RSS Feed by Calculated Risk on 2/19/2010 08:05:00 PM
Friday, February 19, 2010
Bank Failures #19 and #20: Illinois and California
Washington Bank crossed over
But the Rubicon
The La Jolla Bank
A name sounding so happy
New mood: not jolly
by Soylent Green is People
From the FDIC: FirstMerit Bank, National Association, Akron, Ohio, Assumes All of the Deposits of George Washington Savings Bank, Orland Park, Illinois
George Washington Savings Bank, Orland Park, Illinois, was closed today by the Illinois Department of Financial Professional Regulation – Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. ...From the FDIC: OneWest Bank, FSB, Pasadena, California, Assumes All of the Deposits of La Jolla Bank, FSB, La Jolla, California
As of December 31, 2009, George Washington Savings Bank had approximately $412.8 million in total assets and $397.0 million in total deposits. ...
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $141.4 million. ... George Washington Savings Bank is the 19th FDIC-insured institution to fail in the nation this year, and the second in Illinois. The last FDIC-insured institution closed in the state was Town Community Bank and Trust, Antioch, on January 15, 2010.
La Jolla Bank, FSB, La Jolla, California, was closed today by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. ...La Jolla Bank is a pretty good size failure. That makes four today ... hey, OneWest ... get out your tinfoil hats!
As of December 31, 2009, La Jolla Bank, FSB had approximately $3.6 billion in total assets and $2.8 billion in total deposits. ...
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $882.3 million. ... La Jolla Bank, FSB is the 20th FDIC-insured institution to fail in the nation this year, and the second in California. The last FDIC-insured institution closed in the state was First Regional Bank, Los Angeles, on January 29, 2010.
Bank Failure #18: La Coste National Bank, La Coste, Texas
by Calculated Risk on 2/19/2010 07:05:00 PM
Alligator shirt emblem?
A penniless bank
by Soylent Green is People
From the FDIC: Community National Bank, Hondo, Texas, Assumes All of the Deposits of the La Coste National Bank, La Coste, Texas
The La Coste National Bank, La Coste, Texas, was closed today by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. ...Another small bank ...
As of December 31, 2009, The La Coste National Bank had approximately $53.9 million in total assets and $49.3 million in total deposits....
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $3.7 million. ... The La Coste National Bank is the 18th FDIC-insured institution to fail in the nation this year, and the first in Texas. The last FDIC-insured institution closed in the state was Madisonville State Bank, Madisonville, on October 30, 2009.
Bank Failure #17 in 2010: Marco Community Bank, Marco Island, Florida
by Calculated Risk on 2/19/2010 05:42:00 PM
Marco Community fails
Mutual absorbs.
by Soylent Green is People
From the FDIC: Mutual of Omaha Bank, Omaha, Nebraska, Assumes All of the Deposits of Marco Community Bank, Marco Island, Florida
Marco Community Bank, Marco Island, Florida, was closed today by the Florida Office of Financial Regulation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. ...It is Friday.
As of December 31, 2009, Marco Community Bank had approximately $119.6 million in total assets and $117.1 million in total deposits. ..
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $38.1 million. ... Marco Community Bank is the 17th FDIC-insured institution to fail in the nation this year, and the third in Florida. The last FDIC-insured institution closed in the state was Florida Community Bank, Immokalee, on January 29, 2010.
Man in Foreclosure Bulldozes Home, More Housing Bailout and Market
by Calculated Risk on 2/19/2010 04:36:00 PM
From WLWT.com: Frustrated Owner Bulldozes Home Ahead Of Foreclosure (ht Philip, Rob Dawg)
[Terry Hoskins] used a bulldozer two weeks ago to level the home he'd built, and the sprawling country home is now rubble, buried under a coating of snow.There is a video at the link above and here are some photos.
"As far as what the bank is going to get, I plan on giving them back what was on this hill exactly (as) it was," Hoskins said. "I brought it out of the ground and I plan on putting it back in the ground."
Hoskins' business in Amelia is scheduled to go up for auction on March 2, and he told Fuller he's considering leveling that building, too.
From Diana Olick at CNBC: Housing Bailout Grows
Today President Obama stood in Nevada, ground zero for the foreclosure crisis, a state with 13 percent unemployment, and announced another pricey program to keep borrowers in their homes.
