2 BANKS SHUT DOWN on October 1, 2010, 129 Banks fail in 2010!!

On Friday, October 1, 2010, TWO BANKS were CLOSED by U.S. regulators. The two failed institutions were located in Florida and Washington. This brings the total number of US Bank Failures to 129 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 165 banks will fail in 2010. These six bank failures had total ASSETS of approximately $528.3 MILLION and total deposits of approximately $486.5 MILLION. The Federal Deposit Insurance Corporation (“FDIC”) estimates the cost of the two bank closures to its Deposit Insurance Fund (“DIF”) will be approximately $154.8 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 TWO failed banks are:

  • Wakulla Bank – Crawfordville, Florida was closed by the Florida Office of Financial Regulation, which appointed the FDIC as receiver. The FDIC entered into a purchase and assumption agreement with Centennial Bank – Conway, Arkansas, to assume all of the deposits of Wakulla Bank.  As of June 30, 2010, Wakulla Bank had approximately $424.1 million in total assets and $386.3 million in total deposits. Centennial Bank did not pay the FDIC a premium for the deposits of Wakulla Bank. In addition to assuming all of the deposits of the failed bank, Centennial Bank agreed to purchase essentially all of the assets. The FDIC and Centennial Bank entered into a loss-share transaction on $212.7 million of Wakulla Bank’s assets. Centennial 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 $113.4 million. Wakulla Bank is the 128th FDIC-insured institution to fail in the nation this year, and the twenty-fifth in Florida. The last FDIC-insured institution closed in the state was Haven Trust Bank Florida, Ponte Vedra, on September 24, 2010.

 

  • Shoreline Bank – Shoreline, Washington, was closed by the Washington Department of Financial Institutions, which appointed the FDIC as receiver. The FDIC entered into a purchase and assumption agreement with GBC International Bank, Los Angeles, California, to assume all of the deposits of Shoreline Bank. As of June 30, 2010, Shoreline Bank had approximately $104.2 million in total assets and $100.2 million in total deposits. GBC International Bank will pay the FDIC a premium of 0.25% to assume all of the deposits of Shoreline Bank. In addition to assuming all of the deposits of the failed bank, GBC International Bank agreed to purchase approximately $65.7 million of the failed bank’s assets. The FDIC will retain the balance of the assets for later disposition. The FDIC and GBC International Bank entered into a loss-share transaction on $49.2 million of Shoreline Bank’s assets. GBC International 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 $41.4 million. Shoreline Bank is the 129th FDIC-insured institution to fail in the nation this year, and the tenth in Washington. The last FDIC-insured institution closed in the state was North County Bank, Arlington, on September 24, 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 7,830 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.)

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