Libor Rates Make New Historic Low

London Interbank Offered Rates (LIBOR) set a new historical low this week. The short term, 1-month LIBOR rate is down to a new record low at only 0.29% from 2.46% just a year ago.

This is This table shows all LIBOR rates are down significantly from a year ago.

Updated 7/25/2009	This week	Month ago	Year ago
1 Month LIBOR Rate	0.29	0.31	2.46
3 Month LIBOR Rate	0.50	0.61	2.80
6 Month LIBOR Rate	0.96	1.15	3.14
1 Year LIBOR Rate	1.49	1.74	3.26

New historical lows shown in red

		###### LIBOR ######				Prime	Fed
		1 Mo	3 Mo	6 Mo	1 Yr	Rate	Funds
							Rate
Current %		0.29	0.50	0.96	1.49	3.25	0.25
Min %		0.29	0.50	0.96	1.46	3.25	0.25
Max %		6.94	6.85	7.07	5.43	9.5	7.063

See Libor Rates at a Glance for current rates and graphs.

Definition: LIBOR is the London Interbank Offered Rate. It is a daily reference rate based on the interest rates banks in the London wholesale money market (or interbank market) offer to lend unsecured funds to each other. LIBOR is usually slightly higher than the London Interbank Bid Rate (LIBID). LIBID is the rate the same banks are prepared to accept deposits.

• Current Libor Rates
  
  
• Historical Libor Rates
  
  
• Libor Rates at a Glance

Meanwhile, down at the Treasury

Faster! Faster! The deficit has topped $1,000,000,000,000!

Pace of Bank Closings Picks Up

Last week, only one bank was closed in the US. That was Bank of Wyoming, number 24 on my list of banks most likely to close in 2009. Bank of Wyoming had only one office and deposits of just $67 million. Its operation has been taken over by Central Bank & Trust in Lander, WY. The estimate cost to the insurance fund is $27 million or 40 cents on the dollar.

This week, four banks were closed. The largest was Vineyard Bank, NA in Rancho Cucamonga, CA which was number 49 on my list. Vineyard Bank had 16 offices had deposits of about $1.6 billion. The offices and accounts have been transferred to California Bank & Trust. The estimated cost to the insurance fund is $579 million or 36 cents on the dollar.

Close behind is Temecula Valley Bank with eleven branches in California and deposits of $1.3 billion. The offices and accounts will be taken over by First-Citizens Bank of Raleigh, NC with an estimated cost to the insurance fund of $391 million or 30 cents per dollar on deposit.

BankFirst with just 2 offices in Sioux Falls and Minneapolis will be taken over by Alerus Financial, NA. Alerus will operate the South Dakota office as First Dakota National Bank and will operate the Minnesota office as Alerus Financial, NA. BankFirst had deposits of $254 million and assets of $275 million. Alerus will take only $72 million of the assets while Beal Bank Nevada will take $177 million in loans. The remaining assets will stay with the FDIC until they can find someone willing to take them. The closing is estimated to cost the FDIC $91 million or 36 cents per dollar.

Down in Georgia, First Piedmont Bank, also with 2 offices, has been taken over by First American Bank and Trust of Athens, GA. First Piedmont Bank had deposits of $115 million and the closing will cost the FDIC insurance fund $29 million or 25 cents per dollar.

Four banks closed this week, one last week plus seven closed on July 2nd makes 12 banks closed in the first three weeks of July, double the pace of the first half of the year.

Striking three more, there are 42 banks left on my current list of the 50 65 Banks Most Likely to Close in 2009.

