The strain of the nation's economic downturn has led to unprecedented numbers of bank closures. Three more community banks ÃƒÂ¢Ã¢â€šÂ¬" in California, Minnesota, and Maryland ÃƒÂ¢Ã¢â€šÂ¬" joined that group Friday, as regulators stepped in and sold off their operations to other institutions. So far in 2009, "84 banks have folded":http://www.fdic.gov/bank/individual/failed/banklist.html, and analysts say they expect hundreds more before the recession ends. The FDIC has added 111 banks to its "so-called problem list":http://www.dsnews.com/articles/fdic-adds-111-to-troubled-watch-list-as-bank-losses-mount-2009-08-28, bringing the total number of institutions under the agency's close watch to 416. The California Department of Financial Institutions closed "Affinity Bank":http://www.affinitybank.com in Ventura on Friday. The FDIC reached an agreement with "Pacific Western Bank":http://www.pacificwesternbank.com of San Diego to take over Affinity's ten branches and assume the failed bank's $922 million in deposits. Pacific Western also agreed to purchase Affinity's $1 billion of assets, of which the FDIC will share in the losses. Regulators said Affinity's capital reserves had been severely depleted by defaults on construction loans and commercial mortgages. The FDIC estimates that Affinity's failure will cost it $254 million. It is the ninth institution in California to go under this year. "Mainstreet Bank":http://www.localbankers.com in Forest Lake, Minnesota, was also shut down Friday. "Central Bank":http://www.centralbnk.com of Stillwater, Minnesota, agreed to assume the operations of Mainstreet's eight branch offices. Central Bank also purchased the failed institution's $434 million in deposits from the FDIC for a premium of 0.10 percent, as well as its $459 million of assets. The FDIC and Central Bank entered into a loss-share transaction on approximately $268 million of Mainstreet Bank's assets. Mainstreet Bank had seen significant success during the recent real estate boom as a result of residential construction. As recently as February of last year, the institution was in full-fledge growth mode, buying up branches in western Wisconsin and acquiring commercial lenders. But as the crisis hit, Mainstreet Bank's real estate construction portfolio crumbled, with $16.9 million of its $43.5 million loans in default by the end of last quarter. Since the beginning of 2008, Mainstreet had lost $42.3 million. The FDIC said the Minnesota bank's failure will cost the agency's insurance fund an estimated $95 million. Mainstreet Bank is the second of two FDIC-insured institutions in Minnesota to fail this year. The other was Horizon Bank in Pine City on June 26. "Bradford Bank":http://www.bradfordfsb.com in Baltimore, Maryland, was the third institution closed Friday, shut down by the Office of Thrift Supervision (OTS). "Manufacturers and Traders Trust Company":http://www.mandtbank.com (M&T) of Buffalo, New York, has acquired the failed bank. M&T will take over its nine branches, $383 million in deposits, and $452 million in assets. The FDIC and M&T agreed to share in the losses on approximately $338 million of Bradford Bank's assets. Bradford had been one of Baltimore's fastest-growing banks. In 2006 and 2007, it was Bradford that stepped in to buy up three smaller troubled Baltimore-area banks. But in May, the OTS determined Bradford was "significantly undercapitalized," and after it failed to raise additional money, the regulator shut it down. The FDIC expects Bradford Bank's closure to cost it $97 million. The only other institution in Maryland to go under this year was Suburban Federal Savings Bank in Crofton back in January.
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About Carrie Bay
Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.
March 11, 2014
March 11, 2014
March 11, 2014