Bank Failures

[Kevin Yeats]

Two banks have failed to start off 2014 (one outside Chicago and the second in Oklahoma). 2013 ended up with 24 bank failures half of the prior year well below the recent peak of 2010 (157 bank failures).

We will have to see how 'relaxed' the banks are now with the lending policies.

Any comments/experiences?

[Chris Martin]

Over time, I've learned that the failure list isn't really a good measure of the longevity of a bank. A 'troubled bank' (FDIC doesn't disclose this list) is the one to watch. In many areas, these banks don't "fail", they get acquired instead. I've banked with a few that did just that. One, before the aqcuisition/sellout, I had ceased doing business with because their lending policies became irrational. I took them a 25% LTV deal (it started at 65%) they didn't (or couldn't) do... and it had nothing to do with my end. I took that business to another local community bank, along with all the other long established accounts.