Saturday, February 21, 2009

Bank Failure Friday – Another one bites the dust…

Oregon Regulators Shut Silver Falls Bank, 14th Seized in 2009

By Ari Levy and Margaret Chadbourn

Feb. 21 (Bloomberg) -- Oregon regulators seized Silver Falls Bank, the 14th U.S. bank shuttered this year, as the worst financial crisis in a more than half a century further tightens access to credit and pushes foreclosures higher.

Silver Falls, with $131.4 million in assets and $116.3 million in deposits, was shut by the Oregon Department of Consumer and Business Services and the Federal Deposit Insurance Corp. was named receiver, the FDIC said yesterday in a statement. Citizens Bank of Corvallis, Oregon, will assume deposits from Silver Falls. The Silverton-based bank’s three offices will open Feb. 23 as branches of Citizens Bank.

“There is no need for customers to change their banking relationship to retain their deposit insurance coverage,” the FDIC said in the statement.

Regulators have closed eight banks in February, the most for any month since 1993. The FDIC shuttered 25 banks in 2008, including Washington Mutual Inc., the biggest U.S. bank to fail last year, and IndyMac Bank Inc., the second biggest. Pinnacle Bank of Beaverton, Oregon, was closed last week.

Silver Falls Bank had experienced critically low levels of capital, said David Tatman, administrator of the Oregon regulator’s Division of Finance & Corporate Securities, in a statement on the agency’s Web site. The bank had a heavy dependence on commercial construction loans, many of which were not performing or being repaid, Tatman said in the statement.

“Despite many efforts, such as a recent stock offering, Silver Falls Bank management was not able to address these significant problems in a timely manner,” Tatman said.

Stock Sale
Silver Falls raised $525,000 from a stock sale last month, the Oregon regulator said. Funds were held in an escrow account and are being returned to the investors, the regulator said.

Citizens Bank will buy about $13 million in assets, the FDIC said. The failure will cost the deposit insurance fund, supported by fees on banks, about $50 million, the FDIC said.
President Barack Obama this month signed a $787 billion stimulus package to revive the U.S. economy and unveiled a $275 billion housing program targeting as many as 9 million struggling homeowners.

On Dec. 16, the FDIC doubled premiums it charges banks to replenish its reserves, which had $34.6 billion as of the third quarter. Bank failures through 2013 may cost the funds more than the $40 billion, according to the Washington-based agency that oversees 8,384 institutions with $13.6 trillion in assets.
What’s there to say about that? It was awfully nice of them to return the $525,000 from last month’s stock sale. Makes me wonder who is idiotic enough to buy stock in a company that was clearly on the verge of failure? Of course their stupidity will ultimately be paid for with taxpayer dollars. No problem, there’s evidently an unlimited supply by current (and past) governmental thinking.

Even though it would be highly appropriate to play “Another One Bites the Dust,” after seeing that picture of Sheila Bair this tune suddenly came to mind – gee, I don’t know why?

Eagles – Witchy Woman:

Wow, lots of hair in that flashback - I hardly recognized them!