With almost a month since the last bank failure, Friday evenings haven't been this slow in years.
Don't make plans to go out.
At least 200 banks remain on the brink. With few prospects for recovery, failures — and the Friday evening death-watch ritual — will be a reality for a while longer.
"We will see a slower pace again in 2012, it will perhaps be slower than 2011, but that means we'll continue to see failures in 2013," said Matthew Anderson, a managing director at Trepp LLC, a firm that tracks bank performance. "Even if there is a really strong economic rebound, we would likely still see 100 failures over the next two years."
Trepp says 227 banks have a high likelihood of failure. The data shows banks are spending a longer time on the watch list. The 90 banks that have failed so far in 2011 had a median length of eight quarters on the list, versus five quarters in 2010. Once a bank goes on the watch list, it typically stays there, Anderson said.
"The heal rate has been between 5% and 10%," Anderson said, referring to ailing banks that have either been recapitalized or acquired. "That could pick up a bit next year."
Some smaller banks have staved off failure with promises of new equity or a possible sale.
Randy Dennis, president of DD&F Consulting Group in Little Rock, Ark., said such proposed deal partly explain why there have been fewer failures this year than expected. (Industry observers say this Friday will likely be the last chance for failures this year.)
"I think a number of banks were pulled off the bid list because of potential deals, but some of those might come back to the list," said Dennis, who had expected 100 failures this year. "The FDIC would love to have solutions for some of these banks."
Dennis' data also shows 200 banks at risk of failure.
Florida, Georgia and Illinois retain their status as the failure hubs on industry observers' lists. But several failure watchers said mini-hubs could be places such as Minnesota, Missouri, North Carolina and Tennessee.
Minnesota has 14 banks at risk of failure, according to Trepp data; 17 banks have failed in the state since 2008. North Carolina has had four failures since 2008 and has 13 banks at risk. Tennessee, failure free throughout the downturn, has 11 likely failures. In 2011, Colorado was one of the mini-hubs, with six banks crumbling after a 15-month break.
Nothing has fundamentally changed in the economy in those states; the banks have just "run out of gas," Dennis said.
Lori Buerger, a lawyer at Schiff Hardin LP in Chicago, said there could be more one-off failures in 2012 in states that have been relatively immune to the downturn.
"There are areas that haven't had a lot of activity, that may see a bank failure for the first time in this cycle," Buerger said. "It won't generate the volume of failures as in some other states, but it will be a great opportunity for bidders."
David Jones, president and CEO of the $171 million-asset Grinnell State Bank in Iowa, got that opportunity last month when the bank increased its size 53% by buying the failed Polk County Bank in Johnston, a Des Moines suburb. Polk County was the first Iowa bank to fail since late 2009.
Jones said in late November that Grinnell State had long thought Johnston would be a good place for expansion, but his bank is not a fan of building branches in new markets and had never been able to find the right acquisition. He knows the former owners of Polk and even looked at acquiring the bank before the failure.
"We thought Johnston was a good place to be as long as 20 years ago," Jones said. "They invited us in 2009 to come in and buy the bank, but there was no buying the bank. Nobody could find a way to make it work."
Grinnell State Bank bought Polk's assets outright from the Federal Deposit Insurance Corp. Jones said he wasn't interested in a loss-share arrangement.
"We would rather be independent of the government," Jones said. "We didn't want to be involved in a long, drawn-out process."
Several observers say Jones could be the prototype for next year's buyers: a highly capitalized small bank striking its first failed-bank deal for another small bank without a loss-share agreement.
"There is no bidder fatigue for this group of likely bidders," Buerger said. "Unlike some, these bidders haven't already filled their plates."
Mark Kanaly, a partner at Alston & Bird LLP in Atlanta, said those buyers will likely eschew loss-share agreements because they are hard to execute on a small scale. "Accepting the FDIC as a full-blown business partner is difficult to do if you're a onesie or twosie buyer," he said. "We are not seeing a lot of first-time loss-share buyers."
Jones said he is comfortable taking on Polk's assets without a safety net, but he said he knows it is going to be a tougher path to workout.
"You don't save someone from drowning without getting a little wet," he said.