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Where Should We Expect To See More Bank Failures?

Wednesday, June 1, 2011 - 1:04 PM
I had some free time and decided to crunch the Bauer Financial info to see where the most weak banks are located. I don't think this info will be particularly surprising to most readers, but still, I hope it's useful.

To recap - so far this year we have had 44 bank failures. The most affected states are: Georgia (12); Florida (5); Illinois (4); California & Wisconsin (3 each); Alabama, Colorado, Michigan, Oklahoma, and Washington (2 each); 7 other states with 1 each.

Not all, but certainly the vast majority, of these failed banks were rated 0* on Bauer before failing. So I looked at which states had the most 0* banks to see where the vulnerabilities are greatest. As you might expect, a lot of the states that are at the top of the bank failure list are on this list, too.

The states that have more than five 0* Bauer rated banks are: Georgia (52), Florida (40), Illinois (31), Minnesota (22), California (12), Washington (12), North Carolina (11), Missouri (10), Colorado (10), South Carolina (9), Wisconsin (8), Michigan (7), Arizona (7), Kansas (6), Tennessee (6).

Five of the top six states on this list have already had multiple bank failures this year.

I also looked at which states had the highest percentages of weak banks. Georgia tops this list again. Almost 20% of the banks in Georgia are rated 0* by Bauer Financial. The remaining top five in this list are Arizona, Florida, Nevada, and Washington. All of them have 15% or higher of the banks in the state rated 1* or less by Bauer.

Where are banks doing the best? In general, New England. Connecticut is the only state in New England to have more than one 0* bank (it has two). Also, certain other states in the midwest and south are doing well. The states with less than one percent of banks rated 0* are: Ohio, Texas, Indiana, Louisiana, Massachusetts, Kentucky, Nebraska. The states with NO 0* banks are: West Virginia, Maine, Delaware, New Hampshire, Vermont, Rhode Island, and Alaska.

Best of luck in continuing to find good deposit rates at financially solid banks.
9
eric2eric218 posts since
Oct 17, 2010
Rep Points: 163
1. Wednesday, June 1, 2011 - 5:06 PM
We should all use our "free time" as well as you. Great job! Very useful information. Thank-you
1
MikeMike327 posts since
Feb 22, 2010
Rep Points: 876
2. Thursday, June 2, 2011 - 8:29 AM
Mike,


Thanks for your kind words. They are much appreciated.

One point I failed (no pun intended) to make in my initial post, but should have, is that not all 0* banks will end up closing. It should be clear that there are far more 0* banks just in the top-ten states than we can reasonably expect to fail this year, given the current (and apparently decelerating) pace of failures. I suppose it's possible that some of the 0* banks will recover, or will merge with stronger institutions on their own.

Still, I think it will be interesting to see how the second half of the year turns out. I plan to look back at this post from time to time and see what's happened since and how it compares to the data I posted.

Enjoy..
1
eric2eric218 posts since
Oct 17, 2010
Rep Points: 163
3. Sunday, July 24, 2011 - 1:30 PM
So, almost 2 months in, how am I doing so far?

Let's see...from the original post, the states with the most 0* banks at that time:

Georgia (52), Florida (40), Illinois (31), Minnesota (22), California (12), Washington (12), North Carolina (11), Missouri (10), Colorado (10), South Carolina (9), Wisconsin (8), Michigan (7), Arizona (7), Kansas (6), Tennessee (6).

Bank failures since then:

4 each in FL, GA

3 in CO

1 each in SC, IL, AZ

All in all, I'd say I'm not doing too badly. All of the states with bank failures since June 1 have been on my list. It is interesting how some states are having higher failure rates than other with similar numbers of weak banks. This makes it looks like a few states (especially IL, MN, CA, WA, NC, MO) may be overdue for more closures. Or maybe it just means that CO bank regulators are really tightening the ****s faster than some other states?

I'll post another update in a few more months.
5
eric2eric218 posts since
Oct 17, 2010
Rep Points: 163
4. Sunday, August 7, 2011 - 6:38 PM
keep up the good work
2
MikeMike327 posts since
Feb 22, 2010
Rep Points: 876
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