by Calculated Risk on 7/23/2010 07:16:00 PM

Desert oasis
Once flush green brown shifts to fail
Viva, lost wages
by Soylent Green is People
From the FDIC: Plaza Bank, Irvine, California, Assumes All of the Deposits of SouthwestUSA Bank, Las Vegas, Nevada

As of March 31, 2010, SouthwestUSA Bank had approximately $214.0 million in total assets and $186.7 million in total deposits.
...
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $74.1 million. ... SouthwestUSA Bank is the 102nd FDIC-insured institution to fail in the nation this year, and the fourth in Nevada. The last FDIC-insured institution closed in the state was Nevada Security Bank, Reno, on June 18, 2010.

That makes six today.

by Calculated Risk on 7/23/2010 06:10:00 PM

Century mark gone
Whomever is last standing
Please turn out the lights
by Soylent Green is People
From the FDIC: IBERIABANK, Lafayette, Louisiana, Assumes All of the Deposits of Sterling Bank, Lantana, Florida

As of March 31, 2010, Sterling Bank had approximately $407.9 million in total assets and $372.4 million in total deposits.
...
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $45.5 million. ... Sterling Bank is the 97th FDIC-insured institution to fail in the nation this year, and the eighteenth in Florida. The last FDIC-insured institution closed in the state was Metro Bank of Dade County, Miami, on July 16, 2010.

From the FDIC: Renasant Bank, Tupelo, Mississippi, Assumes All of the Deposits of Crescent Bank and Trust Company, Jasper, Georgia

As of March 31, 2010, Crescent Bank and Trust Company had approximately $1.01 billion in total assets and $965.7 million in total deposits.
...
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $242.4 million. ... Crescent Bank and Trust Company is the 98th FDIC-insured institution to fail in the nation this year, and the tenth in Georgia. The last FDIC-insured institution closed in the state was First National Bank, Savannah, on June 25, 2010.

From the FDIC: First Citizens Bank and Trust Company, Inc., Columbia, South Carolina, Assumes All of the Deposits of Williamsburg First National Bank, Kingstree, South Carolina

As of March 31, 2010, Williamsburg First National Bank had approximately $139.3 million in total assets and $134.3 million in total deposits.
...
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $8.8 million. .... Williamsburg First National Bank is the 99th FDIC-insured institution to fail in the nation this year, and the fourth in South Carolina. The last FDIC-insured institution closed in the state was Woodlands Bank, Bluffton, on July 16, 2010.

From the FDIC: The Bennington State Bank, Salina, Kansas, Assumes All of the Deposits of Thunder Bank, Sylvan Grove, Kansas

As of March 31, 2010, Thunder Bank had approximately $32.6 million in total assets and $28.5 million in total deposits.
...
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $4.5 million.... Thunder Bank is the 100th FDIC-insured institution to fail in the nation this year, and the first in Kansas. The last FDIC-insured institution closed in the state was SolutionsBank, Overland Park, on December 11, 2009.

From the FDIC: Roundbank, Waseca, Minnesota, Assumes All of the Deposits of Community Security Bank, New Prague, Minnesota

As of March 31, 2010, Community Security Bank had approximately $108.0 million in total assets and $99.7 million in total deposits.
...
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $18.6 million. .... Community Security Bank is the 101st FDIC-insured institution to fail in the nation this year, and the seventh in Minnesota. The last FDIC-insured institution closed in the state was Pinehurst Bank, St. Paul, on May 21, 2010.

by Calculated Risk on 7/23/2010 05:11:00 PM

It might be a little surprising, but existing home sales are still above the historical median level of the last 40 years as a percent of owner occupied units ...


Click on graph for larger image in new window.

The first graph shows existing home sales on an annual basis, and end of year inventory. For 2010, sales are estimated at 5.0 million units and year end inventory at 3.4 million units (currently 4.0 million in June, but inventory will decline seasonally).

The second graph shows the same information normalized by the number of owner occupied units.

Because of the high number of low end foreclosures (investor buying), and various government programs (tax credit, etc.) the number of existing home sales have stayed fairly high.

The median for sales is about 6.1% of owner occupied units or currently about 4.6 million sales per year.

