FDIC Failed Institution Forecast: 1Q2009 Ends On Target

Analyst: Bill Bradway

March 31, 2009

On March 27th, the FDIC closed Omni National Bank, the 20th consolidated bank closure (covering 21 bank charters) in the 1st quarter of 2009. TeamBank Financial (with two FDIC charters) and FirstCity Bank were closed on March 20th. The aggregate assets and deposits of the 20 institutions were just under $9.6 billion and $7.9 billion, respectively. Separately, the FDIC announced that the problem institution list expanded from 171 at the end of 3Q2008 to 252 as of 12/31/2008.

Seventeen of the twenty institutions had assets between $100 million and $1 billion. Only two of the failed institutions had assets over $1 billion and the final institution had assets of less than $100 million. Two of the twenty closed institutions (MagnetBank, Omni National Bank) had to be liquidated as no buyers were even willing to take over the deposits and branch operations. The aggregate estimated loss from the 20 closures is pegged at just under $2.3 billion by the FDIC, which represents 24% of assets and 29% of deposits.

• How is our forecast for FDIC failures in 2009 tracking?
• With several new government sponsored funding programs, will the FDIC be able to ratchet up the rate of closures during 2009?

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