The FDIC’s closure of troubled financial institutions has recently taken on a state-based theme. Last week, on April 23, 2010, the FDIC closed seven banks, all of which were in the state of Illinois. This past Friday night, on April 30, 2010, when the FDIC again closed seven banks, the list included three from Puerto Rico, as well as two from Missouri. The FDIC’s Failed Bank List can be found here.

 

With the closure of seven banks on two successive Friday nights, the pace of bank failures has definitely picked up. The most recent round of closures brings the 2010 year to date number of bank failures to 64. The 2010 closure rate is well ahead of last year’s pace, when the FDIC closed a total of 140 banks. The FDIC did not close its 64th bank during 2009 until July 24th. There have been 229 bank failures since January 1, 2008.

 

The 23 banks closed in April 2010 is the second highest monthly total during the current round of bank failures, exceeded only by the 24 banks closed in July 2009. (By way of comparison, there were only 25 banks closed in all of 2008.)

 

The seven Illinois banks closed on April 23 brings the total number of Illinois bank failures to ten, the highest number for any state during 2010. The other states with the highest numbers of bank failures during 2010 are Florida (9), Georgia (7) and Washington State (6).

 

Though Illinois leads the 2010 bank failure tables, the state with the highest numbers of bank closures since January 1, 2008 is Georgia with 37 failed banks, followed by Illinois (32), California (26), Florida (25), and Minnesota (11).

 

There has definitely been a concentration of bank failures in certain states. However, the woes besetting banks are surprisingly widespread. 38 states (as well as Puerto Rico) have each had at least one bank failure since January 1, 2008.

 

The states without any bank failures since January 1, 2008 are: Alaska, Connecticut, Delaware, Hawaii, Iowa, Maine, Mississippi, Montana, New Hampshire, North Carolina, North Dakota, Rhode Island, Tennessee, Vermont, and West Virginia. There have been no failed banks in the District of Columbia either. (Readers who think they can discern the unifying factor that explains why these states have no failed banks are invited to add their explanations using the blog’s comment feature.)

 

The costs to the FDIC from these bank failures have been enormous. The cost to the FDIC’s Depositors Insurance Fund (DIF) from the April 2010 bank closures alone was $9.4 billion, the highest monthly total so far during the current bank failure wave.

 

The April 30 closure of Westernbank in Puerto Rico cost the DIF fund $3.31 billion, the third most costly closure in the current round. Only the July 11, 2008 closure of IndyMac ($8.0 billion) and the May 21, 2009 closure of BankUnited ($4.9 billion) were more costly to the fund.

 

Roughly three quarters of the banks that have failed so far this year have involved banks with assets under $1 billion. The 2010 failed banks involve a slightly higher proportion of larger banks; in 2010, about 26% of bank failures (17 out of 64) have involved banks with assets over $1 billion, compared to about 20% in 2009 (28 out of 140).

 

The 2010 bank closures have also involved a slightly greater proportion of the smallest banks. Thus, about 23% of the 2010 bank closures (15 out of 64) have involved banks with assets under $100 million, compared to about 17% of failed banks in 2009 (24 out of 140).