Regulators close 2 small Southern banks
NEW YORK — Regulators on Friday shut down a small bank in Wilmington, N.C. and another small bank in Fayetteville, Ga., pushing this year’s tally of failed banks up to 39.
The wave of bank failures is expected to continue as the weak housing market and rising unemployment rate cause more borrowers to default on their loans.
The Federal Deposit Insurance Corp. was appointed receiver on Friday of Cooperative Bank of Wilmington, N.C., after the bank was closed by North Carolina regulators. The FDIC agreed to have First Bank of Troy, N.C., take over the failed bank’s 24 branches and nearly all of its assets.
Cooperative Bank had total assets of $970 million and total deposits $774 million.
The FDIC was also appointed receiver of Southern Community Bank of Fayetteville, Ga., on Friday. The FDIC agreed to have the United Community Bank of Blairsville, Ga., assume the failed bank’s five branches and nearly all of its assets.
Southern Community Bank had $307 million in deposits and $377 million in assets.
For both banks, the FDIC will retain the remaining unacquired assets to sell later.
The number of banks on the FDIC’s list of “problem” institutions leaped to 305 in the first quarter — the highest number since 1994 during the savings and loan crisis — from 252 in the fourth quarter. The combined assets of those banks rose to $220 billion from $159 billion.
To be sure, most “problem” institutions don’t fail, but the pace of failures has been much higher this year than in past years. The 39 institutions closed this year compare with 25 in all of 2008 and just three in 2007.
One silver lining is that while more banks are being shuttered this year than last, the size of the banks has tended to be smaller.
The largest U.S. bank failure ever was last year: Seattle-based thrift Washington Mutual Inc. fell in September, with about $307 billion in assets. It was acquired by JPMorgan Chase & Co. for $1.9 billion in a deal brokered by the FDIC.
The costliest bank failure was also in 2008, when the big California lender IndyMac Bank got seized and cost the FDIC’s insurance fund an estimated $10.7 billion.
The FDIC expects U.S. bank failures to cost the deposit insurance fund around $70 billion through 2013.
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