Quick update on the Georgia banking crisis

Well it’s been a quiet few weeks for the FDIC. Only three banks in the entire country were closed in March, and there hasn’t been a bank in Georgia shut down since February 18th.

Every week that goes by with few closures is good news for banks. I had thought that we’d see well over 150 banks closed in the U.S. this year, but with the first quarter done, only 26 have been closed. (Six of those were in Georgia.) For more on bank failures, check out the FDIC’s Failed Bank List.

For more on the banking crisis in Georgia generally, see this post: Some background on the banking crisis in Georgia.

The slower pace of FDIC closures could mean that the federal agency is purposefully giving struggling institutions the time to ride the wave of an apparently improving economy. Or it might mean that the agency is simply stretched thin and/or can’t find other banks willing to acquire some of those in trouble. Of course, many of the problem banks are under scrutiny because of the real estate bust; since there will be no quick rebound in residential or commercial values, it could be years before some banks get their balance sheets cleaned up.

According to the unofficial problem bank list maintained by surferdude808 (based on FDIC releases) and presented by Calculated Risk here, the FDIC has issued some sort of enforcement order against 985 institutions that are still operating, with a total of $431 billion in assets. There are 65 banks in Georgia, about 6.5% of the total, on the list. There are certainly other banks under scrutiny that have not been named in public releases.

Based on trends over the last couple of years, a clear majority of those 65 banks in Georgia will probably fail, but the odds of more surviving improve with each passing week.