Calif. Bank Is Third To Fail This Year

(AP)  Regulators on Friday shut down 1st Centennial Bank in California, the third U.S. bank to fail this year.

California regulators closed the Redlands-based bank and appointed the Federal Deposit Insurance Corp. as receiver. 1st Centennial had assets of $803.3 million and deposits of $676.9 million as of Jan. 9.

The FDIC said 1st Centennial's insured deposits will be assumed by First California Bank, based in Westlake Village, Calif. Its six branches will reopen Monday as offices of First California.

The agency said patrons of 1st Centennial will continue to have full access to their deposits.

Regular deposit accounts are insured up to $250,000.

First California also will buy about $293 million of the failed bank's assets; the FDIC will retain the rest for eventual sale.

The FDIC estimated that the resolution of 1st Centennial will cost the federal deposit insurance fund $227 million.

1st Centennial was the third federally insured bank to fail and be shuttered by regulators this year amid the pressures of tumbling home prices, rising mortgage foreclosures and tighter credit. It's expected that many more banks won't survive this year's continued economic tumult, and some may have to merge with other institutions.

Twenty-five U.S. banks succumbed last year, far more than those that failed in the previous five years combined. Only three failed in 2007.

Regulators in November closed two big thrifts - Downey Savings and Loan Association and PFF Bank & Trust - based in Southern California, an area of the country that's been battered by the mortgage and housing crises.

Since October, the Treasury Department has been using most of the first half of the $700 billion federal bailout fund to buy stock in banks and other financial institutions, with the idea that cash injections will spur banks to get lending again.

Last week, the government extended a new multibillion-dollar lifeline to the country's biggest bank by assets, Bank of America Corp., providing an additional $20 billion in support from the bailout fund on top of the $25 billion it previously received.

The Treasury, the Federal Reserve and the FDIC also agreed to participate in a program to provide guarantees against losses on about $118 billion in various types of loans and securities backed by the bank's residential and commercial real estate loans.

High-level officials in Washington are trying to find the best way to prod banks into lending more money, reaching for a solution 18 months after the most severe credit crisis in decades sent investors fleeing. U.S. officials have been discussing the notion of establishing a new government-backed bank to remove bad loans and other toxic assets from banks' balance sheets. In theory, with those assets gone, banks would be freer to make more loans.

This week the House voiced bipartisan anger over the bailout program, demanding more prudent spending of the remaining $350 billion with tighter oversight. President Barack Obama said Friday that any legislation governing the use of the second half of the money must include new measures to ensure accountability and transparency.

Seattle-based thrift Washington Mutual Inc. failed in late September, the biggest bank collapse in U.S. history. It had $307 billion in assets.

The FDIC estimates that through 2013, there will be about $40 billion in losses to the deposit insurance fund, including an $8.9 billion loss from the failure of IndyMac Bank last July. The agency has raised insurance premiums paid by banks and thrifts to replenish its fund, which now stands at around $34.6 billion, below the minimum target level set by Congress and the lowest level since 2003.

The FDIC has in place a program to guarantee as much as $1.4 trillion in U.S. banks' debt for more than three years as part of the government's financial rescue plan. Under the program, which is meant to thaw the freeze in bank-to-bank lending, the FDIC is providing temporary insurance for loans between banks, guaranteeing the new debt in the event of payment default by the borrowing bank.

Of the roughly 8,500 federally insured banks and thrifts, the FDIC had 171 on its confidential list of troubled institutions as of Sept. 30 - a nearly 50 percent jump from the second quarter and the highest tally since late 1995.

1st Centennial customers with questions can call the FDIC at 800-822-1918.

[noloyalisti]

That''s what we get for hiring another bad actor for Governor. I guess we did not learn from the first one, also a Republi CON bad actor.

[whitemale08]

It''s not the fault of so-called ''anchor-babie'' but rather the belief in this whole idea of an ''information-age'', phony post-industrial, ''Reagan taught us defecits don''t matter'', Keynesian, Adam Smith and his invisible hand, consumer-led, debt-based, service sector, ''green'' economy.

