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15 Bank Failures So Far 4 August 09′

Detective Krum

Detective Krum

August 2009 saw 15 bank failures. Three banks failed on Friday August 28, 2009: Affinity Bank in Ventura, California, Mainstreet Bank in Forest Lake, Minnesota and Bradford Bank in Baltimore, Maryland. Wasn’t the bank bailout passed by the US Congress suppose to stop the bank failures or was the bailout a way to consolidate the large wealthy banks and swallow up the smaller banks?

If Chris Dodd, Barney Frank and Chuck Schummer wouldn’t have put TARP together, these banks most likely wouldn’t be in the mess they are.

Texas saw Guaranty Bank from Austin, Texas fail in August and Florida saw Community National Bank of Sarasota County located in Venice, Florida and First State Bank of Sarasota. Then let’s not forget Taylor, Bean & Whitaker being raided by the FBI and 1,000 employees lose their jobs. The ripple down is being felt by servicers of Taylor, Bean & Whitaker’s fall considering they were the 10th largest home loan bank in the country.

To see a complete list of bank failures for August, check the chart below.

List of 15 bank failures in August 2009 & still counting

List of 15 bank failures in August 2009 & still counting

August 31, 2009 Posted by | 1 | | 2 Comments

Arkansas Banks at Risk of Failure

Detective Krum

Detective Krum

The list is by no means to be considered complete and issues may or may not have changed since this post. When people search specific banks by region, I like to look into banks in the areas our readers seek.

This post is looking at banks in Arkansas which could fail or appear to be at risk of failing.  If I had to pick what bank I thought was in the highest risk for failing, I’d pick Southern Bank of Commerce located in Paragould, Arkansas because their bank rating is the lowest at (E-)  nearly an (F) . I’d strongly consider removing my money from that bank even if FDIC insured because it could take sometime to have access to your money (ask WWII age people how that was).

Legacy National Bank of Springdale, Arkansas would be my second worst at an (E+)  rating. There are many banks in Arkansas with good ratings I’d rather do business with. For example, Warren Bank & Trust of Warren Arkansas has an ( A-)  rating and People’s Bank in Sheridan Arkansas has an( A)  rating.

On the other hand,  Timberland Bank (ElDorado, AR) First Western Bank (Booneville) Farmer’s Bank & Trust (Blytheville) Bank of Gravett (Gravett) and Arvest Bank (Fayetteville) all have (D) ratings. Why do business with a bank that has a D rating when your money appears more secure with an A rated bank. Would you want someone working for you who scores a D on your company test or someone who scores an A on your company test?

August 29, 2009 Posted by | 1 | , | Leave a comment

SunTrust Bank Sounds Alarm?

Detective Krum

Detective Krum

OK you need to stay with me on this one.

Colonial, a Montgomery, Alabama-based holding company, sought Chapter 11 protection, listing assets of $45 million and debts of $380 million. Its banking unit became the biggest bank to be seized by regulators since the collapse last year of Washington Mutual Inc.

The company provided funding for Taylor Bean & Whitaker Mortgage Corp., based in Ocala, Florida,  the 12th-largest U.S. home lender, now suspended by federal agencies.

Yuji Saito, head of the foreign-exchange group in Tokyo said world economies are still doubtful.  The yen strengthened after Atlanta- based SunTrust Banks Inc. said U.S. financial institutions may report more credit losses as commercial real estate falters.

Why is this an alarm, you ask?  Disparities in banks’ loan values grew as the year progressed. When a loan’s market value falls, it might be that the lender would charge higher borrowing costs or, outsiders perceive a greater chance of default than management is assuming. Perhaps the underlying collateral has collapsed in value, even if the borrower hasn’t missed a payment. SunTrust Bank showed large divergence in their loan values. It showed a $13.6 billion gap as of June 30, which exceeded its $11.1 billion of Tier 1 common equity.

SunTrust is saying commercial real estate is next to fail. SunTrust had $15.9 billion in commercial real-estate loans as of June 30, or 13 percent of $122.8 billion in loans, according to a presentation to investors last week. The bank was not receiving interest on less than 1 percent of the commercial real-estate loans, SunTrust said.

Is it arbitrary accounting like Arthur Andersen provided? Fair-value estimates in the short-term can be a poor indicator of an asset’s eventual worth, especially when markets aren’t functioning smoothly and market prices are falling.  The problem with relying on management’s intentions is that they may be even less reliable.

August 28, 2009 Posted by | 1 | , | 1 Comment

Bank Failures Skyrocket

Detective Krum

Detective Krum

How many banks failed from the year 2000 to December 2008?

How many banks failed from January 1, 2009 until August 2009?

The question, what was the purpose of the bank bailout stimulus?

The United States Congress crammed down American’s throats the bank bailouts under the pretense that the economy would collapse if bailouts did not pass.  93% of Americans strongly opposed the bank bailouts and Congress said, in essence, shove it up your ass as they passed the bailouts.

What was the purpose of the bank bailout? The synopsis on Wikipedia states:

The Emergency Economic Stabilization Act of 2008, commonly referred to as a bailout of the U.S. financial system, is a law enacted in response to the subprime mortgage crisis authorizing the United States Secretary of the Treasury to spend up to US$700 billion to purchase distressed assets, especially mortgage-backed securities, and make capital injections into banks. Both foreign and domestic banks are included in the bailout. The Federal Reserve also extended help to American Express, whose bank-holding application it recently approved.The Act was proposed by Treasury Secretary Henry Paulson during the global financial crisis of 2008.

Then why did 7 banks fail from the year 2000 through 2008 and since the bank bailout was passed from January 1, 2009 until August 2009 there have been 57 bank failures? See bank failures.

August 28, 2009 Posted by | 1 | | Leave a comment