FDIC closes 7 more banks (13 in the past two weeks) and 103 year to date

The FDIC was busy again Friday as they closed another 7 banks bringing the 2010 total closed banks to 103. For all of 2009, the FDIC closed 140 banks. With an average of 3.5 bank closings per week, the FDIC is well on their way to exceed last year's closings by 30%.

The FDIC estimates Friday's 7 closings will cost the Deposit Insurance Fund (DIF) of roughly $431 million.

Banks asset valuations continue to be significantly overstated and of course no one knows how overstaded they are until the FDIC shows up and pulls back the sheets. Home Valley Bank, Cave Junction, Oregon stated assets of $251.8 million and deposits of $229.6 million. The FDIC estimates the hit to the DIF of $37.1 million. This would imply an asset valuation closer to $192.5 million or roughly 24% less than the bank stated.

SouthwestUSA Bank, Las Vegas, Nevada was even more creative in their asset valuation. They listed $214.0 million in total assets and $186.7 million in total deposits and yet the FDIC estimates the DIF hit at $74.1 million which implies an asset valuation of $112.6 million. Clearly management held their meetings around the company bong given a 90% over statement of assets.

One wonders how many Wall Street banks also determine asset valuations while crunching numbers around their corporate bong!

C and C Bank Accounting Valuation Specialists