M&T Bank Acquires Another Struggling Bank

For the second time this week, Manufacturers and Traders Bank (M&T) of Buffalo, NY has acquired a struggling bank. After being closed today by regulators, nearly all of the deposits of K Bank of Randallstown, MD were assumed by M&T. Just a few days ago M&T Bank offered to acquire Wilmington Trust Bank in nearby Delaware. K Bank was the 58th ranked bank on the list and had approximately $538.3 million in total assets and $500.1 million in total deposits when closed.

64th ranked Pierce Commercial Bank, of Tacoma, WA closed with approximately $221.1 million in total assets and $193.5 million in total deposits. Heritage Bank (4070th) of Olympia, WA has agreed to assume all deposits.

88th ranked First Vietnamese American Bank of Westminster, CA closed with approximately $48.0 million in total assets and $47.0 million in total deposits. Grandpoint Bank of Los Angeles, CA has agreed to assume all deposits excluding certain brokered deposits. Grandpoint Bank is owned by Grandpoint Capital which began in June 2010 through the acquisition of Santa Ana Business Bank (7015th). It has since been the buyer of a number of small banks.

106th ranked Western Commercial Bank of Woodland Hills, CA has also closed this week. It had approximately $98.6 million in total assets and $101.1 million in total deposits. First California Bank (5750th) of Westlake Village, CA has agreed to assume all deposits.

M&T Acquires Struggling Wilmington Trust

The Wall Street Journal reported today that M&T Bank acquired Wilmington Trust at a 46% discount over (or perhaps under is more accurate) its stock price. While over 90% of all bank failures seem to come from the weakest 1.5% of banks, this does not mean that banks further down the list are not also constrained in terms of their ability to operate. This has been the rationale behind presenting the rank of acquiring banks when possible each week. M&T is an incredibly healthy 6408th on the current list. Wilmington Trust? They are 383rd. If you factor in the roughly 3-5% probability of failure, their cost structure may simply be too great to continue as a going concern.

Fed Friday Claims Seven More Failed Banks

It was a big day for bad banks, with the most closings in two months. In all, 4 Top 40 banks failed. While much of U.S. was covered this week, the majority of the closings were in southeast. An area particularly hard hit during the current banking crisis, another 2 banks in Florida and 2 in Georgia were among the casualties. The list includes both small and somewhat larger banks as shown:

10th ranked, First Bank of Jacksonville, Jacksonville, FL with approximately $81.0 million in total assets and $77.3 million in total deposits was closed. Ameris Bank (3760th) of Moultrie, GA has agreed to assume all deposits.

11th ranked, Hillcrest Bank of Overland Park, KS. Hillcrest was the largets bank to close this week with approximately $1.65 billion in total assets and $1.54 billion in total deposits. A new bank of the same name, Hillcrest Bank, N.A., has been set up and has agreed to takeover the failed bank.

31st ranked, The Gordon Bank of Gordon, GA was the smallest bank to close this week. assets totaled less than $29.4 million with $26.7 million in total deposits. Morris Bank (906th) of Dublin, GA has agreed to assume all deposits.

33rd ranked, Progress Bank of Florida, Tampa, FL with approximately $110.7 million in total assets and $101.3 million in total deposits was closed. Bay Cities Bank (4185th) of Tampa, FL has agreed to assume nearly all deposits.

152nd ranked First Suburban National Bank of Maywood, IL closed with some $148.7 million in total assets and $140.0 million in total deposits was closed. Seaway Bank and Trust Company (2851st) of Chicago, IL has agreed to assume nearly all deposits.

The next bank on the list, 153rd ranked The First National Bank of Barnesville, GA also failed this week. It had approximately $131.4 million in total assets and $127.1 million in total deposits was closed. United Bank (2522nd) of Zebulon, GA has agreed to assume nearly all deposits.

Finally, First Arizona Savings, A FSB of Scottsdale, AZ closed as well. As an OTS bank it was un-ranked. First Arizona had $272.2 million in total assets and $198.8 million in total deposits. No acquirer could be found for the bank. As a result, the FDIC has approved the payout of the insured deposits of First Arizona Savings, A FSB.

