FDIC Takes Over 5 More Banks

Brings Total Bank Failures this Year to 120

(AP)  Regulators on Friday shut banks in Georgia, Michigan, Minnesota, Missouri, and California, bringing the number of bank failures this year to 120 amid the struggling economy and a cascade of defaults on loans.

The Federal Deposit Insurance Corp. took over United Commercial Bank in San Francisco, with $11.2 billion in assets and $7.5 billion in deposits. East West Bancorp Inc., parent company of East West Bank based in Pasadena, Calif., is buying all of the deposits and most of the failed bank's assets.

The FDIC also closed United Security Bank, based in Sparta, Ga., with $157 million in assets and $150 million in deposits; Home Federal Savings Bank in Detroit, with $14.9 million in assets and $12.8 million in deposits; Prosperan Bank, based in Oakdale, Minn., with $199.5 million in assets and $175.6 million in deposits; and Gateway Bank in St. Louis, with $27.7 million in assets and $27.9 million in deposits.

Ameris Bank, based in Moultrie, Ga., agreed to assume the assets and deposits of United Security, while Liberty Bank and Trust Co., based in New Orleans, is buying the assets and deposits of Home Federal Savings.

Alerus Financial of Grand Forks, N.D., agreed to assume the assets and deposits of Prosperan Bank, while Central Bank of Kansas City is buying the assets and deposits of Gateway Bank.

The failure of United Commercial Bank is expected to cost the federal deposit insurance fund an estimated $1.4 billion; the failure of the other four banks a combined $132.7 million.

With United Security, 21 Georgia banks have failed this year, more than in any other state. Most of the failures have involved banks in the Atlanta area, where the collapse of the real estate market brought economic dislocation. Failures also have been especially concentrated in California and Illinois.

As the economy has soured, with unemployment rising, home prices tumbling and loan defaults soaring, bank failures have cascaded and sapped billions out of the federal deposit insurance fund. It has fallen into the red.

Depositors' money — insured up to $250,000 per account — is not at risk, with the FDIC backed by the government. The FDIC still has billions in loss reserves apart from the insurance fund. It can also tap a Treasury Department credit line of up to $500 billion.

Last week, regulators shut nine banks owned by holding company FBOP Corp. It was a new milestone: nine was the highest number of banks closed in a day since the financial crisis began taking down banks last year. Minneapolis-based US Bancorp bought the deposits and most of the assets of the banks, which included two others in California, three in Texas, two in Illinois and one in Arizona.

Banks have been especially hurt by failed real estate loans. Banks that had lent to seemingly solid businesses are suffering losses as buildings sit vacant. As development projects collapse, builders are defaulting on their loans.

If the economic recovery falters, defaults on the high-risk loans could spike. Many regional banks, especially, hold large concentrations of these loans. Nearly $500 billion in commercial real estate loans are expected to come due annually over the next few years.

The 120 bank failures are the most in a year since 1992 at the height of the savings-and-loan crisis. They have cost the federal deposit insurance fund more than $27 billion so far this year, and hundreds more bank failures are expected to raise the cost to around $100 billion through 2013.

The number of banks on the FDIC's confidential "problem list" jumped to 416 at the end of June from 305 in the first quarter. That's the most since June 1994. About 13 percent of banks on the list generally end up failing, according to the FDIC.

The 120 failures this year compare with 25 last year and three in 2007.

To replenish the insurance fund, the FDIC wants the roughly 8,100 insured banks and savings institutions to pay in advance about $45 billion in premiums that would have been due over the next three years.

The Obama administration recently proposed a plan to provide infusions of money to small banks at low interest rates, provided they agree to increase lending to small businesses. Banks and credit unions that serve low-income areas would get aid at even lower rates to help small businesses in the hardest-hit rural and urban areas. The aid would come from money still available in the $700 billion federal bailout fund, which went mostly to large banks.

[band3x]

More stock holders get screwed.

[charlie7410]

How could it be a great denial? Its an insurance policy. Seems the only people that wanna brag about not having insurance are the insurance companies.

Let's review US Bank failures by year:
2007 - 3
2008 - 25
2009 - 120+
Economists say "recession is over". We're still in the "Great Denial".

[stn_sage]

Or, the "Great Deception"!

Let's review US Bank failures by year:
2007 - 3
2008 - 25
2009 - 120+
Economists say "recession is over". We're still in the "Great Denial".

[Virgil-1]

Obama plan in effect!
Obama voters are getting the change.It's just sad that the stable
minded Americans have to sink with the ship also.

[pubsrtoast]

Yeah, if only McMoron/Palin ticket along with their treasury secretary Phil "Mental Recession" Gramm had somehow won. I have no doubt that we would have been throwing flowers and dancing in the streets (Republican code for disaster).

[stn_sage]

WRONG, friend!
Continuation of the Bush/Cheney plan!
Both Bush & Obama are 'front men' for the Globalists, and they're carrying out THEIR agenda...NOT the agenda he promised as a candidate!

So far, Obama & the Democrats in Congress have been unwilling to pursue an agenda that is needed to bring the economy BACK!

The public is NOT represented by EITHER of the two major parties, folks!

To get REAL change, we're going to HAVE TO get rid of incumbents on a regular basis who don't PRODUCE...and start electing people from alternate parties who won't be 'bought off'!

[Idntv]

Just your normal government take over.. Get everything into one big bank run by the government so that they can more effectively control all spending and purchases. Welcome to the SSA (Socialist States of America).

[bobnjersey]

[Just your normal government take over.. Get everything into one big bank run by the government so that they can more effectively control all spending and purchases. Welcome to the SSA (Socialist States of America). ]

gee ... what 'one' is it going to be? each failed bank's assets are being bought by another bank ... not one bank.

what other 'socialist' signs should we all be looking for ... maybe the sewer being processed by one local entity ... or maybe it will be all the seperate fire trucks and hoses combine in each town so that a bunch of people show up at each fire ... or maybe instead of everyone building their own roads we get one group to do it for everyone.

what if they built bigger buildings ... hire teachers ... and have all the children attend each day at certain times to be taught the socialist dogma? watch out for that.

[hungry1968-17]

Maybe you should learn to read.

Or couldn't you stop drooling on yourself long enough to get to the fourth and fifth paragraphs of the story:

"Ameris Bank, based in Moultrie, Ga., agreed to assume the assets and deposits of United Security, while Liberty Bank and Trust Co., based in New Orleans, is buying the assets and deposits of Home Federal Savings.

Alerus Financial of Grand Forks, N.D., agreed to assume the assets and deposits of Prosperan Bank, while Central Bank of Kansas City is buying the assets and deposits of Gateway Bank."

[stryker54]

They don't want you to know Obama and his banker buddies are taking control of the loot. With just a few banks nationwide it won't be hard for the govt. to account for all you transactions.

[hungry1968-17]

Maybe you should learn to read.

Or couldn't you stop drooling on yourself long enough to get to the fourth and fifth paragraphs of the story:

"Ameris Bank, based in Moultrie, Ga., agreed to assume the assets and deposits of United Security, while Liberty Bank and Trust Co., based in New Orleans, is buying the assets and deposits of Home Federal Savings.

Alerus Financial of Grand Forks, N.D., agreed to assume the assets and deposits of Prosperan Bank, while Central Bank of Kansas City is buying the assets and deposits of Gateway Bank."

[bobnjersey]

[The Federal Deposit Insurance Corp. took over United Commercial Bank in San Francisco, with $11.2 billion in assets and $7.5 billion in deposits.]

where's the listing of the liabilities? sounds like all the deposits are covered by a mile w/ what's listed.