http://calculatedrisk.blogspot.com/2008/08/s-downgrades-downey-financial.html">CR posted about the downgrade at Downey</a>, and here is the full article for those who don't want to register for the S&P;site...



NEW YORK (Standard & Poor's) Aug. 13, 2008--Standard & Poor's Ratings Services

said today that it lowered its counterparty credit rating on Downey Financial

Corp. (Downey) to 'B+/C' from 'BB+/B'. The rating will remain on CreditWatch

Negative where it was originally placed on June 3, 2008.

This action was taken in response to our concerns that Downey's weakened

financial profile has left it exposed to potential funding and liquidity

problems. "Although Downey still had approximately $2.4 billion in available

liquidity between its remaining lines of credit and cash on the balance sheet,

deposit outflows in July and the recent drawing down of most of its FHLB lines

have reduced Downey's liquidity and available lines of credit. This, coupled

with Downey's already weakened financial profile and asset quality problems,

has reduced the company's flexibility and greatly weakened its franchise.

Downey has since reversed 40% of its July deposit outflows," said Standard &

Poor's credit analyst Robert B. Hoban, Jr. Downey has since reversed 40% of

its July deposit outflows. We are concerned that depositors in Downey's

footprint have a heightened sensitivity to potential bank failures after

recent experience and publicity, which increases the possibility that Downey

could experience further material deposit outflows. If that were to happen, it

could overwhelm Downey's liquidity and/or trigger an adverse regulatory

action, and the rating would have to be lowered an additional several notches.

California's deteriorating housing market has had a substantial negative

effect on Downey's credit performance, financial profile, and capitalization.

Adjusted nonperforming assets (NPAs) at the end of June were $1.4 billion

(11.16% of assets), an increase of 45% from the previous quarter's already

very high level. Downey's concentration in California and its level of

exposure to the more at-risk 2006-2007 vintage mortgages is likely to result

in continued asset-quality problems and heightened loss severity. Although

Downey's capital and reserve levels remain good, further NPA growth may

overwhelm the thrift's ability to overcome its asset-quality problems. In

addition, another loss on the scale of second-quarter 2008 is likely to

threaten the thrift's regulatory "well-capitalized" designation.

Resolution of the CreditWatch will be based on a close monitoring of

Downey's liquidity, capitalization, and any regulatory action.
 
It is like watching a row of dominos in slow motion:


<a href="http://www.bloomberg.com/apps/news?pid=20601087&sid=a20jAJRpYIuM&refer=home">Wahovia</a>
 
Michael Phelps is not only a good swimmer, but he single handily stopped any bank failures this week. The regulators were too busy watching the Olympics to notice the impending doom of many of the banks.



Hat tip to CF for the one liner early today on the regulators were too busy.
 
Strongest and weakest banks: <a href="http://www.moneyandmarkets.com/newsletter/103/StrongestandWeakestBanksandThrifts.pdf">The X report</a>.



<a href="http://bigpicture.typepad.com/comments/2008/08/strongest-banks.html">Hat tip to Barry for this absolute gem</a>.



Downey Savings D-



First Fed D+



Vineyard BK D



WAMU D+
 
The Columbian Bank and Trust Company, Topeka, KS just failed.



$752M assets, $622M deposits, $46M uninsured.



Slowly nibbling away another 1 or 2% of FDIC's reserves.
 
<strong><span style="font-size: 14px;">FDIC shutters Silver State Bank of Nevada</span>

</strong>

Son of presidential nominee John McCain was reportedly former board member; closing marks the 11th bank failure this year.



<a href="http://money.cnn.com/2008/09/05/news/economy/bank_closure.ap/index.htm">Who's next ?</a>
 
That one will cost 500M$ to the FDIC.



As you can see, it's the state of the FDIC reserves that I'm watching more than the number of bank failures.
 
[quote author="Trooper" date=1220702026]<strong><span style="font-size: 14px;">FDIC shutters Silver State Bank of Nevada</span>

</strong>

Son of presidential nominee John McCain was reportedly former board member; closing marks the 11th bank failure this year.