... This one gives $1.5 billion to the hardest hit states ... to "help address the problems facing the hardest hit housing markets." White House officials describe this as states that have "suffered an average home price drop of over 20 percent from the peak."
Click on graph for larger image in new window.This graph is from Doug Short of dshort.com (financial planner). His comments:
This chart is an offshoot of my Four Bad Bears. It shifts the point of alignment from the pre-bear highs to the bear bottom in the Oil Crisis and Tech Crash, the first major low in the 1929 Dow, and the March 9th closing low for our current Financial Crisis.
As the chart illustrates, the S&P 500 lows in 1974 and 2002 marked the beginnings of sustained recoveries. The Dow low in 1929 failed 11 months later.
DOT: Vehicle Miles Driven unchanged in December
by Calculated Risk on 2/19/2010 02:28:00 PM
In early 2008 there was sharp drop in U.S. vehicle miles driven. That was one of the key signs of demand destruction for oil that led me to predict oil prices would decline sharply in the 2nd half of 2008.
With oil prices at $77 per barrel, I've started looking for possible signs of demand destruction again (see: Oil Prices Push Above $81 per Barrel).
The Department of Transportation (DOT) reports that vehicle miles driven in December were unchanged from December 2008:
Travel on all roads and streets changed by 0.0% (-0.1 billion vehicle miles) for December 2009 as compared with December 2008. ... Cumulative Travel for 2009 changed by +0.2% (6.6 billion vehicle miles).
Click on graph for larger image in new window.This graph shows the comparison of month to the same month in the previous year as reported by the DOT.
As the DOT noted, miles driven in Dovember 2009 were unchanged compared to December 2008, and miles driven have declined 1.0% compared to December 2007 - and are down 3.2% compared to December 2006. This is a multi-year decline.
So far there is no evidence of significant demand destruction for oil, however the lack of growth in miles driven is suggesting a sluggish recovery.
Mortgage Delinquencies by Period
by Calculated Risk on 2/19/2010 12:11:00 PM
Much was made this morning about the decline in the 30 day delinquency "bucket" (percent of loans between 30 and 60 days delinquent). Hopefully this graph will put the problem in perspective ...
Click on graph for larger image in new window.
Loans 30 days delinquent are still elevated, and still above the levels in 2007 - and at about the level of early 2008 - when prices were falling sharply.
The 60 day bucket also declined in Q4, but it is still above the levels of 2008.
As MBA Chief Economist Jay Brinkmann noted, the 90 day and 'in foreclosure' rates are at record levels. Obviously the lenders have been slow to start foreclosure proceedings - and the 90+ day delinquent bucket is now very full. And lenders have been slow to actually foreclose - and the 'in foreclosure' bucket is at record levels.
What impacts prices are distress sales; homes coming out of the 'in foreclosure' bucket without being cured. Since the lenders slowed foreclosures to a trickle, prices have stabilized or even increased slightly in some areas.
But these record levels of long term delinquencies are why Brinkmann cautioned about house prices. This morning he pointed out on the conference call that there are a record 4.5 million homes seriously delinquent or in foreclosure. The loans on some of these homes will be cured - perhaps by HAMP modifications of by other lender modification programs - but many of these homes will go to foreclosure or be sold as short sales putting pressure on house prices.
MBA Q4 National Delinquency Survey Conference Call
by Calculated Risk on 2/19/2010 11:17:00 AM
On the MBA conference call concerning the "Q4 2009 National Delinquency Survey", MBA Chief Economist Jay Brinkmann said this morning:
A few graphs ...
Click on graph for larger image in new window.The first graph shows the delinquency and foreclosure rates for all prime loans.
This is a record rate of prime loans in delinquency and foreclosure (tied with Q3 2009).
Prime loans account for over 75% of all loans.
"We're all subprime now!"
NOTE: Tanta first wrote this saying in 2007 in response to the 'contained to subprime' statements.
The second graph shows just fixed rate prime loans (about 66% of all loans).This is a new record for prime fixed rate loans.
Note that even in the best of times (with rapidly rising home prices in 2005), just over 2% of prime FRMs were delinquent or in foreclosure. However the cure rate was much higher back then since a delinquent homeowner could just sell their home.
The third graph shows the delinquency and in foreclosure process rates for subprime loans. Although the total has declined, about 40% of subprime loans are still delinquent or in foreclosure.
