The bad news is that four Idaho lending institutions made the 2010 unofficial problem bank list. The good news is: Thank goodness you live in Idaho. There are more than 900 other banks on the list put together by Calculated Risk, a finance and economics blog credited with being one of the first new-media outlets to predict the burst of the U.S. housing bubble.
The list is comprised of banks under formal enforcement actions with the Federal Deposit Insurance Corporation, Federal Reserve Board or other regulatory agency. Included are: Boise-based Syringa Bank and Idaho Banking Company, McCall-based Idaho First Bank and the Farmers National Bank of Buhl. Each agreed to a consent order or written agreement to improve their financial condition.
"The good news is they're all making progress," Gavin Gee, Idaho's director of finance, told Citydesk. "Some are further along than others, but we're encouraged."
Gee said there are other banks--not headquartered but operating in Idaho--that are under similar enforcement actions. They include the Bank of the Cascades and Sterling Savings Bank.
There were 157 bank failures in the United States during 2010, the highest level since 1992. Gee doesn't see anything of the sort occurring in Idaho in 2011.
"In my 33 years with the department, all but one Idaho-regulated bank have been able to comply with orders and avoid failure. A state-chartered bank [First Bank & Trust of Idaho] failed in 1986. That's only one of dozens that have been subject to enforcement orders over the years," said Gee.
In addition, 2009 saw the federally chartered First Bank of Idaho fail. Idaho does not regulate national banks.
"And while states around us have had several bank failures, we've been very fortunate in Idaho," said Gee. "We're confident that the banks we regulate will be able to address the problems they're experiencing. It's all related to the economy. Banks are challenged by the fact that we still have high unemployment, high bankruptcy filings and high mortgage foreclosures."
The Farmers National Bank of Buhl, the largest of the four Idaho banks to make the list, reported assets of more than $360 million for the third quarter of 2010. Idaho Banking in Boise reported assets over $300 million, Syringa reported $250 million and Idaho First in McCall reported $85 million.
Gee's finance department oversees licenses and regulation for 15 industries, including Idaho banks, with total assets in the banking industry alone of over $5.5 billion. The total number of entities regulated is over 146,000 including collection agencies and credit unions.
"It would be incorrect to assume that just because a bank has been designated by some rating agency that they're a 'problem,' that indeed there's a problem," said Gee. "And in a worst-case scenario, it's important for the consumer to understand that as long as their deposits are within the FDIC limitations [usually up to $250,000], their money is insured."