1 Magnet Bank, Salt Lake City, UT
2 Citizens Community Bank, Ridgewood, NJ
3 FirstBank Financial Services, McDonough, GA
4 Westsound Bank, Bremerton, WA
5 Suburban Federal Savings Bank, Crofton, MD
6 America West Bank, Layton, UT
7 Silver Falls Bank, Silverton, OR
8 Ocala National Bank, Ocala, FL
9 Sun Security Bank, Ellington, MO
10 Eastern Savings Bank, FSB, Hunt Valley, MD
11 Alliance Bank, Culver City, CA
12 FirstCity Bank, Stockbridge, GA
13 Chestatee State Bank, Dawsonville, GA
14 First Security National Bank, Norcross, GA
15 Ocean Bank, Miami, FL
16 Family Bank and Trust Co., Palos Hills, IL
17 Southern Community Bank, Fayetteville, GA
18 BankCherokee, Saint Paul, MN
19 First Tuskegee Bank, Tuskegee, AL
20 Federal Trust Bank, Sanford, FL
21 Pinnacle Bank, Beaverton, OR
22 Lake Country Community Bank, Morristown, MN
23 Mesa Bank, Mesa, AZ
24 Bank of Wyoming, Thermopolis, WY
25 1st American State Bank of Minnesota, Hancock, MN
26 First State Bank of Altus, Altus, OK
27 EvaBank, Eva, AL
28 Strategic Capital Bank, Champaign, IL
29 Ebank, Atlanta, GA
30 Polk County Bank, Johnston, IA
31 Parkway Bank, Rogers, AR
32 Security Bank of Gwinnett County, Suwanee, GA
33 State Bank of Park Rapids, Park Rapids, MN
34 Herrin Security Bank, Herrin, IL
35 Omni National Bank, Atlanta, GA
36 Northpointe Bank, Grand Rapids, MI
37 Towne Bank of Arizona, Mesa, AZ
38 Timberland Bank, El Dorado, AR
39 Blue Ridge Savings Bank, Inc., Asheville, NC
40 First Piedmont Bank, Winder, GA
41 Select Bank, Grand Rapids, MI
42 Oxford Bank, Oxford, MI
43 Security Bank of North Metro, Woodstock, GA
44 MetroPacific Bank, Irvine, CA
45 Earthstar Bank, Southampton, PA
46 Neighborhood Community Bank, Newnan, GA
47 The Home Savings and Loan Company, Youngstown, OH
48 Heritage Community Bank, Glenwood, IL
49 Vineyard Bank, NA, Rancho Cucamonga, CA
50 Community Bank of Lemont, Lemont, IL
51 Mainstreet Bank, Forest Lake, MN
52 Mutual Bank, Harvey, IL
53 Freedom Bank of Georgia, Commerce, GA
54 Newton County Loan & Savings FSB, Goodland, IN
55 Riverside Bank, Cape Coral, FL
56 BankUnited, Coral Gables, FL
57 American Sterling Bank, Sugar Creek, MO
58 The Park Avenue Bank, New York, NY
59 First Commerce Community Bank, Douglasville, GA
60 Centennial Bank, Ogden, UT
61 Warren Bank, Warren, MI
62 Peoples First Community Bank, Panama City, FL
63 Corus Bank, Chicago, IL
64 Butler Bank, Lowell, MA
65 Republic Federal Bank, Miami, FL

Hitting Bottom and the New Normal

Signs are beginning to point out that the economy may have hit bottom May 31st. Housing, which led us into this recession, will probably still continue to drop in most markets, but the larger economy seems to have adjusted to the slide in housing.

GM and Chrysler have been through bankruptcy and auto sales seem to have ended their slide. Fathers, it seems, got a new tool for Father's Day and have decided to put it to use. One home improvement retailer I frequent seems to have made it through the winter and spring selling garden gloves, cheese balls and M&M candies. Now, those going through the checkout seem to have something in the basket that can actually be installed in the home. Purchases are still small. They're not buying pallet loads of lumber and drywall, but something to fix up or pretty up the home that they are stuck with.

Unlike last summer, gasoline prices are more moderate and more stable. Heating prices this winter, especially natural gas, also looks to be more moderate and stable. A new natural gas pipeline across the prairie states called the Rocky Mountain Express is bringing gas to the Midwest and East Coast from Colorado and Wyoming, reducing our purchases from Canada. And while CIT's future is very uncertain right now, we've been able to make it through the first half of the year without a major financial disruption on the order of Lehman Brothers, AIG, IndyMac, Bear Sterns, Merrill Lynch or WaMu.

Businesses seem to have adjusted to what I call "the new normal". In many cases that required writedowns, layoffs and a change in business strategy. Many businesses have made the necessary cuts and are now poised to make a profit again. It won't be as heady as before, but profits can be made. Those firms that have engaged in creative accounting (often for their very survival) will be continuing to take writedowns for many quarters to come. In the real estate market in particular, there is a lot of inventory out there that is still priced unrealistically high. Generally, those properties are "upside down" and the owners or banks don't want to (or can't afford to) book the losses. So they continue to price the property to wishful thinking.