<a href="http://money.cnn.com/2008/09/05/news/economy/bank_closure.ap/index.htm">Who's next ?</a></blockquote>


<a href="http://www.huffingtonpost.com/jayne-lyn-stahl/andrew-mccain-resigns-fro_b_115233.html">There is no reportedly about it.</a>
 
WaMu is not long for this world:




<a href="http://www.reuters.com/article/marketsNews/idINN0926506620080909?rpc=44">WaMu CDS spreads</a>
 
[quote author="awgee" date=1221018343]WaMu is not long for this world:




<a href="http://www.reuters.com/article/marketsNews/idINN0926506620080909?rpc=44">WaMu CDS spreads</a></blockquote>
So who goes first....WaMu, Downey Savings, or First Fed???
 
[quote author="usctrojanman29" date=1221020118][quote author="awgee" date=1221018343]WaMu is not long for this world:




<a href="http://www.reuters.com/article/marketsNews/idINN0926506620080909?rpc=44">WaMu CDS spreads</a></blockquote>
So who goes first....WaMu, Downey Savings, or First Fed???</blockquote>


Is that like the joke that goes something like "A Priest, a Doctor, and an Attorney are in a transatlantic flight all alone, when the plane catches fire midair and starts to lose altitude............................"?
 
[quote author="no_vaseline" date=1221021380][quote author="usctrojanman29" date=1221020118][quote author="awgee" date=1221018343]WaMu is not long for this world:




<a href="http://www.reuters.com/article/marketsNews/idINN0926506620080909?rpc=44">WaMu CDS spreads</a></blockquote>
So who goes first....WaMu, Downey Savings, or First Fed???</blockquote>


Is that like the joke that goes something like "A Priest, a Doctor, and an Attorney are in a transatlantic flight all alone, when the plane catches fire midair and starts to lose altitude............................"?</blockquote>
No, I'm really curious which dog...errr bank gets taken over by the Feds. Obviously Downey and First Fed aren't going to have the impact that FDIC like WaMu going down will.
 
[quote author="usctrojanman29" date=1221036916][quote author="no_vaseline" date=1221021380][quote author="usctrojanman29" date=1221020118][quote author="awgee" date=1221018343]WaMu is not long for this world:




<a href="http://www.reuters.com/article/marketsNews/idINN0926506620080909?rpc=44">WaMu CDS spreads</a></blockquote>
So who goes first....WaMu, Downey Savings, or First Fed???</blockquote>


Is that like the joke that goes something like "A Priest, a Doctor, and an Attorney are in a transatlantic flight all alone, when the plane catches fire midair and starts to lose altitude............................"?</blockquote>
No, I'm really curious which dog...errr bank gets taken over by the Feds. Obviously Downey and First Fed aren't going to have the impact that FDIC like WaMu going down will.</blockquote>


I think DSL is in worse shape, but I do not think there are CDSes written on it's bonds so your guess is as good as mine. First Fed? I dunno. I have not been following it, although I read some snide comment about it on CR from time to time.




Is WaMu too big too fail? Are there too many CDSes written on it's bonds? If they just let it go, the result may a bit too interesting.
 
<a href="http://articles.moneycentral.msn.com/Investing/SuperModels/5BanksSafeFromTheStorm.aspx?page=1">5 banks safe from the storm</a>



Northern Trust (NTRS, news, msgs), based in Chicago, has one of the best fundamental performance records in the business. Its profits are one standard deviation above those of its peers through June 30, and its loan default rate in the second quarter this year was just 0.03%. The main reason is that its noninterest income is four times greater than its net interest income, meaning that it doesn't depend on loans to make a profit. Whalen believes its performance margin compared with those of its peers will widen over the next few quarters as banks with more credit exposure take a beating.



