FDIC Bank Failures Reach 118: The Weak Shakeout Continues

Earlier this year, on February 22nd, I wrote about the first 20 failed banks of 2010. Fast forward 6 months later, and there are now 118 bank failures in 2010. To put this year’s bank failures in perspective, there was a total of 140 bank failures in 2009. At the current annual pace, the FDIC total bank failures could reach 180 by year end, or an increase of 28.5% year-over-year.

The most fascinating and unexpected point to highlight from the chart and data below is that each of the highest bank failure months (March, April and July) correlate with rare up-trending monthly market returns for the S&P (see March, April and July below). Do bank failures actually bode well for the financial markets?

Here’s the breakdown of the number of bank failures per month in 2010:

January: 15

February: 7

March: 19

April: 23

May: 14

June: 8

July: 22

August: 10

As the strong continue to survive, here’s a snapshot of failed weak banks in August 2010, according to the FDIC:

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