On Friday, August 20, 2010, EIGHT BANKS were CLOSED by U.S. regulators. The eight failed institutions were located in, Florida, Virginia, Illinois and California. This brings the total number of US Bank Failures to 118 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 Eight bank failures had total ASSETS of approximately $4.4 BILLION and total deposits of approximately $3.5 BILLION. The Federal Deposit Insurance Corporation (“FDIC”) estimates the cost of the eight bank closures to its Deposit Insurance Fund (“DIF”) will be approximately $473.5 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 EIGHT failed banks are:

• Community National Bank at Bartow – Bartow, Florida, and Independent National Bank -  Ocala, Florida, were closed by the Office of the Comptroller of the Currency, which then appointed the FDIC as receiver for the two banks. The FDIC entered into purchase and assumption agreements with CenterState Bank of Florida, National Association – Winter Haven, Florida, to assume all the deposits and essentially all the assets of the two failed banks, which were not affiliated with one another. As of June 30, 2010, Community National Bank at Bartow had total assets of $67.9 million and total deposits of $63.7 million; and Independent National Bank had total assets of $156.2 million and total deposits of $141.9 million. CenterState Bank of Florida, N.A. did not pay the FDIC a premium for the deposits of the two failed banks. The FDIC and CenterState Bank of Florida, N.A. entered into loss-share transactions on $51.9 million of Community National Bank at Bartow’s assets; and $119.7 million of Independent National 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 for Community National Bank at Bartow will be $10.3 million; and for Independent National Bank, $23.2 million. These closings bring the total for the year to 112 banks in the nation, and the twenty-first and twenty-second in Florida. Prior to these failures, the last FDIC-insured institution closed in the state was Bayside Savings Bank, Port Saint Joe, on July 30, 2010.

 

• Imperial Savings and Loan Association – Martinsville, Virginia, was closed by the Office of Thrift Supervision, which appointed the FDIC as receiver. The FDIC entered into a purchase and assumption agreement with River Community Bank, National Association  - Martinsville, Virginia, to assume all of the deposits of Imperial Savings and Loan Association. As of June 30, 2010, Imperial Savings and Loan Association had approximately $9.4 million in total assets and $10.1 million in total deposits. River Community Bank, N.A. did not pay the FDIC a premium for the deposits of Imperial Savings and Loan Association. In addition to assuming all of the deposits of the failed bank, River Community Bank, N.A. agreed to purchase essentially all of the assets. The FDIC estimates that the cost to the DIF will be $3.5 million. Imperial Savings and Loan Association is the 113th FDIC-insured institution to fail in the nation this year, and the first in Virginia. The last FDIC-insured institution closed in the state was Greater Atlantic Bank, Reston, on December 4, 2009.

 

• ShoreBank – Chicago, Illinois, was closed by the Illinois Department of Financial and Professional Regulation, which appointed the FDIC as receiver. The FDIC entered into a purchase and assumption agreement with Urban Partnership Bank – Chicago, Illinois, a newly-chartered institution, to assume all of the deposits of ShoreBank. As of June 30, 2010, ShoreBank had approximately $2.16 billion in total assets and $1.54 billion in total deposits. Urban Partnership Bank will pay the FDIC a premium of 0.50% to assume all of the deposits of ShoreBank. In addition to assuming all of the deposits of the failed bank, Urban Partnership Bank agreed to purchase essentially all of the assets except for the marketable securities and fixed assets. The FDIC and Urban Partnership Bank entered into a loss-share transaction on $1.41 billion of ShoreBank’s assets. Urban Partnership 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 $367.7 million. ShoreBank is the 114th FDIC-insured institution to fail in the nation this year, and the fifteenth in Illinois. The last FDIC-insured institution closed in the state was Palos Bank and Trust Company, Palos Heights, on August 13, 2010.

 

• Butte Community Bank – Chico, California, and Pacific State Bank – Stockton, California, were closed by the California Department of Financial Institutions, which then appointed the FDIC as receiver for the two banks. The FDIC entered into purchase and assumption agreements with Rabobank, National Association – El Centro, California, to assume all the deposits and essentially all the assets of the two failed banks, which were not affiliated with one another. As of June 30, 2010, Butte Community Bank had total assets of $498.8 million and total deposits of $471.3 million; and Pacific State Bank had total assets of $312.1 million and total deposits of $278.8 million. Rabobank, National Association will pay the FDIC a premium of 4.05% to assume all of the deposits of Butte Community Bank, but it did not pay the FDIC a premium for the deposits of Pacific State Bank. The FDIC and Rabobank, National Association entered into loss-share transactions on $425.4 million of Butte Community Bank’s assets; and $249.7 million of Pacific State Bank’s assets. Rabobank, National Association 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 Butte Community Bank will be $17.4 million; and for Pacific State Bank, $32.6 million. These closings bring the total for the year to 116 banks in the nation, and the seventh and eighth in California. Prior to these failures, the last FDIC-insured bank closed in the state was Granite Community Bank, National Association, Granite Bay, on May 28, 2010.

 

• Los Padres Bank – Solvang, California was closed by the Office of Thrift Supervision, which appointed the FDIC as receiver. The FDIC entered into a purchase and assumption agreement with Pacific Western Bank – San Diego, California, to assume all of the deposits of Los Padres Bank. As of June 30, 2010, Los Padres Bank had approximately $870.4 million in total assets and $770.7 million in total deposits. Pacific Western Bank will pay the FDIC a premium of 0.45% to assume all of the deposits of Los Padres Bank. In addition to assuming all of the deposits of the failed bank, Pacific Western Bank agreed to purchase essentially all of the assets. The FDIC and Pacific Western Bank entered into a loss-share transaction on $579.8 million of Los Padres Bank’s assets. Pacific Western 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 $8.7 million. Los Padres Bank is the 117th FDIC-insured institution to fail in the nation this year, and the eighth in California. The last FDIC-insured institution closed in the state was Butte Community Bank, Chico earlier today.

 

• Sonoma Valley Bank – Sonoma, California, was closed by the California Department of Financial Institutions, which appointed the FDIC as receiver. The FDIC entered into a purchase and assumption agreement with Westamerica Bank, San Rafael – California, to assume all of the deposits of Sonoma Valley Bank. As of June 30, 2010, Sonoma Valley Bank had approximately $337.1 million in total assets and $255.5 million in total deposits. Westamerica Bank will pay the FDIC a premium of 2.0% to assume all of the deposits of Sonoma Valley Bank. In addition to assuming all of the deposits of the failed bank, Westamerica Bank agreed to purchase essentially all of the assets. The FDIC estimates that the cost to the DIF will be $10.1 million. Sonoma Valley Bank is the 118th FDIC-insured institution to fail in the nation this year, and the tenth in California. The last FDIC-insured institution closed in the state was Los Padres Bank, Solvang, earlier today.

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.)

Tags: Bank failures 2010, Banking, Commercial Real Estate, Commercial Real Estate Loans, CRE, Deposit Insurance Fund, Failures, FDIC, Federal Deposit Insurance Corporation

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