iBank Monitor offers custom bank industry studies and newsletters covering regulatory enforcement actions, bank failure statistics, FDIC receivership loan sales and financial metrics of individual institutions.
The March 31, 2010 Financial Institution Historical Stock Price Volatility Survey has been completed. This new issue of the Survey was prepared
from updated publicly available stock price information and includes:
Utilization of the recently released Volatility Informatics software
which provides advanced capabilities for simultaneous stock price
volatility calculations on multiple companies, customized groups of
companies and various geographic regions. This is in contrast to the
single entity volatility calculator contained in the Stock
Informatics product.
Over 900 exchange traded or listed financial institutions excluding large
money center or super regional institutions which can significantly
influence Survey results. Due to the anticipated use of the Survey
information by community financial institutions, and the desire to
"level the playing field" for small institutions, no asset size or
market capitalization weighting was used to calculate the Survey
averages.
Coverage of 51 states and territories.
Calculations derived from a historical data bank of daily stock
prices updated through March 31, 2010. Financial institutions
included in the Survey must have had readily accessible historical
"adjusted" stock prices - either traded on a recognized exchange or
consistently listed over the counter.
A six year historical data span covering stock prices from March 31, 2004 through
March 31, 2010. Many of the sampled institutions have historical stock price data covering the
full six years while others have a shorter period due to recent market listings (IPO's) or de novo status. All volatility results
have been included in the Survey to provide the reader with the
complete list of all institutions with the corresponding information
for determination of the relevancy to their own circumstances. The
average data span for all institutions sampled was 5.37 years
and for volatility formula calculations daily, weekly and monthly
stock price information was used. The exhibits attached to the
Survey indicate the span of historical data available for each
institution.
To request your free complimentary copy
of the 269 page Survey, please generate an e-mail request with your contact information by clicking here.
Sincerely,
Peter Minford
Since e-mail is such a critical way for us to communicate and to provide Web Ex support, please ask your I. T. department to add DataInformatics.com to your company's approved e-mail Whitelist to insure continued contact..
Last Friday six banks were closed representing total assets of $2.0 billion. For 2010 ninety-six banks have failed with total assets of $76.9 billion. The FDIC's closure activity has produced an average asset disposal ratio of 87.29% and an estimated loss ratio of 22.77% for 2010.
Since our last newsletter several new public Regulatory Enforcement Actions have been levied by the OTS and Federal Reserve. We anticipate receiving the FDIC's enforcement actions for June next week which will probably produce yet another spike in iBank Monitor Watch List of banks.
The iBank Monitor Watch List increased to 949 banks with total assets of $595.9 billion. The iBank Monitor Critical List contains 107 banks down from 113 banks the previous week due exclusively to last week's six bank failures. Detailed Watch and Critical lists are provided in separate sections below.
Shelf Bank Charters and Private Equity
Last week, three of the failed banks (Metro Bank of Dade, Turnberry Bank and National Bank of the South) were purchased by NAFH National Bank, a Shelf Charter upstart institution with a whopping $900 million in its coffers. As part of NAFH's failed bank purchase and assumption transaction, the FDIC provided $1.0 billion in loss sharing guarantees on $1.4 billion in total failed bank assets.
In addition to cobbling together a 23 branch banking network in Southeast Florida and South Carolina, NAFH also committed $175 million to purchase a 99% interest in TIB Bank (Naples, Florida) which has total assets of $1.7 billion and a 32 branch bank network in the Florida Keys and Southwest Florida. In relatively short order, NAFH with its impressive list of former big-bank executives, has amassed a 55 branch $2.8 billion banking organization with enough spare cash to continue growing well into the tens of billions of dollars in banking assets.
Private equity slowly continues to percolate to the top of successful failed and troubled bank transactions. In order to comprehend the potential magnitude, a list of publicly disclosed Shelf Charters, Bank Holding Company formations and Super Capitalized banks has been complied.
While our list is not all encompassing, we estimate that approximately $14 billion in private equity has been raised since 2008 for the banking sector, of which $3.5 billion has been deployed to purchase failed or troubled institutions. Many more deals are rumored to be in the pipeline.
