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Context of 'July 2, 2009: Reports: FDIC Seized 16 Banks in June 2009, 52 Bank Failures Since Start of 2009'

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According to the Federal Deposit Insurance Corporation (FDIC), banks and thrifts issued reports of a fourth quarter 2008 net loss totaling $26.2 billion as well as a $27.8 billion decline from the $575 million earned in fourth quarter 2007; it is the first quarterly loss since 1990. Rising loan-loss provisions, losses from trading activities, and goodwill write-downs also contributed to the loss as banks continue to repair their balance sheets in order to return to future profitability. While more than two-thirds of all insured institutions were profitable, earnings were diluted by large losses at a number of big banks. “Public confidence in the banking system and deposit insurance is demonstrated by the increase in domestic deposits during the fourth quarter,” FDIC Chairman Sheila Bair says. “Clearly, people see an FDIC-insured account as a safe haven for their money in difficult times.” FDIC-insured lenders reported net income of $16.1 billion in 2008, down from $100 billion in 2007 and the lowest since the $11.3 billion reported in 1990, the agency says. Regulators shuttered 25 banks last year, including Washington Mutual Inc., the biggest bank failure in US history. Regulators have so far seized 14 lenders this year, including eight in February. [Bloomberg, 2/26/2009; Federal Deposit Insurance Corporation, 2/26/2009; FDIC News and Events, 2/26/2009, pp. Press Releases]

Entity Tags: Federal Deposit Insurance Corporation, Sheila Bair

Timeline Tags: Global Economic Crises

The Federal Deposit Insurance Corporation (FDIC) spent $314.3 million to shut down 16 banks in June 2009, according to reports released today. The federal insurer closed seven banks on June 25, pushing the number of bank failures for 2009 to 52, more than double the failures for all of 2008. The late June closures included six Illinois regional banks, all controlled by one family whose bank business model, according to the FDIC, “created concentrated exposure in each institution.” The FDIC says that the failure of the six family-owned banks is due to the banks’ investments in collateralized debt obligations and other losses. The failures and subsequent government takeover of the Illinois banks brought total 2009 Illinois bank failures to 12. Local and regional banks have been especially hard hit by plummeting home values that devalued mortgage-backed assets, while rising unemployment rates forced increased numbers of consumers to default on their loans.
June 2009 Bank Failures FDIC Update through July 2, 2009 -
bullet Founders Bank, Worth, Illinois, with approximately $962.5 million in assets, closed. The PrivateBank and Trust Company, Chicago, Illinois, agreed to assume all deposits, approximatedly $848.9 million.
bullet Millennium State Bank of Texas, Dallas, Texas, approximately $118 million in assets, closed. State Bank of Texas, Irving, Texas, agreed to assume all deposits, approximately $115 million.
bullet The First National Bank of Danville, Danville, Illinois, approximately $166 million in assets, closed. First Financial Bank, N. A., Terre Haute, Indiana, assumed all deposits, approximately $147 million.
bullet The Elizabeth State Bank, Elizabeth, Illinois, approximately $55.5 million in assets, closed. Galena State Bank and Trust Company, Galena, Illinois, agreed to assume all deposits, approximately $50.4 million.
bullet Rock River Bank, Oregon, Illinois, approximately $77 million in assets, closed. The Harvard State Bank, Harvard, Illinois, agreed to assume all deposits, approximately $75.8 million.
bullet The First State Bank of Winchester, Winchester, Illinois, approximately $36 million in assets, closed. The First National Bank of Beardstown, Beardstown, Illinois, agreed to assume all deposits, approximately $34 million.
bullet The John Warner Bank, Clinton, Illinois, with approximately $70 million in assets, was closed. State Bank of Lincoln, Lincoln, Illinois, agreed to assume all deposits, approximaedly $64 million.
bullet Mirae Bank, Los Angeles, California, approximately $456 million in assets, closed. Wilshire State Bank, Los Angeles, California, agreed to assume all deposits, approximately $362 million.
bullet MetroPacific Bank, Irvine, California, approximately $80 million in assets, closed. Sunwest Bank, Tustin, California, agreed to assume all non-brokered deposits, approximately $73 million.
bullet Horizon Bank, Pine City, Minnesota, approximately $87.6 million in assets, closed. Stearns Bank N. A., St. Cloud, Minnesota, agreed to assume all deposits, excluding certain brokered deposits, approximately $69.4 million.
bullet Neighbor Community Bank, Newnan, Georgia, approximately $221.6 million in assets, closed. CharterBank, West Point, Georgia, agreed to assume all deposits, approximately $191.3 million.
bullet Community Bank of West Georgia, Villa Rica, Georgia, approximately $199.4 million in assets and approximately $182.5 million in deposits, approved for payout by the FDIC board of directors.
bullet First National Bank of Anthony, Anthony, Kansas, approximately $156.9 million in assets, closed. Bank of Kansas, South Hutchinson, Kansas, agreed to assume all deposits, approximately $142.5 million.
bullet Cooperative Bank, Wilmington, North Carolina, approximately $970 million in assets, closed. First Bank, Troy, North Carolina, agreed to assume all deposits, excluding certain brokered deposits, approximately $774 million.
bullet Southern Community Bank, Fayetteville, Georgia, approximately $377 million in assets, closed. United Community Bank, Blairsville, Georgia, agreed to assume all deposits, approximately $307 million.
bullet Bank of Lincolnwood, Lincolnwood, Illinois, approximately $214 million in assets, closed. Republic Bank of Chicago, Oak Brook, Illinois, agreed to assume all deposits, approximately $202 million. [CNN, 7/2/2009; FDIC.gov, 7/2/2009]

