Unofficial Problem Bank list declines to 714 Institutions

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for August 23, 2013.

Changes and comments from surferdude808:

This week all we got was two bank closures from the FDIC as they did not release second quarter industry results or its enforcement actions through July. The closings and one other removal lower the count of the Unofficial Problem Bank List to 714 institutions with assets of $253.1 billion. A year ago, the list held 898 institutions with assets of $346.7 billion.

The OCC terminated the action against Paragon National Bank, Memphis, TN ($260 million Ticker: PGNN). After being issued a Prompt Corrective Action order effective June 11, 2013, Community South Bank, Parsons, TN ($387 million) failed today.

The other closing was a bank controlled by Capitol Bancorp Ltd. (Ticker: CBCRQ), Sunrise Bank of Arizona, Phoenix, AZ ($202 million). This is the sixth bank controlled by Capitol Bancorp to fail. After controlling more than 50 banks at its peak, Capitol is down to an interest in seven banks. The failures have cost the FDIC insurance fund an estimated $48 million. On August 16, the FDIC in a bankruptcy court filing countered the company's allegations that it improperly denied issuing cross-guaranty waivers that could have prevented their sale to avoid failure. According to an SNL Securities report (FDIC continues to consider Capitol Bancorp cross-guaranty waivers as complexity mounts ), the FDIC argued that the company's desire to depose FDIC officials and obtain documents on four closures was "inappropriate" or "would accomplish nothing." With this closing and the mounting costs to the insurance fund, it probably becomes more difficult for the company to negotiate the sale of its remaining units before their failure or seizure under cross-guaranty.

Next week, we anticipate the FDIC will release its enforcement actions through July and the aggregate Official Problem Bank figures as of June.

CR Note: The first unofficial problem bank list was published in August 2009 with 389 institutions. The list peaked at 1,002 institutions on June 10, 2011, and is now down to 714.