US regulators close 3 small banks
NEW YORK — Regulators have shut down three more small banks, pushing this year’s tally of failed banks to 40.
One bank closed Friday was in North Carolina, another in Georgia, and the third was in Kansas. The wave of bank failures is expected to continue throughout the year 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 of Cooperative Bank of Wilmington, N.C., Southern Community Bank of Fayetteville, Ga., and First National Bank of Anthony in Anthony, Kan.
The FDIC agreed to have First Bank of Troy, N.C., take over Cooperative Bank’s 24 branches and nearly all of its assets. Cooperative Bank had total assets of $970 million and total deposits of $774 million.
United Community Bank of Blairsville, Ga., will assume Southern Community bank’s five branches, its $307 million in deposits, and nearly all of its $377 million in assets.
And Bank of Kansas of South Hutchinson, Kan., will acquire First National Bank of Anthony’s six branches, its $142.5 million in deposits, and nearly all of its $156.9 million in assets.
The FDIC will retain the remaining unacquired assets of all three failed banks to sell later. And with all three acquirers, the FDIC has entered into loss-sharing agreements to maximize returns on the assets and minimize disruptions for loan customers.
The FDIC said it estimates that Cooperative Bank’s failure will cost the deposit insurance fund $217 million. Southern Community Bank’s will cost $114 million, and First National Bank of Anthony’s will cost $32.2 million.
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 40 institutions that have 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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