Entity Tags: Martin J. Gruenberg, Sheila Bair, John E. Bowman, Thomas J. Curry, John C. Dugan, Federal Deposit Insurance Corporation

Timeline Tags: Global Economic Crises

Federal Deposit Insurance Corporation (FDIC) regulators take over real estate lender Colonial BancGroup Inc. in the biggest US bank failure this year. Regulators also close four banks in Arizona, Nevada and Pennsylvania. This increases to 77 the number of federally insured banks that have failed in 2009. The FDIC is appointed receiver of Colonial BancGroup, based in Montgomery, Alabama; Community Bank of Arizona, based in Phoenix; Union Bank, based in Gilbert, Arizona; Community Bank of Nevada, based in Las Vegas; and Dwelling House Savings and Loan Association, located in Pittsburgh. The FDIC approves the sale of Colonial’s $20 billion in deposits and about $22 billion of its assets to BB&T Corp., which is based in Winston-Salem, North Carolina. According to the FDIC, the failed bank’s 346 branches in Alabama, Florida, Georgia, Nevada, and Texas will reopen at normal times starting on Saturday as BB&T offices. A temporary government bank is established by the FDIC for Community Bank of Nevada to give depositors approximately 30 days to open accounts at other financial institutions. As of June 30, Community Bank of Nevada had assets of $1.52 billion and deposits of $1.38 billion; Community Bank of Arizona had assets of $158.5 million and deposits of $143.8 million; Union Bank had assets of $124 million and deposits of $112 million as of June 12. MidFirst Bank, based in Oklahoma City, agrees to assume all the deposits and $125.5 million of the assets of Community Bank of Arizona, as well as about $24 million of the deposits and $11 million of the assets of Union Bank, with the FDIC retaining what’s left for eventual sale. Dwelling House had $13.4 million in assets and $13.8 million in deposits as of March 31. PNC Bank, part of Pittsburgh-based PNC Financial Services Group Inc., agrees to assume all of Dwelling House’s deposits and about $3 million of its assets; the FDIC will hold the rest for eventual sale. The FDIC expects Colonial BancGroup’s failure to cost it an estimated $2.8 billion and that of Community Bank of Nevada, $781.5 million; Union Bank, $61 million; Community Bank of Arizona, $25.5 million; and Dwelling House, $6.8 million. The 77 bank failures nationwide this year compare with 25 last year and three in 2007. As the economy spiraled downward, bank failures increased seismically, siphoning billions out of the FDIC which, at $13 billion as of the first quarter, is at its lowest level since 1993. While losses on home mortgages may be leveling, commercial real estate loan delinquencies remain a potential trouble spot, say FDIC officials. The FDIC’s list of problem institutions soared to 305 in first quarter 2009—the highest since the savings and loan crisis in 1994—increasing from 252 in fourth quarter 2008. Regulators anticipate US bank failures will cost the FDIC about $70 billion through 2013. The shutdown in May of Florida thrift BankUnited is expected to cost the federal insurer $4.9 billion, the second-largest hit since the financial crisis commenced. So far, the costliest is the seizure of big California lender IndyMac Bank in 2008, where it is estimated that the FDIC lost $10.7 billion. In September 2008, the largest US bank failure was the failure of Seattle-based Washington Mutual Inc. (WAMU), with about $307 billion in assets. In a deal brokered by the FDIC, JP Morgan Chase and Co. purchased WAMU for $1.9 billion. [fdic.gov, 8/2009; ABC News, 8/14/2009]

Entity Tags: Federal Deposit Insurance Corporation, Colonial BancGroup, Inc., IndyMac Bank, JP Morgan Chase, Washington Mutual Inc.

Timeline Tags: Global Economic Crises

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