The lone bank failure over the last three weeks may have offered a respite from the usual series of collapses on Friday nights, but most observers caution against predictions that bank closures may be slowing.
The Sept. 10 closure of the $188 million-asset Horizon Bank in Bradenton, Fla. — the 119th this year — was the first since Aug. 20. But considering the weak economy and continued growth in both the Federal Deposit Insurance Corp.'s problem bank list and commercial real estate losses, the steady volume of FDIC takeovers is expected to continue.
"I wish I could say it was a turning point, but it doesn't look like one to me," said Mark Schmidt, a managing director at Promontory Financial Group and a former Atlanta regional director for the FDIC. "It's a very high probability that it's just a blip and things are going to resume and we'll probably get back close to the level we've been seeing throughout the year, which by my calculation looks like about 15 failures a month. There will be peaks and valleys throughout the rest of the year."
In the wake of the financial crisis, a week without a failure has been somewhat rare, and consecutive Fridays without a collapse were almost unthinkable. Before Aug. 27, there had been on average nearly four a week since the beginning of March.
"It raises the question of: Why the slowdown?" said Bert Ely, an independent consultant based in Alexandria, Va. "Three data points … doesn't make a trend. I'd be the first to admit that. But it's still puzzling."
