THE NIGHTMARE OF INDUSTRY FAILURES

Research finds 50% of people have occasional nightmares and between 2% and 8% of adults are plagued by them. While the subjects of nightmares vary, there are some common ones that many people have including not running fast enough to escape danger or falling from some high place. Reasons vary, but for adults, nightmares are usually more common when you have a late night meal (increases metabolism and brain activity); are on medication (interact with the brain); have sleep apnea or restless leg syndrome; have anxiety or depression; or have gone through a traumatic event. The good news is that for those nightmares that aren't caused by medications, behavioral changes have been proven effective to suppress the bad dreams for 70% of adults. Simple things, such as exercising, yoga, meditation, avoiding caffeine and keeping a regular schedule have been found to be very effective ways to avoid having a nightmare. Speaking of nightmares, as the credit crisis has ground on over the years; we have found ourselves monitoring email and the FDIC web site for blasts about bank failures every Friday. Sometimes failures are announced and sometimes they are not, but we know that probably without exception, the management teams of these banks worked diligently until the end to try and save their institutions. We are never happy to receive notification of a failure, but we also must review the details in order to help other banks avoid repeating the mistakes of the past. To begin, we analyzed the entire FDIC list of 473 institutions that have failed since Oct. 1, 2000. We found that over this 12Y period, institutions were closed in a total of 44 states. Failures ranged from as low as 1 per state (9 states) to a high of 82 in GA. The top 4 states had a total of 241 failures as a group and represented 51% of the total during this period. By state, the number of failures for each one was GA (82), FL (65), IL (54) and CA (40). Other states that had double-digit failures over this period of time included WA (17), MI (14), AZ (13), MO (12), NV (11) and TX (10). Looking further into the data, we find some banks have surfaced as very active buyers of these failed institutions. Those with the most acquisitions during this period include U.S. Bank MN (13 acquisitions); State Bank and Trust Company GA (12); Ameris Bank GA (10); Bank of the Ozarks AR (7); and Stearns Bank MN (7). Perhaps even more interesting, the FDIC was not able to find an acquirer for 29 institutions, or about 6% of the overall total of those that failed. Finally, we found institutions that failed most often strangely started with the letter "F" (67 institutions), followed by the letters "C" (62); "S" (48); "B" (40); "P" (32). Meanwhile, institutions that had the fewest number of failures began with the letters "J" or "K" at 2 each. Finally, if you are worried about the future of the industry and want to be sure your bank is protected, consider changing its name to begin with the letters "Q", "X", "Y", or "Z", all of which registered no failures over this period. As for us, we expect to continue to have the occasional nightmare, as we lose sleep over the substantial impact of Dodd Frank on community banks and worry about the group of banks nationwide that remain under strain.