Tag Archives: Bank Failure

Following a month without a single bank failure, state and federal regulators stepped in over the weekend to seize community-based lenders in Arizona and Florida. This latest pair of closings brings the FDIC's tally of failed banks for the 2011 calendar year to 92. Officials with the FDIC say institutional failures stemming from the real estate downturn have peaked and are now trending lower. The 92 failures as of mid-December this year is indeed well below the 157 that became insolvent in 2010 and 140 in 2009.

Bad real estate loans from the boom years of the last decade have forced 412 FDIC-insured lenders to shutter their operations since the start of 2008. No institution's balance sheet has been fully insulated from the downturn in the real estate markets, but data released by the FDIC suggests lenders are finding their way out of the storm. After rising since 2006, the FDIC's so-called ""Problem List"" of banks at risk of failure has contracted for two quarters in a row. At the same time, money set aside to cover expected loan losses has fallen nearly 50 percent from a year ago.

This year's tally of failed banks rose to 90 over the weekend, as state and federal regulators stepped in to close the doors on two more community-based lenders in Iowa and Louisiana. Polk County Bank has been acquired by Grinnell State Bank in Iowa, and Louisiana's Central Progressive Bank is now part of First NBC Bank. Together the two closings are expected to cost the FDIC more than $70 million.

The National Credit Union Association (NCUA) has reached settlements with Citigroup and Deutsche Bank Securities regarding residential mortgage-backed securities sales to five wholesale credit unions that have recently failed. Citigroup agreed to pay $20.5 million, and Deutsche Bank agreed to pay $145 million to help lessen the losses incurred when the five credit unions failed. Neither bank admitted to fault when agreeing to the settlement. Total losses incurred from the five credit union failures stand at $3.3 billion, according to the NCUA.

Community Bank of Rockmart ran its business from a single branch location in Rockmart, Georgia. The bank had $55.9 million in deposits and assets totaling $62.4 million. It became the 88th FDIC-insured institution to fail in the nation this year and the 23rd in Georgia when state regulators shuttered its doors late last week. The FDIC brokered a deal with Century Bank of Georgia to assume all the deposits of the failed bank and purchase $40.7 million of its assets.

While the roots of the financial crisis can be found in the nation's residential housing sector, it's now exposure to bad commercial real estate loans that's battering banks' balance sheets. The research firm Trepp LLC has released a new report on recent U.S. bank failures and the drivers behind their demise. In total, 11 banks failed during the month of October, collectively with $617 million in nonperforming loans. Commercial real estate loans made up 65 percent of the nonperforming balance, while residential real estate was 22 percent.

State and federal regulators have closed the doors on two more community-based lenders in Nebraska and Utah, bringing this year's tally of failed banks to 87. Mid City Bank, Inc. in Omaha has been acquired by Purdum State Bank, which is now operating under the name Premier Bank. Utah's SunFirst Bank has been largely absorbed by Cache Valley Bank. However, the FDIC says it is retaining $15 million in deposits that may be subject to external litigation involving SunFirst Bank, along with $20.8 million of its assets which Cache Valley Bank elected not to acquire.

State and federal regulators shuttered All American Bank in Des Plaines, Illinois, over the weekend, bringing this year's failed-bank tally to 85. The FDIC brokered a deal with International Bank of Chicago to take over the failed lender's operations and purchase all of its assets. All American Bank is the ninth FDIC-insured institution in the state to go under this year.

Four more community-based lenders have been seized by regulators. That brings this year's tally of failed institutions to 84. But the number of fallen banks in the U.S. continues to lag behind the 139 closures recorded at this time during 2010. Officials with the FDIC say bank failures have peaked and are expected to continue to decline as the financial sector returns to health. This latest round of closings claimed two lenders in Georgia and one each in Colorado and Florida.

This year's failed-bank tally has risen to 80 with the closings of four more lenders over the weekend. Piedmont Community Bank in Georgia was picked up by State Bank and Trust Company. Country Bank in Illinois has been taken over by Blackhawk Bank & Trust. In Cranford, New Jersey, First State Bank has now become part of New York's Northfield Bank. Blue Ridge Savings Bank in North Carolina was absorbed by the Bank of North Carolina.