February 24, 2010: Headwinds Gathering Strength?
February 24th, 2010
Yesterday afternoon, the FDIC released its Quarterly Banking Profile for Q4 2009. Some highlights from the report are:
- Problem banks jumped 27% to 702 and associated assets also jumped by 16% to $402.8 Billion.
- The Deposit Insurance Fund dropped to -$20.9 Billion.
- 2009 produced the fewest number of new bank charters for any year since 1942.
- Total industry assets at insured institutions declined for the fourth consecutive quarter. For 2009, total insured assets declined by 5.3%; the largest decline for a year since the inception of the FDIC.
- Asset quality significantly deteriorated in Q4. Net Charge-Offs increased 37.2% over Q4 2008.
- Annualized charge-off rate rose to 2.89%; the highest on record.
There is an increasing disconnect between stock market prices and Economic data. Yesterday, a much weaker-than-expected Consumer Confidence report for February showed the index at 46.0 (consensus estimate of 55.0) which was the lowest level since April 2009. Today, January New Home Sales came in at 308,000 (est. was 360,000). This was the lowest rate of New Home Sales on record, according to Bloomberg.
With the Quarterly Banking Profile saying that 2010 will likely be a much worse year in the industry than 2009 and data like today’s New Home Sales, evidence is mounting that suggests that broad market could be forming a barrier of long-term resistance and that the next major move will be to the downside.
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