On Friday, July 16, 2010, SIX BANKS were CLOSED by U.S. regulators. The six failed institutions were located in South Carolina, Florida, and Michigan. This brings the total number of US Bank Failures to 96 so far in 2010, compared to 140 in 2009, 25 in 2008 and 3 in 2007. If bank failures continue at this pace, an estimate of over 190 banks will fail in 2010. These six bank failures had total ASSETS of approximately $2.0 BILLION and total deposits of approximately $1.8 BILLION. The Federal Deposit Insurance Corporation (“FDIC”) estimates the cost of the six bank closures to its Deposit Insurance Fund (“DIF”) will be approximately $334.8 million.
Although the economy is showing signs of a gradual recovery with the larger financial institutions stabilizing, tumbling home prices, soaring loan defaults in residential and commercial real estate and rising unemployment continue to take their toll on small banks. In the fourth quarter of 2009, the number of banks on the FDIC’s list of problem institutions grew to 702 from 552 in the third quarter of 2009. This is the highest number of problem institutions since the savings and loan crisis in the early 1990′s. Increasing loan losses on commercial real estate are expected to cause hundreds more bank failures in the next few years. The FDIC anticipates bank failures to cost over $100 billion over the next three years.
The SIX failed banks are:
- Woodlands Bank – Bluffton, South Carolina, was closed by the Office of Thrift Supervision, which appointed the FDIC as receiver. The FDIC entered into a purchase and assumption agreement with Bank of the Ozarks – Little Rock, Arkansas, to assume all of the deposits of Woodlands Bank. As of March 31, 2010, Woodlands Bank had approximately $376.2 million in total assets and $355.3 million in total deposits. Bank of the Ozarks did not pay the FDIC a premium for the deposits of Woodlands Bank. In addition to assuming all of the deposits of the failed bank, Bank of the Ozarks agreed to purchase essentially all of the assets. The FDIC and Bank of the Ozarks entered into a loss-share transaction on $288.7 million of Woodlands Bank’s assets. Bank of the Ozarks will share in the losses on the asset pools covered under the loss-share agreement. The FDIC estimates that the cost to the DIF will be $115.0 million. Woodlands Bank is the 91st FDIC-insured institution to fail in the nation this year, and the second in South Carolina. The last FDIC-insured institution closed in the state was Beach First National Bank – Myrtle Beach, on April 9, 2010.
- Metro Bank of Dade County – Miami, Florida; Turnberry Bank – Aventura, Florida; and First National Bank of the South – Spartanburg, South Carolina, were closed by federal and state banking agencies, which then appointed the FDIC as receiver for all three institutions. The FDIC entered into purchase and assumption agreements with NAFH National Bank, Miami, Florida, a newly-chartered bank subsidiary of North American Financial Holdings, Inc., Charlotte, North Carolina, to assume all the deposits and essentially all the assets of the three failed institutions. Metro Bank of Dade County was closed by the Florida Office of Financial Regulation; Turnberry Bank was closed by the Office of Thrift Supervision; and First National Bank of the South was closed by the Office of the Comptroller of the Currency. The three failed institutions were not affiliated with one another. The FDIC entered into purchase and assumption agreements with NAFH National Bank, Miami, Florida, a newly-chartered bank subsidiary of North American Financial Holdings, Inc., Charlotte, North Carolina, to assume all the deposits and essentially all the assets of the three failed institutions. As of March 31, 2010, Metro Bank of Dade County had total assets of $442.3 million and total deposits of $391.3 million; Turnberry Bank had total assets of $263.9 million and total deposits of $196.9 million; and First National Bank of the South had total assets of $682.0 million and total deposits of $610.1 million. NAFH National Bank did not pay the FDIC a premium for the deposits of the failed banks. In addition to assuming all the deposits from the two Florida institutions and one South Carolina institution, NAFH National Bank will purchase virtually all their assets. The FDIC and NAFH National Bank entered into loss-share transactions on $299.3 million of Metro Bank of Dade County’s assets; $194.6 million of Turnberry Bank’s assets; and $512.4 million of First National Bank of the South’s assets. NAFH National Bank will share in the losses on the asset pools covered under the loss-share agreement. The FDIC estimates that the cost to the DIF for Metro Bank of Dade County will be $67.6 million; for Turnberry Bank, $34.4 million; and for First National Bank of the South, $74.9 million. These closings bring the total for the year to 94 banks in the nation, and the fifteenth and sixteenth in Florida and the third in South Carolina. Prior to these failures, the last bank closed in Florida was Peninsula Bank – Englewood, on June 25, 2010, and the last bank closed in South Carolina was Woodlands Bank – Bluffton, earlier today.
- Olde Cypress Community Bank – Clewiston, Florida, was closed by the Office of Thrift Supervision, which appointed the FDIC as receiver. The FDIC entered into a purchase and assumption agreement with CenterState Bank of Florida, National Association – Winter Haven, Florida, to assume all of the deposits of Olde Cypress Community Bank. As of March 31, 2010, Olde Cypress Community Bank had approximately $168.7 million in total assets and $162.4 million in total deposits. CenterState Bank of Florida, N.A. did not pay the FDIC a premium for the deposits of Olde Cypress Community Bank. In addition to assuming all of the deposits of the failed bank, CenterState Bank of Florida, N.A. agreed to purchase essentially all of the assets. The FDIC and CenterState Bank of Florida, N.A. entered into a loss-share transaction on $128.2 million of Olde Cypress Community Bank’s assets. CenterState Bank of Florida, N.A. will share in the losses on the asset pools covered under the loss-share agreement. The FDIC estimates that the cost to the DIF will be $31.5 million. Olde Cypress Community Bank is the 95th FDIC-insured institution to fail in the nation this year, and the seventeenth in Florida. The last FDIC-insured institution closed in the state was Turnberry Bank, Aventura, earlier today.
- Mainstreet Savings Bank, FSB – Hastings, Michigan, was closed by the Office of Thrift Supervision, which appointed the FDIC as receiver. The FDIC entered into a purchase and assumption agreement with Commercial Bank – Alma, Michigan, to assume all of the deposits of Mainstreet Savings Bank, FSB. As of March 31, 2010, Mainstreet Savings Bank, FSB had approximately $97.4 million in total assets and $63.7 million in total deposits. Commercial Bank will pay the FDIC a premium of 1.13% to assume all of the deposits of Mainstreet Savings Bank, FSB. In addition to assuming all of the deposits of the failed bank, Commercial Bank agreed to purchase essentially all of the assets. The FDIC and Commercial Bank entered into a loss-share transaction on $77.1 million of Mainstreet Savings Bank, FSB’s assets. Commercial Bank will share in the losses on the asset pools covered under the loss-share agreement. The FDIC estimates that the cost to the DIF will be $11.4 million. Mainstreet Savings Bank, FSB is the 96th FDIC-insured institution to fail in the nation this year, and the fourth in Michigan. The last FDIC-insured institution closed in the state was New Liberty Bank – Plymouth, on May 14, 2010.
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation’s banking system. The FDIC insures deposits at the nation’s 7,932 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.
(Source: Federal Deposit Insurance Corporation)
