How Many Banks Will Fail in 2009?

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deFaoilWell thats the $64,000 question many investors are worried about. We will never know until the FDIC announces the closings. This year (2008) so far 25 banks have failed. This number is lower than the hundreds predicted by some folks. With 3 business days remaining this year, we can only hope that the FDIC does not announce any more closings for 2008. Usually they announce them on Friday after market close.

2008 Failed US Banks:

Bank Name Closing Date Updated Date
Sanderson State Bank, Sanderson, TX
En Español December 12, 2008 December 12, 2008
Haven Trust Bank, Duluth, GA December 12, 2008 December 12, 2008
First Georgia Community Bank, Jackson, GA December 5, 2008 December 5, 2008
PFF Bank and Trust, Pomona, CA November 21, 2008 November 21, 2008
Downey Savings and Loan, Newport Beach, CA November 21, 2008 November 21, 2008
The Community Bank, Loganville, GA November 21, 2008 November 21, 2008
Security Pacific Bank, Los Angeles, CA November 7, 2008 November 7, 2008
Franklin Bank, SSB, Houston, TX November 7, 2008 November 7, 2008
Freedom Bank, Bradenton, FL October 31, 2008 October 31, 2008
Alpha Bank & Trust, Alpharetta, GA October 24, 2008 October 24, 2008
Meridian Bank, Eldred, IL October 10, 2008 October 10, 2008
Main Street Bank, Northville, MI October 10, 2008 October 10, 2008
Washington Mutual Bank, Henderson, NV and Washington Mutual Bank FSB, Park City, UT September 25, 2008 October 20, 2008
Ameribank, Northfork, WV September 19, 2008 October 20, 2008
Silver State Bank, Henderson, NV
En Español September 5, 2008 October 20, 2008
Integrity Bank, Alpharetta, GA August 29, 2008 December 23, 2008
The Columbian Bank and Trust, Topeka, KS August 22, 2008 October 20, 2008
First Priority Bank, Bradenton, FL August 1, 2008 October 27, 2008
First Heritage Bank, NA, Newport Beach, CA July 25, 2008 October 20, 2008
First National Bank of Nevada, Reno, NV July 25, 2008 December 9, 2008
IndyMac Bank, Pasadena, CA July 11, 2008 October 27, 2008
First Integrity Bank, NA, Staples, MN May 30, 2008 October 20, 2008
ANB Financial, NA, Bentonville, AR May 9, 2008 October 27, 2008
Hume Bank, Hume, MO March 7, 2008 October 27, 2008
Douglass National Bank, Kansas City, MO January 25, 2008 October 20, 2008

Past Failures:

The number of bank failures increased in the US in the 1980s.

Average bank failures per year from 1955 to 1981 = 5.3

Average bank failures per year from 1982 to 1990 = 131.4

This number is 25 times the failures from 1955 to 1981.

Average bank failures per year from 1987 to 1990 = 187.3 (due to many S&L; collapses)

This year we have had 25 failures. Last year there were only 3 failures.

In Oct, LA times reported that the FDIC is seeking new office space in California to house 600 people and manage bank closings in 2009. The Times stated:

“The Federal Deposit Insurance Corp. plans soon to sign a major lease of office space in Orange County, probably in Irvine, where as many as 600 people would liquidate the assets of troubled banks and thrifts based in California and other Western states.

The agency needs 200,000 square feet of space and has looked at locations across Southern California, FDIC spokesman David Barr said.

“It’s a temporary office – three to five years is what we’re looking at,” Barr said Tuesday. “We hope to find the space within the next few weeks.””

Last Month the FDIC said:

“The list of banks it considers to be in trouble shot up nearly 50 percent to 171 during the third quarter _ yet another sign of escalating problems among the institutions controlling Americans’ deposits.

The 171 banks on the FDIC’s “problem list” encompass only about 2 percent of the nearly 8,500 FDIC-insured institutions. Still, the increase from 117 in the second quarter is sharp, and the current tally is the highest since late 1995.

“We’ve had profound problems in our financial markets that are taking a rising toll on the real economy,” said FDIC Chairman Sheila Bair in a statement, adding that Tuesday’s report “reflects these challenges.”‘

With the new office in Cali and the long troubled banks list, we can be sure that there will more closings next year.