Potential private equity also targets "Inflatable Banks", those which can be "Super Capitalized" for use as vehicles to buy other banks. Gerald Ford, the Texas billionaire, was repeatedly frustrated by his group's unproductive attempts to purchase failed banks using a Shelf Charter. Coinciding with the 18 month expiration of the Ford Shelf Charter, they purchased a 91% interest in Pacific Capital Bancorp's $7.3 billion California banking franchise. Even after expending $500 million for Pacific Capital, the Ford Group will retain approximately $900 million for further capitalization.
One thing is for sure, private equity continues to build a formidable case with the FDIC to allow them to win more failed bank deals - not only in terms of the level of capital being raised, but also the cadre of high level former bankers and bank regulators who are being recruited. (Click here for list)
Stock Informatics - Warrant Valuation Services
For some banks, asset quality problems have become a bit more quantifiable, perhaps to the point where potential investors may be able to ascertain with some clarity their down-side risk of a bank investment.As a result, we are noticing that more banks are developing new capital-raise initiatives - either in the form of Common Stock or Preferred Stock.
As an additional inducement, Warrants are being employed more frequently to sweeten the yields for investors.For issuing companies, independent Warrant valuations, using both intrinsic value and fair value methodologies, have become more critical.This is especially true in determining the relative allocation of proceeds to be assigned to the equity instrument and the Warrant component.
Stock Informatics is pleased to have become a respected national source for Equity Grant valuations including Stock Options, Equity Grants and Warrants.
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We hope that you find the information contained this newsletter useful - whether you are a banker, investor or a consultant to the banking industry. If you have received a forwarded copy of this newsletter from an associate, please feel free to subscribe - subscriptions are free!
iBank Monitor Watch List
These reports were developed as the result of delays and inconsistencies we have encountered in monitoring Regulatory Enforcement Actions. You should not rely on this list in making a determination of the financial health of a bank since circumstances are constantly changing. Further investigation should be made by reading the text of Enforcement Actions and analyzing detailed and current financial information.
For inclusion in the iBank Monitor - Watch List, a bank will have triggered any one of the following in our analysis:
Banks or their holding company with a Public Regulatory Enforcement Action (Supervisory Agreement, Cease and Desist Order, Etc.).
Banks with a Risk Based Capital Ratio less than 10% and a Texas Ratio greater than 70% or negative. Indicating a possible asset quality weakness.
Banks with a Risk Based Capital Ratio less than 10%, a ratio of Brokered CD's to Total Deposits of 15% or greater and a Loan to Deposit Ratio of 90% or greater. Indicating a possible liquidity weakness due to the prohibition against soliciting and/or renewing Brokered CD's and/or CDARS deposits.
Banks with a Risk Based Capital Ratio less than 10%, a ratio of Non Deposit Borrowings to Total Assets of 15% or greater and a Loan to Deposit Ratio of 90% or greater. Indicating a possible liquidity weakness due to the possible cancelation of Fed Funds Lines and tighter borrowing restrictions with the Federal Reserve and FHLB. The Federal Reserve and FHLB will likely reduce advance rates on pledged collateral, require physical possession of loan files, or reduce the borrowing base as a result of random loan file audits which may indicate documentation deficiencies.
Banks with a Risk Based Capital Ratio less than 9.00%.
Banks with a negative Texas Ratio* or 100% or greater regardless of their Risk Based Capital Ratio. Indicating a possible asset quality weakness.
(*The Texas Ratio is the sum of non performing assets, including loans 90 or more days past due and OREO, divided by the bank's tangible equity plus loan loss reserves. Texas Ratio calculations do not include non performing loans which are government guaranteed.)
The iBank Monitor Watch List currently contains 949 banks, an increase by 7 banks since the last publication, which are spread over 11 regions (click here for a list of regions/states). These troubled banks represent aggregate total assets of $595.9 billion. Contributing to the increase were multiple new Regulatory Enforcement Actions.
A detailed list of the iBank Monitor Watch List banks can be accessed by clicking on the following regions:
The iBank Monitor Critical List identifies the most troubled U.S. banks using a rigorous financial screening process. The methodology examines the most recent quarter-end capital ratios, non performing assets, intangible assets, and net earnings after considering gains/losses from sales of assets as well as loan loss provisions (click for quarterly historical summary).
At the beginning of the current quarter, 159 banks were included on the Critical List.