The median for inventory is about 3.1% of owner occupied units or just over 2.3 million units (about 6 months of inventory).

As distressed sales move into the mid-to-high priced areas and investor activity declines, I expect turnover will slow, and overall sales will probably decline to the median level over the next year or two. This is below most forecasts ...

The NAR forecast for 2011 is 5.6 million existing home sales. So I'll take the under.

by Calculated Risk on 7/23/2010 02:15:00 PM

Here are the European bank stress test results by country and bank. From MarketWatch: Seven European banks fail stress tests

Since there are plenty of reports on the stress tests, I'd like to comment on three housing related reports that readers have emailed me today ...

   1) The FHA

There are some reports out today that the FHA is "broke". This is based on an entry in the Federal Register that I reported on last week. What is important about the notice is the FHA is tightening standards - like cutting seller concessions in half - and this is the public notice of these changes. These changes will become effective after the 30 day comment period - or in mid-August.

But the "breaking" reports focused on this statement in the Federal Register:

A recently issued independent actuarial study shows that the Mutual Mortgage Insurance Fund (MMIF) capital ratio has fallen below its statutorily mandated threshold.

Uh, that is not news. The study was released back in November 2009!

   2) Fed MBS Program

There is a story out today about how the Fed was still buying MBS after March 31st! That would be news, but the evidence was that MBS was still showing up on the Fed's balance sheet.

I covered this several times, but it takes a few months for the purchases to settle on the Fed's balance sheet (see: the discussion from SIFMA: "To-Be-Announced" Trading of Agency Passthrough Securities). Here is what I wrote in March:

The coming increase in the Fed's balance sheet (and the expansion of the Supplementary Financing Program (SFP) over the same period) are related to the MBS settling on the Fed's balance sheet. Now that the short term liquidity facilities are finished - the balance sheet will increase by about $200 billion over the next couple of months as the remaining MBS settle.

The Fed stopped buying on March 31st (I even predicted some people would be fooled by the increase of the Fed's balance sheet!).

Update: I'm not referring to this Bloomberg story about a minor adjustment in holdings.

   3) Lenders holding REO off market

There is a report arguing lenders are sitting on a huge amount of REO. I disagree with the methodology in the report (I corresponded with the author). In my view, better (and much lower) estimates come from Barclays and housing economist Tom Lawler.

See: Barclays Lowers REO Inventory Estimate and Lawler's REO: Agencies vs. Private Label

Final Note: My goal is to let everyone know what I know - my intention is not to embarrass anyone (so no links to the articles). If I'm receiving these articles (multiple times) others are probably reading them too. Heck, I'm concerned about the FHA (but this report is not new news) and housing in general. The situation is bad enough ...

by Calculated Risk on 7/23/2010 12:01:00 PM

Here are the Committee of European Banking Supervisors (CEBS) aggregate results.

The aggregate Tier 1 ratio, used as a common measure of banks’ resilience to shocks, under the adverse scenario would decrease from 10.3% in 2009 to 9.2% by the end of 2011 (compared to the regulatory minimum of 4% and to the threshold of 6% set up for this exercise). The aggregate results depend partly on the continued reliance on government support for currently 38 institutions in the exercise.
...
For the institutions that failed to meet the threshold for this stress test exercise, the competent national authorities are in close contact with these banks to assess the results of the test and their implications, in particular in terms of need for recapitalisation.

Results of the individual banks and statements on follow-up actions, where needed, are provided by the banks participating in the exercise and/or their national supervisory authorities.
...
CEBS will publish a summary of the 91 individual bank results, sorted by country, under this page at 18:30 CEST (17:30 BST). Links to the webpages of the participating national supervisory authorities will be activated at the same time.

So the details will be available shortly.

The WSJ reports: German financial supervisors say Hypo Real Estate is the only German bank to fail stress test. All Dutch banks pass. All Spanish listed banks pass.

CNBC reports: Portuguese, Dutch, Italian Banks Pass Stress Test, All German Banks Except HRE Pass, France Top 4 Banks Pass

Reuters reports: Several Spanish Savings Banks Fail Stress Test: Report