6 BANKS SHUT DOWN on September 17, 2010, 125 Banks fail in 2010!!

On Friday, September 17, 2010, SIX BANKS were CLOSED by U.S. regulators. The six failed institutions were located in New Jersey, Georgia, Ohio and Wisconsin. This brings the total number of US Bank Failures to 125 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 $1.3 BILLION and total deposits of approximately $1.2 BILLION. The Federal Deposit Insurance Corporation (“FDIC”) estimates the cost of the six bank closures to its Deposit Insurance Fund (“DIF”) will be approximately $347.6 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:

  • ISN Bank – Cherry Hill, New Jerseywas closed by the New Jersey Department of Banking and Insurance, which appointed the FDIC as receiver. The FDIC entered into a purchase and assumption agreement with New Century Bank (doing business as Customers Bank) – Phoenixville, Pennsylvania, to assume all of the deposits of ISN Bank. As of June 30, 2010, ISN Bank had approximately $81.6 million in total assets and $79.7 million in total deposits. New Century Bank did not pay the FDIC a premium to assume all of the deposits of ISN Bank. In addition to assuming all of the deposits of the failed bank, New Century Bank agreed to purchase essentially all of the failed bank’s assets. The FDIC and New Century Bank entered into a loss-share transaction on approximately $64.8 million of ISN Bank’s assets. New Century 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 approximately $23.9 million. ISN Bank is the 120th FDIC-insured institution to fail in the nation this year, and the first in New Jersey. The last FDIC-insured institution closed in the state was First BankAmericano – Elizabeth, on July 31, 2009.

 

  • Community & Southern Bank – Carrollton, Georgia acquired the banking operations, including all the deposits, of three Georgia-based institutions. The Bank of Ellijay – Ellijay, First Commerce Community Bank – Douglasville, and The Peoples Bank – Winder, were closed by the Georgia Department of Banking and Finance, and the FDIC was named receiver for each institution. The failed institutions were not affiliated with one another. The FDIC entered into a purchase and assumption agreement with Community & Southern Bank. As of June 30, 2010, Bank of Ellijay had total assets of $168.8 million and total deposits of $160.7 million; First Commerce Community Bank had total assets of $248.2 million and total deposits of $242.8 million; and The Peoples Bank had total assets of $447.2 million and total deposits of $398.2 million. Community & Southern Bank will pay the FDIC a premium of 1.0% to acquire all of the deposits of the Bank of Ellijay and First Commerce Community Bank. They also will pay the FDIC a premium of 1.25% to acquire all of the deposits of The Peoples Bank. Besides assuming all the deposits from the three Georgia institutions, Community & Southern Bank will purchase virtually all the failed banks’ assets. The FDIC and Community & Southern Bank entered into a loss-share transaction on approximately $602.5 million of the failed institutions’ assets. Community & Southern Bank and the FDIC 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 Bank of Ellijay will be $55.2 million; for First Commerce Community Bank, $71.4 million; and for The Peoples Bank, $98.9 million. These failures bring the total number of failures to 123 for the nation and to 14 for Georgia. Prior to these failures, the last bank closed in the state was Northwest Bank & Trust – Acworth, on July 31, 2010.

 

  • Bramble Savings Bank – Milford, Ohio, was closed by the Ohio Division of Financial Institutions, which appointed the FDIC as receiver. The FDIC entered into a purchase and assumption agreement with Foundation Bank – Cincinnati, Ohio, to assume all of the deposits of Bramble Savings Bank. As of June 30, 2010, Bramble Savings Bank had approximately $47.5 million in total assets and $41.6 million in total deposits. Foundation Bank did not pay the FDIC a premium to assume all of the deposits of Bramble Savings Bank. In addition to assuming all of the deposits of the failed bank, Foundation Bank agreed to purchase essentially all of the failed bank’s assets. The FDIC estimates that the cost to the DIF will be $14.6 million. Bramble Savings Bank is the 124th FDIC-insured institution to fail in the nation this year, and the second in Ohio. The last FDIC-insured institution closed in the state was American National Bank – Parma, on March 19, 2010.

 

  • Maritime Savings Bank – West Allis, Wisconsin, was closed by Office of Thrift Supervision, which appointed the FDIC as receiver. The FDIC entered into a purchase and assumption agreement with North Shore Bank, FSB –  Brookfield, Wisconsin, to assume all of the deposits of Maritime Savings Bank. As of June 30, 2010, Maritime Savings Bank had approximately $350.5 million in total assets and $248.1 million in total deposits. North Shore Bank, FSB did not pay the FDIC a premium to assume all of the deposits of Maritime Savings Bank. In addition to assuming all of the deposits of the failed bank, North Shore Bank, FSB agreed to purchase approximately $177.6 million of the failed bank’s assets. The FDIC estimates that the cost to the DIF will be $83.6 million. Maritime Savings Bank is the 125th FDIC-insured institution to fail in the nation this year, and the first in Wisconsin. The last FDIC-insured institution closed in the state was Bank of Elmwood – Racine, on October 23, 2009.

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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