The following chart shows the home price history in Denver and Minneapolis. These cities are sunny in the summer and snowy in the winter. The seasonal effects have been pronounced. I think Denver's prices have stabilized but Minneapolis is due for one more year of losses before recovering next spring.

Under 5% Mortgages from Charles Schwab Bank

Schwab Bank has fixed rate, conforming mortgage loans from under 5.00%.

From Charles Schwab Bank Mortgage Loan Rate:

Fixed Conforming Loans (For Loan Amounts of $417,000 or Less)

Fixed Rated as of 07/14/09
	Rate	Points	APR
30yr Fixed	5.375 5.16	0.0 1.0	5.405 5.28
25yr Fixed	5.375 5.16	0.0 1.0	5.41 5.297
20yr Fixed	5.25 4.96	0.0 1.0	5.291 5.121
15yr Fixed	4.875 4.66	0.0 1.0	4.927 4.864
10yr Fixed	4.875 4.66	0.0 1.0	4.949 4.952

See Charles Schwab Bank Mortgage Rates for contact information and current rates for fixed and adjustable mortgage loans.

6 Campbell Family Banks Closed in Illinois

The Illinois Department of Financial and Professional Regulation closed 6 banks in Illinois yesterday all controlled by the Campbell family. All 6 failed not due to bad lending practices directly, but concentrated investments in CDOs.

The largest was Founders Bank in Worth. Founders Bank with 11 offices in Chicago's southwest suburbs had deposits of $848.9 million. The offices and accounts have been transferred to The Private Bank and Trust Company of Chicago. The estimated cost to the insurance fund is $188.5 million or 22 cents on the dollar.

Rock River Bank with four branches had deposits of $75.8 million. The offices and accounts will be taken over by Harvard State Bank with an estimated cost to the insurance fund of $27.6 million or 36 cents per dollar on deposit.

Elizabeth State Bank with just 2 offices will be taken over by Galena State Bank and Trust. Elizabeth State Bank had deposits of $55.5 million and the closing will cost the FDIC $11.2 million or 20 cents per dollar.

First State Bank of Winchester, also with 2 offices, has been taken over by The First National Bank of Beardstown. First State Bank of Winchester had deposits of $34 million and the closing will cost the FDIC insurance fund $6 million or 18 cents per dollar.

The John Warner Bank, with 3 offices in central Illinois has been taken over by the State Bank of Lincoln. John Warner Bank had deposits of $64 million and will cost the insurance fund $10 million or 17 cents per dollar on deposit.

First National Bank of Danville, with 7 offices will be taken over by First Financial Bank of Terre Haute, Indiana. First National had deposits of $147 million and will cost the insurance fund $24 million or 16 cents per dollar.

The Campbell family also controls 2 other community banks in Illinois and Legacy Bank in Scottsdale, Arizona.

Also on Thursday, Millennium State Bank of Texas in Dallas was shut down. The one office with $115 million in deposits will be reopened on Monday as the State Bank of Texas. The cost to the FDIC is estimated at $47 million or 41 cents per dollar on deposit.

The seven banks closed this week bring the total number for calendar year 2009 to 52.

45 Banks Closed in First Half

Five more banks have closed on June 26th, bringing the total for the first half of the year to 45. Two banks were in Georgia, two were in California and one was in Minnesota.

Let's start with Georgia. Community Bank of West Georgia's two locations in Villa Rica and Kennesaw were closed by the Georgia Department of Banking and Finance which was unable to find another bank willing to take over operations. Direct deposits from the federal government such as Social Security and Veterans' payments will be transferred to United Community Bank's Villa Rica branch, but for existing balances, the FDIC began mailing out checks on Monday. Deposits were approximately $182.5 million.. The FDIC has estimated the cost to the insurance fund to make depositors whole is $85 million or 47 cents on the dollar.

The other Georgia bank to close on Friday was Neighborhood Community Bank in Newnan which was number 46 on my list. CharterBank in West Point, GA has taken over operations. Neighborhood Community had deposits of $191.3 million at 4 branches. The cost to the FDIC insurance fund is estimated at $66.7 million or 35 cents on the dollar.