US Bancorp (USB, news, msgs), based in Minneapolis, still has a return on equity of 22% and has a high proportion of its income coming from nonloan services. It has charged off 1% of its total loans and is adding to loan-loss reserves at a 2-1 ratio without cutting dividends, which speaks well for management. Whalen says it is very unlikely that US Bancorp, "one of the best-performing commercial banks in the world," will ever need to obtain additional capital or sell itself to outsiders.



Washington Federal (WFSL, news, msgs), a thrift based in Seattle, reported a 10.1% return on equity through the second quarter, compared with a negative 4% for peers. Returns have tracked a full standard deviation above those of its rivals. Its main operating unit reported just 0.21% of loan defaults versus 1.26% for its peers. It has received advances from the Federal Home Loan Bank system equal to 16% of its assets, but its strong capital position and profitability still make it a top choice for cash deposits.



Charles Schwab Bank (SCHW, news, msgs), based in San Francisco and the thrift subsidiary of a discount brokerage, has an "eye-popping" return on equity of 27%, which is 1.26 standard deviations above those of its peers, making it almost countercyclical. With virtually no credit losses in the second quarter, Whalen calls the thrift subsidiary of Schwab a "pretty safe place to stash your loot" and says it deserves kudos for its success in a declining credit market.



Bank of Hawaii (BOH, news, msgs), based in Honolulu, sports a return on equity of 26% and is a full standard deviation above its peers in funding its loans. With just a 0.46% charge-off rate and high average maturity of its loans, Whalen thinks it has done a beautiful job in a tough environment.
 
[quote author="awgee" date=1221041419][quote author="usctrojanman29" date=1221036916][quote author="no_vaseline" date=1221021380][quote author="usctrojanman29" date=1221020118][quote author="awgee" date=1221018343]WaMu is not long for this world:




<a href="http://www.reuters.com/article/marketsNews/idINN0926506620080909?rpc=44">WaMu CDS spreads</a></blockquote>
So who goes first....WaMu, Downey Savings, or First Fed???</blockquote>


Is that like the joke that goes something like "A Priest, a Doctor, and an Attorney are in a transatlantic flight all alone, when the plane catches fire midair and starts to lose altitude............................"?</blockquote>
No, I'm really curious which dog...errr bank gets taken over by the Feds. Obviously Downey and First Fed aren't going to have the impact that FDIC like WaMu going down will.</blockquote>


I think DSL is in worse shape, but I do not think there are CDSes written on it's bonds so your guess is as good as mine. First Fed? I dunno. I have not been following it, although I read some snide comment about it on CR from time to time.




Is WaMu too big too fail? Are there too many CDSes written on it's bonds? If they just let it go, the result may a bit too interesting.</blockquote>
But interesting may be fun to see.
 
Lehman, WaMu, Merrill, and AIG are toast. BOA may buy Merrill. AIG and it's credit default swaps are the 800 lb. gorilla.
 
It's Friday! Did your bank fail today?



<a href="http://www.fdic.gov/bank/individual/failed/securitypacific.html">On November 7, 2008, Security Pacific Bank, Los Angeles, CA</a> was closed by the California Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC) was named Receiver.



All deposit accounts have been transferred to Pacific Western Bank, Los Angeles, CA ("assuming institution") and will be available immediately. On Monday, November 10, 2008, the former Security Pacific Bank locations will reopen as branches of Pacific Western Bank.



<a href="http://www.fdic.gov/bank/individual/failed/franklinbank.html">On November 7, 2008, Franklin Bank, SSB, Houston, TX</a> was closed by the Texas Department of Savings and Mortgage Lending and the Federal Deposit Insurance Corporation (FDIC) was named Receiver.



All deposit accounts have been transferred to Prosperity Bank, El Campo, TX ("assuming institution") and will be available immediately. On Saturday, November 8, 2008, the former Franklin Bank, SSB locations will reopen as branches of Prosperity Bank.



What is interesting is that Franklin Bank was run by <a href="http://people.forbes.com/profile/lewis-s-ranieri/34929">Lew Ranieri</a>, AKA the godfather of the mortgage bond.
 
You must log in or register to reply here.
Back
Top