Premier Bank Among This Week's Bank Closures

For the second week in a row, eastern U.S. based banks have been sparred from the chopping block. However, three central U.S. based banks have become our most recent casualties of the current banking crisis.

14th Ranked Premier Bank of Jefferson City, MO was shut down by regulators this week. Considerably larger then many of the smaller banks that have been closed in recent weeks, Premier had approximately $1.18 billion in total assets and $1.03 billion in total deposits at the time it was closed. Providence Bank (3043rd) of Columbia, MO has agreed to assume nearly all deposits excluding certain brokered deposits.

Just missing out on the list, 42nd ranked WestBridge Bank and Trust Company of Chesterfield, MO was closed today. WestBridge had approximately $91.5 million in total assets and $72.5 in total deposits. Midland States Bank (2038th) of Effingham, IL has agreed to assume essentially all deposits of the failed bank.

The second bank to close this week was Security Savings Bank (un-ranked OTS regulated bank), F.S.B of Olathe, KS. It had approximately $508.4 million in total assets and $397.0 million in total deposits was closed. Simmons First National Bank (1274th) of Pine Bluff, AR has agreed to assume all deposits.

The Feds Claim Two More Banks

Two Top 40 banks were closed by regulators this week.

The first was 20th ranked Wakulla Bank of Crawfordville, Florida, was closed today by the Florida Office of Financial Regulation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. As of June 30, 2010, Wakulla Bank had approximately $424.1 million in total assets and $386.3 million in total deposits. In addition to assuming all of the deposits of the failed bank, Centennial Bank (ranked 4347th) of Conway, AR agreed to assume nearly all deposits of the failed bank.

The second was 26th ranked Shoreline Bank of Shoreline, Washington. It had approximately $104.2 million in total assets and $100.2 million in total deposits as of the most recent quarter. GBC International Bank (2687th) of Los Angeles, CA has agreed to assume all deposits excluding certain brokered deposits.

When Does It Become A "Problem Bank?"

If you look at the most recent FDIC statistics on problem banks, you would see that there were 829 problem banks at the end of the last quarter. This is an increase of 127 banks in half a year even as the number of firms continues to fall from bank closures and mergers and acquisitions. The FDIC wont disclose who the problem banks are. This is in order to avoid making the bank's financial position even worse and exacerbating their chances of failure. One proxy is to look at the number of banks facing regulatory action, but not all actions are created equally and how the FDIC regards actions by other agencies is not clear. No doubt, you wouldn't want to hear that your bank had an action taken against it. But a small fine is a very different thing then a cease and desist order. Close scrutiny of the actions helps, although that is a lot to look through.

Even as 10% of banks have problems according to the FDIC, only about 2% are believed to close. So, 80% of these banks likely wont have issues so severe as to lead to a failure. Does this mean we have a large number of banks out there 10-20% likely to fail? Or are we looking at a smaller percentage of very risky banks and then a larger handful of "problem" banks that require attention but may be more in the 2-10% range. Certainly, a 2-10% chance in such a sensitive sector still requires scrutiny. But not the same level of fear of impending doom.

The Bank Blog decided to examine this issue. Based on the present model we break the number of banks down into 4 classes based on their risks of failure:

1. Struggling (greater than 50%) - 75 banks
2. Problems (between 10 and 50%) - 204 banks
3. Issues (between 2 and 10%) - 431 banks
4. Stable (less than 2%) - 6998 banks

Naturally, this list does not contain OTS regulated banks but the 730 banks in the higher 3 rankings should roughly approximate the number of "problem banks" in existence that issue call reports. Clearly, the differences in those banks is great.

Nothing Safe About Haven Trust Bank Florida

This week's first shutdown belongs to Haven Trust Bank Florida of Ponte Vedra Beach, Florida. At 28th on the list, Haven had approximately $148.6 million total assets and $133.6 million in total deposits. First Southern Bank (6308th) of Boca Raton, FL has agreed to assume nearly all deposits for the former bank.

The other bank to close this week was 90th ranked North County Bank of Arlington, WA. It had about $288.8 million total assets and $276.1 million in total deposits. Whidbey Island Bank (3646th) of Cupeville, WA has agreed to assume the deposits.