Friday Failures
A triple play to start us off:
Advanta Bank Corp., Draper, UT
Century Security Bank, Duluth, GA
American National Bank, Parma, OH
Follow that up with a home run:
State Bank of Aurora, Aurora, MN
First Lowndes Bank, Fort Deposit, AL
Bank of Hiawassee, Hiawassee, GA
Appalachian Community Bank, Ellijay, GA
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Long term, how common are new bank charters? What is the net bank “mortality rate?” New banks minus failed banks, over the years?
Comment by John F. — 3/20/2010 @ 9:43 am
Sorry John, I don’t have that info. Might be a good question for the folks over at Calculated Risk…
It just so happens that CR has the updated chart for bank failures per year, as well as an update on the unofficial ‘problem banks’.
Comment by BMB — 3/20/2010 @ 10:46 am
Is this the largest number for 1 Friday?
Comment by fatcat — 3/20/2010 @ 10:59 am
Fatcat,
We’ve had a few with this large a number, but some of those were “sub” banks–in other words the parent bank failed and a bunch of branches with different names were closed. These all look rather unique so it has to be one of the larger numbers on a Friday.
Green shoots all over the place.
Comment by Maria — 3/20/2010 @ 11:09 am
It’s the most in a week so far this year, but we also had seven not that long ago, just the week before Christmas.
Back in October, we had 16 in two weeks (the 23rd and the 30th). If you’re really interested, you can browse through the posts to your heart’s content.
In the CR post linked in my comment above (#2), they also have a chart of cumulative failures by week, but it doesn’t show totals per week.
Comment by BMB — 3/20/2010 @ 11:14 am
How many banks are left in GA?
Comment by Alex — 3/20/2010 @ 1:16 pm
Apparently, starting a new bank is a lot tougher than it used to be.
From CNN.Money:
http://money.cnn.com/2009/09/25/news/companies/de_novo_banks/index.htm
“experts believe the Federal Deposit Insurance Corporation, which has the final say on new ventures by choosing whether to extend deposit insurance, has demanded that new lenders raise more capital than they might have in previous years.
Officials have also been vigilant about firms intending to accept brokered deposits or building much of their business through commercial real estate loans, practices that have been problematic.
“You have to have a very solid business plan,” said Carey Richardson, director of sales for the Dallas-based Bankmark, which consults de novo banks. “Regulators want to see that an institution is profitable by the end of its second year.”
Tougher scrutiny
In a sign of just how reluctant regulators have been to sign off on new banks, about two thirds of the 32 firms that applied to the FDIC for deposit insurance have had their application rejected, according to the most recent agency data.
Compare that to the pre-crisis environment of 2006 and 2007, when four out of every five new bank applications were approved.”
Looking around on web, I found estimates of the number of banks in the US ranging from 7,000 to about 8,500. It’s not a simple count as some banks are not FDIC insured. Still, that seems like a lot of banks. If there are 150 failures per year, that’s around 2 percent. How does that failure rate compare to other kinds of businesses, say restaurants or manufacturing, for example? Looks to me like banking is still a pretty damn good business to be in.
Comment by John F. — 3/20/2010 @ 1:19 pm
@Alex: on Georgia, “New wave of bank failures about to hit”
@John: Interesting that they were still approving 4 of 5 bank applications in 06-07 — a year or two after the housing mania had already topped out.
Comment by BMB — 3/20/2010 @ 2:10 pm