by Calculated Risk on 7/31/2010 05:19:00 PM

With the number of institutions on the unofficial problem bank list now over 800, here is a review of the growth of the unofficial list ...

We started posting the Unofficial Problem Bank list in early August 2009 (credit: surferdude808). 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 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. Some of this data is released with a lag, for example the FDIC announced the June enforcement actions yesterday.

Click on graph for larger image in new window.

This graph shows the number of banks on the unofficial list. The number of institutions has more than doubled since early August 2009 - even with all the bank failures (failures are removed from the list). The number of assets is up 50 percent.

On August 7, 2009, we listed 389 institutions with $276 billion in assets, and now the list has 808 institutions and $415 billion in assets.

Note: For Q2 2009, the FDIC listed 416 institutions and $299.8 billion in assets (slightly more than the unofficial list a month later). The FDIC Q2 2010 Quarterly Banking Profile will be released in a few weeks.

The four red dots are the number of banks on the official problem bank list as announced in the FDIC quarterly banking profile for Q2 2009 through Q1 2010. The dots are lagged one month because of the delay in announcing formal actions.

The unofficial count is close, but is slightly lower than the official count - probably mostly due to timing issues.

Based on the current trend, there is still a reasonable chance that the unofficial problem bank list will be over 1,000 banks later this year ...