Excluding quarter to date bank failures, the Critical List now contains 107 banks representing aggregate total assets of $51.5 billion. Detailed lists of these banks can be accessed by clicking the following links:
We continually update a single, comprehensive list of bank Regulatory Enforcement Actions (formal agreements, consent orders, cease and desist orders, and prompt and corrective actions). While the FDIC, OCC, FRB and OTS each have separate search pages which are sporadically updated, they can be cumbersome to review.
We have found that the FRB and OTS tend to provide much more current information - with weekly updates, while the FDIC and OCC appear to update on a monthly cycle nearly 30 days subsequent to month end. In some cases, bank failures have already occurred before the Enforcement Actions have been publicly posted. To further complicate tracing holding company enforcement actions back to subsidiary banks, not all OTS regulated Federal Savings Bank holding companies are listed in the FDIC financial institution directory - an apparent disconnect between the two regulators. In many cases the bank/holding company relationship can only be determined by reading each OTS Enforcement Action to see if the subsidiary bank is mentioned.
Therefore, our list of banks and holding companies operating under regulatory Enforcement Actions for 2008 through 2010 has been tedious to compile - and by no means a fully comprehensive list. Realizing that Memorandum of Understanding (MOU), one of the preliminary Enforcement Actions, are not disclosed to the public, it is assumed that several hundred more banks have some significant issues which are concerning to regulators. While our list is not complete, it probably contains the core group of troubled banks which are commonly referred to in the press by the regulators.
As you review our list of Enforcement Actions, please be aware that we reference holding company enforcement actions to each subsidiary bank, whether or not the subsidiary bank has been issued an enforcement action.
Our Enforcement Action Report contains all available information from each regulator through the following dates:
FDIC: 5/31/2010
Federal Reserve Bank: 7/20/2010
Office of the Comptroller of the Currency: 6/30/2010
Office of Thrift Supervision: 7/15/2010
Click Here to download the complete Bank Enforcement Action Report.
Click Here to download Bank Enforcement Actions issued in last 60 days.
Brokered Certificates of Deposits
The curse of Brokered Deposits
Brokered deposits can be a source of liquidity for banks, but only as long as the institution remains healthy. Statutory restrictions related to Brokered Deposits are placed on banks which are not "adequately capitalized", or subject to a regulatory Enforcement Action which contains a capital maintenance provision. While in certain instances waivers can be obtained, generally banks with Risk Based Capital ratios below 10% can encounter a "liquidity event" as Brokered Deposits mature and renewals may be prohibited.
At the beginning of the current quarter, there were 168 banks with Brokered to Total Deposit Ratios in excess of 10% and Risk Based Capital Ratios below 10.50%.
The following detailed weekly bank failure financial reports are provided to give you some insight into the deteriorating condition of each bank over time. The financial information for each bank is provided quarterly starting with March 31, 2008 up to the most recent quarterly report.
Given the timing of quarterly financial database releases from regulators, there can be delays of more than 60 days in updating our database. Individual Call Reports and TFR's are available earlier, however, the information is not in a database friendly format for our publication.
Year to Date Bank Failure Summary - 2008 to 2010
The following link provides updated summary information by State, Month and Acquiring Bank for all bank failures which have occurred each year:
As 2010 gears up, CFO's, CPA's and consultants are discovering the positive effects of lower stock prices impacting income statements with regard to new equity grants. Preparation is the key for planning in 2010 - whether you are approving new equity grants, reviewing your FAS 123R Black Scholes assumptions, or considering a change in Equity Grant Accounting Software, Stock Informatics can assist with these critical decisions.
Thank you for your continued feedback and support of this newsletter, and please take a few minutes to subscribe if you have not already!
Best regards,
Peter Minford Data Informatics, LLC
Ph: (208) 726-4636, Ext 801
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Data Informatics, LLC. develops data base applications focusing on the unique needs of finance professionals pressed with shorter reporting deadlines while still maintaining critical accuracy. The company's recognized and established products include Stock Informatics and Volatility Informatics for equity grant accounting and Bank Informatics, a PC based software program capable of accessing data feeds from core processing systems to assist in accurate and timely preparation of complex financial reports.
The company also leverages its database expertise in providing consulting and custom studies covering the banking industry - regulatory enforcement actions, bank failure statistics, FDIC receivership loan sales, and financial metrics of individual institutions.