Much was made about the decline in 30 day delinquencies, and this is potentially "good" news. But 1) the level is still very high (3.31%), and 2) a decline happened in Q4 2007 too - and then the rate started rising again, and 3) this is probably related to the slight increase in house prices in many areas.
MBA: 14.05 Percent of Mortgage Loans in Foreclosure or Delinquent in Q4
by Calculated Risk on 2/19/2010 10:00:00 AM
The MBA reports 14.05 percent of mortgage loans were either one payment delinquent or in the foreclosure process in Q4 2009. This is a slight decrease from 14.11% (edit) in Q3 2009, and an increase from 13.5% in Q2 2009 (note: older data was revised).
From the MBA: Delinquencies, Foreclosure Starts Fall in Latest MBA National Delinquency Survey
The delinquency rate for mortgage loans on one-to-four unit residential properties fell to a seasonally adjusted rate of 9.47 percent of all loans outstanding as of the end of the fourth quarter of 2009, down 17 basis points from the third quarter of 2009, and up 159 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate increased 50 basis points from 9.94 percent in the third quarter of 2009 to 10.44 percent this quarter.I'll have notes from the conference call and graphs soon.
The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the fourth quarter was 4.58 percent, an increase of 11 basis points from the third quarter of 2009 and 128 basis points from one year ago. The combined percentage of loans in foreclosure or at least one payment past due was 15.02 percent on a non-seasonally adjusted basis, the highest ever recorded in the MBA delinquency survey.
The percentage of loans on which foreclosure actions were started during the third quarter was 1.20 percent, down 22 basis points from last quarter and up 12 basis points from one year ago. The percentages of loans 90 days or more past due and loans in foreclosure set new record highs. The percentage of loans 30 days past due is still below the record set in the second quarter of 1985.
“We are likely seeing the beginning of the end of the unprecedented wave of mortgage delinquencies and foreclosures that started with the subprime defaults in early 2007, continued with the meltdown of the California and Florida housing markets due to overbuilding and the weak loan underwriting that supported that overbuilding, and culminated with a recession that saw 8.5 million people lose their jobs,” said Jay Brinkmann, MBA’s chief economist.
Core Inflation Declines for the first time since 1982
by Calculated Risk on 2/19/2010 08:30:00 AM
From the BLS report on the Consumer Price Index this morning:
On On a seasonally adjusted basis, the January Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent ...Owners' equivalent rent (OER) declined 0.1% in January, and is declining at about a 1% annualized rate. OER has declined for five consecutive months (a record) and is important because it is the largest component of CPI.
The index for all items less food and energy fell 0.1 percent in January. This decline was largely the result of decreases in the indexes for shelter, new vehicles, and airline fares.
Based on reports of falling rents - and a near record high apartment vacancy rate, OER will probably decline for some time, keeping core CPI low and possibly negative this year. Also - falling rents will push up the price-to-rent ratio, and put additional pressure on house prices.
Elizabeth Warren on CRE
by Calculated Risk on 2/19/2010 05:01:00 AM
We started discussing the coming Commercial Real Estate (CRE) bust in 2006, and the FDIC was well aware of the potential CRE problems back then. See the last graph in this post from 2006 from an FDIC report concerning "emerging risks": Economic Conditions and Emerging Risks in Banking
During the bubble, the small and regional banks were locked out of the residential market (lucky for them!), but many of these banks became overexposed to Construction & Development (C&D) and CRE loans. Now that the CRE bust is here - and is about to get much worse - many small and regional banks will fail over next couple of years.
From V. Dion Haynes at the WaPo: In D.C., more evidence that commercial real estate headed for foreclosure crisis
"There's been an enormous bubble in commercial real estate, and it has to come down," said Elizabeth Warren, chairman of the Congressional Oversight Panel, the watchdog created by Congress to monitor the financial bailout. "There will be significant bankruptcies among developers and significant failures among community banks."There is much more in the article.
...
Nearly 3,000 community banks -- 40 percent of the banking system -- have a high proportion of commercial real estate loans relative to their capital, said Warren, whose committee issued a report on commercial real estate last week.
Here is the TARP Congressional Oversight Panel released last week on Commercial Real Estate (CRE): Commercial Real Estate Losses and the Risk to Financial Stability.
