Regulators shut down 7 more banks in FL, WI, GA, MN and IL; total failed banks in '09 reach 106
Though there are some early signs of economic recovery, bank failures continue and the pace has picked up sharply this year. With the failure of 7 more banks on Friday, the tally has surpassed 100 this year. This takes the total number to 106, compared to 25 in 2008 and 3 in 2007.
As the industry has to tolerate bad loans that were made during the credit explosion, the trouble in the banking system goes even deeper, increasing the possibility of more failures. However, the regulators are trying to avoid panic by seizing banks slowly. Also, the slow seizing could be a strategy as it is hard to get buyers for so many failed banks.
Out of the seven failed banks, three were based in Florida – Partners Bank in Naples with $65.5 million in assets, Hillcrest Bank in Naples with $83 million in assets and Flagship National Bank in Bradenton with $190 million in assets. The other four were American United Bank of Lawrenceville, Georgia with $111 million in assets; Bank of Elmwood in Racine, Wisconsin with $327.4 million in assets; Riverview Community Bank in Otsego, Minnesota with $108 million in assets and First Dupage Bank in Westmont, Illinois with $279 million in assets.
Failure of these institutions represents another impact on the Federal Deposit Insurance Corporation's (FDIC) fund for protecting customer accounts, as it has been appointed receiver for these banks. The failure of these banks is expected to cost the deposit insurance fund an estimated $356.6 million.
The FDIC insures deposits at 8,195 institutions with roughly $13.5 trillion in assets. When a bank fails, it reimburses customers for deposits of up to $250,000 per account. The outbreak of financial institutions failing has significantly stretched the regulator's deposit insurance fund. At June 30, 2009, the fund corpus fell to $10.4 billion, the lowest since 1993, from $13.0 billion in the prior quarter.
Fort Lauderdale-based Stonegate Bank will assume control of all Partners Bank's $64.9 million in deposits. It will also take over Hillcrest Bank's $84 million in deposits.
Moultrie-based Ameris Bank will take control of American United's $101 million in deposits. The FDIC and Ameris Bank entered into a loss-share transaction for $92 million of American United's assets.
Lake City-based First Federal Bank will take over all of Flagship National Bank's $175 million in deposits. Bank of Elmwood's $273.2 million in deposits will be assumed by Oak Creek-based Tri City National Bank. Stillwater-based Central Bank will take control of Riverview Community Bank's $80 million in deposits.
