Feds Shut 3 Banks in Florida, Calif.

FDIC Takeovers Raise Number of Bank Closures This Year to 123

(AP)  Regulators shut down two banks in Florida and one in California on Friday, boosting to 123 the number of U.S. bank failures this year as loan defaults rise in the worst financial climate in decades.

The Federal Deposit Insurance Corp. took over Orion Bank, based in Naples, Fla., with about $2.7 billion in assets and $2.1 billion in deposits, and Sarasota-based Century Bank, with $728 million in assets and $631 million in deposits.

Pacific Coast National Bank in San Clemente, Calif. was also shut down. It had $134.4 million in assets and $130.9 million in deposits.

IberiaBank, based in Lafayette, La., agreed to assume all of Orion Bank's deposits and $2.4 billion of its assets, as well as Century Bank's deposits and $706 million of its assets.

The FDIC will retain the rest for eventual sale.

In addition, the FDIC and IberiaBank agreed to share losses on roughly $1.9 billion of Orion Bank's loans and other assets, and on about $656 million of Century Bank's.

Orion Bank's 23 branches will reopen Saturday as offices of IberiaBank. Century Bank's 11 branches will reopen during normal business hours, starting Saturday, also as IberiaBank.

Tustin, Calif.-based Sunwest Bank agreed to assume all of Pacific Coast National Bank's deposits and essentially all of its assets.

Pacific Coast National Bank's two branches will reopen Monday as branches of Sunwest Bank.

The failure of Pacific Coast National Bank will cost the federal deposit insurance fund an estimated $27.4 million. Orion Bank's will cost $615 million, while Century Bank's failure will cost $344 million.

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.

To replenish the fund, the FDIC on Thursday mandated the roughly 8,100 insured banks and savings institutions pay about $45 billion in premiums in advance that would have been due over the next three years. It is the first time the agency has required prepaid insurance fees. The idea is for banks to spread the costs over three years rather than paying a one-time fee that would deplete their capital reserves.

The FDIC expects the cost of bank failures to grow to about $100 billion over the next four years.

Depositors' money - insured up to $250,000 per account - is not at risk, with the FDIC backed by the government. The FDIC still has about $21 billion cash in loss reserves apart from the insurance fund. It can also tap a Treasury Department credit line of up to $500 billion.

Last week brought the closure of the fourth-biggest bank to fail this year: San Francisco's United Commercial Bank, with $11.2 billion in assets. East West Bancorp Inc., parent of East West Bank of Pasadena, Calif., agreed to buy all of United Commercial's deposits and most of its assets.

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. Failures have been concentrated in California, Georgia and Illinois. Pacific Coast National Bank's failure was the 15th in California this year. Eleven Florida banks have failed this year.

If the economic recovery falters, defaults on the high-risk loans could spike. Many regional banks 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 123 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 $28 billion so far this year. They compare with 25 last year and three in 2007.

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.

[mikedudical]

It's the small banks that are bleeding to death and should be getting the bailout help. They've got record high foreclosures / repossessions (see: http://www.repofinder.com ) and the new Government regulations aren't helping.

[searingtruth]

"It's as if a dam has broken, and instead of fleeing the water we keep building our cities higher in hope of escape.

Even as we are washed away."
SearingTruth

A Future of the Brave

[Ichabod09]

Searing you bogus BS artist-quoting yourself is one of the most moronic things you continually do-that and your arrogant, pretentious "My fellow citizens". Get help for the delusions of grandeur!

[Skirt-Lifter]

btw ... CBS is not covering the mosque story ... i wonder why...

[hungry1968-17]

I guess "search" is a word you've never heard of before?

http://www.cbsnews.com/stories/2009/11/12/national/main5632792.shtml

http://www.cbsnews.com/stories/2009/11/12/ap/national/main5632743.shtml

http://www.cbsnews.com/stories/2009/11/13/national/main5638142.shtml

http://www.cbsnews.com/stories/2009/11/12/ap/national/main5632608.shtml

http://www.cbsnews.com/stories/2009/11/13/ap/national/main5638632.shtml

[Skirt-Lifter]

Feds Shut 3 Banks in Florida, Calif. and seized 5 mosques worth more than $500,000.00, for suspected funneling of funds to Iran. We all know these peaceful Muslim people aren't funneling money to Iran for terrorist reasons, they are simply trying to keep it out of American banks!!!

[kenhamlett]

That is the funniest assessment of the situation I have heard.

[YourVeryWrong]

Is that why you give them your money?

[spaceatoms]

The underlying issues are still out there, if President Obama would have stepped up onto the podium and said we were going to ensure 40 percent gains to capitalistic Wall Street venture bankers as his first priority in office, then he would not have got into the office. We have gone nowhere with this administration. Interest rates should have gone up and slowed the economy instead of more globalization and consumption and debt paid down. The only people bailed out are the wealthy that want to see returns coming from their investments, this is not speaking for the people, this is supporting the oligarchy and then you turn around and send more people to war. Politics is politics, I guess!

[us_1776]

No, it's just the reality of the situation. The 40% gains occurred because Bush bailed out Wall Street with the $700 billion downpayment known as T.A.R.P. And Obama was forced to continue it because you cannot stop a process that was started unless you want to risk losing the entire initial $700 billion. And I do agree with you that the wealthy are able to gobble up assets that were pushed onto the market from the middle-class who were decimated by the reckless and fraudulent policies of the big banks. And this is a travesty of injustice. It has set back the middle-class in America probably 20 years.