Five Stocks of DJ STOXX NORDIC Select Dividend 20 Index

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The Dow Jones STOXX Nordic Select Dividend Index contains 20 components that have the top dividend stocks from the Nordic countries. The index is defined as:

“the ideal tool to track high-dividend-yielding companies and to participate in their respective dividend payouts, across the Nordic region: Denmark, Finland, Iceland, Norway and Sweden. ”

The following are five companies and their current yields from this index:

1.Company Name: Aktieselskabet Dampskibsselskabet Torm
Ticker: TRMD
Dividend Yield : 8.08%

2.Company Name: Metso Corp
Ticker: MXYCY
Dividend Yield : 21.96%

3.Company Name: Statoilhydro ASA
Ticker: STO
Dividend Yield : 5.11%

4.Company Name: UPM-Kymmene Oyj
Ticker: UPMKY
Dividend Yield : 9.51%

5.Company Name: Volvo AB
Ticker: VOLVY
Dividend Yield : 19.67%

Five Stocks of DJ STOXX NORDIC Select Dividend 20 Index

Diamonds in the Rough

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Investors have traditionally stayed away from the OTC market (Pink Sheets) since they were considered to be unsafe.While this is true since many penny stocks trade in the pink sheets and are highly risky, there are some high quality foreign companies that trade in this market. Some of these companies are multi-billion dollar well established companies in their domestic countries. When the New York Stock Exchange raised the fees a few years ago and the Sarbane-Oxley regulations came into effect quite a few foreign companies delisted their ADR stocks from the NYSE and listed them in the OTC market.

The following are some of the sponsored ADRs trading in the OTC markets:

1. Nestle SA (NSRGY)
Dividend Yield: 3.29%

2.Enel Societa Per Azioni (ENLAY)
Dividend Yield: 9.84%

3. Swedbank (SWDBY)
Dividend Yield: 29.21%

4.Danske Bank (DNSKY)
Dividend Yield: 15.79%

5. Tesco Plc (TSCDY)
Dividend Yield: 6.17%

6. BNP Paribas (BNPQY)
Dividend Yield: 10.04%

7.Henkel AG (HENKY)
Dividend Yield: 3.35%

Some of these stocks may have thin trading volumes. I will list more foreign stocks listed in the OTC market in future posts.

The Best Banks of the World 2008

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One of the worst performing sector in the current bear market is the financial sector. Many bank stocks are down over 50% or more. The financials in the S&P 500 Index is down 56.3% year-to-date. On the international level, many well known banks have had to raise capital to stay in business.Others have been gobbled up by their competitors.

In this scenario, The Banker magazine presented its Ninth Bank of the Year Awards for 2008.

While now is not the best time to jump into some of these beaten-down financials, it is prudent to watch this sector and monitor developments.

The Banker Magazine selected The Best Banks of the world 2008 based on many criteria including:

  • Questionnaires Submitted by 740 banks from 150 countries
  • Latest Earnings Results
  • Growth Rates
  • Performance data over the period contained in the Questionnaire
  • Other factors like Technology, Acquisitions and Key Strategic Developments

As per the magazine, these winners “are the cream of the global banking community
and the highest achievers in the industry.”

In this post I have listed the Winners at the global level. The table below includes tickers if the bank is traded in the USA.

The Best Banks of the World 2008

[TABLE=127]

Overview:
1.BNP Paribas of France won both the Global Bank of the Year and the award for best bank in Western Europe. BNP Paribas trades on the OTC market with ticker
BNPQY.

BNP Paribas was the 3rd largest in the world and the largest in Eurozone based on assets held as of April 30 this year.(Source: The Banker) BNP is a member of France’s main stock market Index the CAC 40.BNPQy has a yield of 10.04%.

2.Spain-based Banco Santander (STD) won the award for Latin America because the bank has a huge presence in Latin American countries.Santander was part of the consortium that acquired ABN Amro of The Netherlands last year.In October, Santander acquired the remaining 75.65% of Sovereign Bancorp in USA it did not already own. The current dividend yield is 8.50%.

3.Citibank(C) was rescued by the U.S. government by pumping billions of dollars last month after the bank was on the verge of collapse.After reaching an all-time low of $3.05, Citi’s stock has rebounded to close $7.71 yesterday. According to the deal agreed with the government, Citi cannot pay more than $0.01 in quarterly dividends for the next 3 years
without prior approval.

4.New York-based Bank of New York Mellon(BK),was formed after the merger of The Bank of New York Company, Inc. and Mellon Financial Corporation of Pittsburgh.In the last 52 weeks, the stock is down 39%. BK pays a dividend of 3.19%.

5.The Brazilian bank Banco Bradesco(BBD) won the award in the Environmental, Social and Governance category. Bradesco is one of the large private-sector banks in
Brazil.BBD is a component of the Bovespa Index. Similar to its peer Banco Itau (ITU), BBD is down about 57% in the last 52 weeks.