If we get rid of these ideas that serve no one except Wall Street/City of London oligarchs then we California can turn around and use foreigners to help rebuild America.

[longtree-2009]

in CA, the financial problems can''t all be blamed on illegal aliens. CA is a welfare state for all, a magnet for all to go to CA and qualify for welfare. it is not just illegal aliens by any stretch of the imagination. the CA legislature does not know how to manage the state in bad economic times, they only know how to run the state in good times. the same applies to arnold. if CA were a private sector corporation, there would be draconian measures implemented to cut costs, spending, even laying off employees. CA continues as usual. it is asking for billions in bailout money but CA has made no significant spending cuts. legislators were recently buying new state cars costing up to 50K each. bass, the assembly speaker, and steinberg, senate leader, both flew to obama''s inauguration rather than work on the state budget, spending cuts. arnold vowed to stay and work on the budget but with the two legislative leaders leaving the state, he too went to the inauguration. make no mistake, it is not the illegal aliens hurting CA. if obama or congress gives CA any bailout money without demanding significant spending cuts by CA, then they will be just as corrupt as CA government. why throw good money after bad?

[mcv57]

Posted by Zebraone2

Not so, big-mouth! I have no c/c debt or outrageous mortgage. As a taxpayer, this government manipulation to have the United States pay for corporate corruption and failure is criminal!

[strangeworld]

Hurry to Walmart folks!...buy more foreign made products. When people in the US started believing that they could still have a high standard of living by shipping all manufacturing to foreign lands, they signed their own pink slip. It took years of greed by both US corporations, government officials, business interests, banks, and yes individual Americans to get into this financial mess - I doubt that there''s going to be an easy answer to get us out of it. People need to know that buying American, buying local, and keeping money in their communities by spending their money in businesses run locally will eventually bring jobs back by forcing manufacturers/businesses to relocate into the US again...buying foreign junk at box stores may save you a few cents up front, but what benefit did you reap by saving a few cents up front when it ecventually lead to the loss of your job? Wake up people, if you send your money overseas, how can this country remain strong.

[notopennshut]

Not just all about banks. Many investors have also "closed shop" since they have lost almost everything, including funds within Merrill Lynch, Madoff and other smaller companies. Okay, while these investors were getting gigantic returns, no one uttered a word, or attempted to seek the source of these returns. They were just as happy to receive it. Now folks are crying foul and would like some form of reimbursement. Well, they can try and get it back from their investment managers whom they have trusted all these years. The government and tax payers should not be responsible for paying a penny to these investors. Many of us do not have that kind of investment and to allow taxpayers money to "help" out these money-folks would be an injustice to the rest of us. When you think of how much they reaped in the earlier years of their investments, they have already been repaid more than their initial amounts. So, NO, we must not keep on bailing them out, we should look at helping other everyday folks with a tax cut.

[punkinpie1]

Basically the gov''t backed the wrong horse. They
turned their back on the wrong people. Instead of
helping the taxpayers of this country, they helped
unscruppulous, criminal who wore suits and called
themselves CEOs, CFOS,COOs and executives of the
guise of banks and speculators of Wall Street.

[punkinpie1]

Maybe I''m old fashioned but I feel that since these
banks lied to federal gov''t and definately the tax
payers they should pay back the bailout money they
recieved. I really thought the money was suppose to
be used to soften the credit for customers. But what
I''ve seen is the banks, wall street speculators and
strategists are all a bunch of liars. They should be
in federal prision somewhere.

[runningralph]

hunterdon6, a bank fails when they loan money to people who can''t repay the loan. Sure, they can repo, but that will only get part of their money back. And the repo process is expensive. When banks don''t stick to conservative principles they will collapse as will other institutions that follow liberal philosophies.
Liberalism will destroy any system, including the US government.

[hunterdon6]

How can a bank fail with all the extra fees they charge for everything? Unless the CEO''s are taking the profits.