Seattle-based Washington First International Bank, with $520.9 million in assets and $441.4 million in deposits, was closed by the Washington Department of Financial Institutions, which appointed the Federal Deposit Insurance Corp. as receiver of the failed bank.
East West Bank, based in Pasadena, Calif., agreed to assume the deposits and $501 million of the assets of Washington First International Bank. The rest will be retained by the FDIC for future sale.
In addition, the FDIC and East West Bank agreed to share losses on $418.8 million of Washington First International's loans and other assets.
The bank's failure is expected to cost the deposit insurance fund $158.4 million.
With 82 closures nationwide so far this year, the pace of bank failures is more than double that of 2009, which was already a brisk year for shutdowns. By this time last year, regulators had closed 37 banks. The pace has accelerated as banks' losses mount on loans made for commercial property and development.
The number of bank failures is expected to peak this year and to be slightly higher than the 140 that fell in 2009. That was the highest annual tally since 1992, at the height of the savings and loan crisis. The 2009 failures cost the insurance fund more than $30 billion. Twenty-five banks failed in 2008, the year the financial crisis struck with force, and only three succumbed in 2007.
As losses have mounted on loans made for commercial property and development, the growing bank failures have sapped billions of dollars out of the deposit insurance fund. It fell into the red last year, and its deficit stood at $20.7 billion as of March 31.
The number of banks on the FDIC's confidential "problem" list jumped to 775 in the first quarter from 702 three months earlier, even as the industry as a whole had its best quarter in two years.
A majority of institutions posted profit gains in the January-March quarter. But many small and midsized banks are likely to continue to suffer distress in the coming months and years, especially from soured loans for office buildings and development projects.
The FDIC expects the cost of resolving failed banks to grow to about $100 billion over the next four years.
The agency mandated last year that banks prepay about $45 billion in premiums, for 2010 through 2012, to replenish the insurance fund.
Depositors' money - insured up to $250,000 per account - is not at risk, with the FDIC backed by the government.
By AP Business Writer Marcy Gordon