In California, regulators closed MetroPacific Bank in Irvine and turned over $73 million in deposits to SunWest Bank of Tustin, CA. MetroPacific was number 44 on my list. The estimated cost to the deposit insurance fund is $29 million or 40 cents per dollar on deposit.

The other California bank closed on Friday was Mirae Bank in Los Angeles. Mirae, with $456 million and five branches had a large number of customers of Korean descent. The bank has been taken over by Wilshire State Bank, another Korean-American institution. Mirae's downfall was not residential mortgages but the two-thirds of its loans that were in commercial real estate. The FDIC estimates the cost to the insurance fund at $50 million or only 11 cents on the dollar.

In Minnesota, Horizon Bank in Pine City closed and the two offices reopened on Saturday as Stearns Bank, NA. Horizon had deposits of only $69.4 million and the estimated cost to the FDIC is $33.5 million or 48 cents per dollar of insured deposit.

So, striking two more, here's my current list of the 50 65 Banks Most Likely to Close in 2009.

1 Magnet Bank, Salt Lake City, UT
2 Citizens Community Bank, Ridgewood, NJ
3 FirstBank Financial Services, McDonough, GA
4 Westsound Bank, Bremerton, WA
5 Suburban Federal Savings Bank, Crofton, MD
6 America West Bank, Layton, UT
7 Silver Falls Bank, Silverton, OR
8 Ocala National Bank, Ocala, FL
9 Sun Security Bank, Ellington, MO
10 Eastern Savings Bank, FSB, Hunt Valley, MD
11 Alliance Bank, Culver City, CA
12 FirstCity Bank, Stockbridge, GA
13 Chestatee State Bank, Dawsonville, GA
14 First Security National Bank, Norcross, GA
15 Ocean Bank, Miami, FL
16 Family Bank and Trust Co., Palos Hills, IL
17 Southern Community Bank, Fayetteville, GA
18 BankCherokee, Saint Paul, MN
19 First Tuskegee Bank, Tuskegee, AL
20 Federal Trust Bank, Sanford, FL
21 Pinnacle Bank, Beaverton, OR
22 Lake Country Community Bank, Morristown, MN
23 Mesa Bank, Mesa, AZ
24 Bank of Wyoming, Thermopolis, WY
25 1st American State Bank of Minnesota, Hancock, MN
26 First State Bank of Altus, Altus, OK
27 EvaBank, Eva, AL
28 Strategic Capital Bank, Champaign, IL
29 Ebank, Atlanta, GA
30 Polk County Bank, Johnston, IA
31 Parkway Bank, Rogers, AR
32 Security Bank of Gwinnett County, Suwanee, GA
33 State Bank of Park Rapids, Park Rapids, MN
34 Herrin Security Bank, Herrin, IL
35 Omni National Bank, Atlanta, GA
36 Northpointe Bank, Grand Rapids, MI
37 Towne Bank of Arizona, Mesa, AZ
38 Timberland Bank, El Dorado, AR
39 Blue Ridge Savings Bank, Inc., Asheville, NC
40 First Piedmont Bank, Winder, GA
41 Select Bank, Grand Rapids, MI
42 Oxford Bank, Oxford, MI
43 Security Bank of North Metro, Woodstock, GA
44 MetroPacific Bank, Irvine, CA
45 Earthstar Bank, Southampton, PA
46 Neighborhood Community Bank, Newnan, GA
47 The Home Savings and Loan Company, Youngstown, OH
48 Heritage Community Bank, Glenwood, IL
49 Vineyard Bank, NA, Rancho Cucamonga, CA
50 Community Bank of Lemont, Lemont, IL
51 Mainstreet Bank, Forest Lake, MN
52 Mutual Bank, Harvey, IL
53 Freedom Bank of Georgia, Commerce, GA
54 Newton County Loan & Savings FSB, Goodland, IN
55 Riverside Bank, Cape Coral, FL
56 BankUnited, Coral Gables, FL
57 American Sterling Bank, Sugar Creek, MO
58 The Park Avenue Bank, New York, NY
59 First Commerce Community Bank, Douglasville, GA
60 Centennial Bank, Ogden, UT
61 Warren Bank, Warren, MI
62 Peoples First Community Bank, Panama City, FL
63 Corus Bank, Chicago, IL
64 Butler Bank, Lowell, MA
65 Republic Federal Bank, Miami, FL