Tag Archives: Bank Failure

The first full week of March saw no bank shut-downs, but that lull came to a quick end as regulators seized control of two community-based lenders Friday evening - First National Bank of Davis in Oklahoma and Legacy Bank in Milwaukee, Wisconsin. They bring the number of names on the FDIC's failed bank list to 25 for the 2011 calendar year.

While the housing crisis is what triggered the economic downturn and pushed so many lenders under early on in the receession, it seems the biggest threat has now shifted from residential mortgages to souring commercial real estate (CRE) loans. Commercial real estate proved to be the downfall of the 12 banks that failed last month, according to a report by Trepp, LLC. The company says CRE loans made up 72 percent of the failed banks' nonperforming assets, while residential loans were a distant second, comprising just 20 percent.

In a break from the typical multiple institutional closings that have become the norm of any given weekend for the last couple of years, regulators took control of just one community-based lender Friday evening -- Valley Community Bank in St. Charles, Illinois. The seizure of Valley Community brings the number of names on the FDIC's failed bank list to 23 for the 2011 calendar year.

Two community-based lenders in California and two in Georgia were shut down over the weekend by banking regulators. These latest closings bring the number of names on the FDIC's failed bank list to 22 for the 2011 calendar year to date. The FDIC has said it expects the number of bank closures in 2011 to be less than the 157 that failed in 2010. But if the pace of 20-plus every two months continues, institutional failures will remain extremely elevated by historical standards.

State and federal regulators have shut down four more community-based lenders. This latest round of closings targeted institutions in California, Florida, Michigan, and Wisconsin, and brings the number of bank failures so far in 2011 to 18. Peoples State Bank in Hamtramck, Michigan, was the largest of last weekend's failures and the only one which carried a loss-share agreement from the FDIC.

State and federal regulators seized control of four more community-based lenders over the weekend - in Colorado, New Mexico, Oklahoma, and Wisconsin. That brings the failed-bank tally to 11 for the year. Commercial real estate (CRE) woes remain front and center for failed banks, according to the analysts at Foresight Analytics. In fact, for 10 of the 11 banks that have been shut down since the beginning of the year, the company says CRE loans contributed more than half of the banks' nonperforming loans.

Federal regulators took control of United Western Bank over the weekend after losses in 2009 and 2010 left the Denver-based bank ""undercapitalized and in an unsafe and unsound condition to transact business,"" according to the Office of Thrift Supervision. The institution's parent company called the seizure premature and indicated that the move will likely push it into bankruptcy. Three other smaller lenders were also shut down in Georgia, South Carolina, and North Carolina.

Oglethorpe Bank in Brunswick, Georgia, was shut down by state regulators over the weekend. The FDIC brokered a deal with Bank of the Ozarks in Little Rock, Arkansas to take over the operations of the failed lender. The Georgia bank marks the third bank closing of 2011, just two weeks into the new year. Bank of the Ozarks has been rapidly expanding its presence in the southeastern part of the United States. This is its fifth FDIC-assisted acquisition in the area within the past year.

Just one week into the new year and regulators have moved to shut the doors on two community-based lenders -- First Commercial Bank of Florida in Orlando and Scottsdale, Arizona's Legacy Bank. Officials at the FDIC have said they expect bank failures to begin tapering off from last year, when a total of 157 financial institutions were shuttered and the lingering effects of bad real estate loans made at the height of the boom undermined many banks' balance sheets and left capital levels below regulatory requirements.

Fewer mortgage-related firms closed their doors during 2010 than in 2009, according to newly released industry data. Including mortgage companies, retail and wholesale credit unions, and federally insured banks, the report tracked 201 mortgage-related business operations that either failed or were shut down during 2010. The casualty list was smaller than 2009's count, which stood at 230 mortgage-related fatalities - the most since 1998, when the report was first issued.