Saturday, February 7, 2009

Bank Failure Friday – Another Triple…

The FDIC is really knocking the ball hard, scoring their second triple in two weeks. Who knows, at this rate they’ll be hitting home runs soon?

State regulators close three banks

FirstBank Financial Services of Georgia and Alliance Bank and County Bank of California become latest victims of banking crisis; nine banks have failed in 2009.

By Kenneth Musante, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- State regulators shuttered three banks Friday evening, bringing the total number of bank failures this year to nine.

Deposits at FirstBank Financial Services based in McDonough, Ga. will be taken over by Regions Bank (RF, Fortune 500), based in Birmingham, Ala., according to the Federal Deposit Insurance Corporation.

FirstBank's four branches will reopen on Monday as Regions Bank branches, the agency said.

FirstBank held assets worth about $337 million, and held deposits worth about $279 million at the end of December, the Federal Deposit Insurance Corporation said. Regions Bank has agreed to purchase about $17 million of FirstBank's assets.

Meanwhile, deposits at Alliance Bank out of Culver City, Calif. will be assumed by California Bank & Trust from San Diego.

Alliance Bank held assets totaling $1.14 billion, and deposits of $951 million, the FDIC said. California Bank & Trust agreed to purchase $1.12 billion of Alliance's assets at a discount of $9.9 million.

California Bank & Trust also agreed to share some of the asset losses with the FDIC, the agency said.

Alliance Bank's five offices will reopen Monday as branches of California Bank & Trust.

Finally, County Bank of Merced, Calif. was closed late Friday. The FDIC said that Westamerica Bank of San Rafael, Calif. will assume all of the deposits of County Bank.
County Bank had total assets of approximately $1.7 billion and total deposits of $1.3 billion. Westamerica Bank (WABC), in addition to assuming the deposits, agreed to purchase all of County Bank's assets.

The FDIC said County Bank's 39 offices would reopen as branches of Westamerica. Branches with Saturday hours will reopen Saturday while the remaining branches will reopen Monday.

Customers who banked with FirstBank, Alliance Bank or County Bank will automatically become customers of the new deposit holders, and will retain their account protection under the FDIC, which insures single accounts up to $250,000, and joint accounts up to $500,000, the government agency said.

Over the weekend, those customers will be able to use checks, ATMs and debit cards as normal. Customers who have taken out loans from a failed bank should continue to make regular payments, the FDIC said.

Altogether, the three bank failures will cost the FDIC about $452 million.

The unfolding financial crisis continues to take a toll on banks. If banks continue to fail at a rate of at least one per week, on average, then 2009 could see twice as many failures as in 2008. Last year, 25 banks were closed nationwide, which was the highest annual total since 1993, when 42 banks went under.

Economists expect the number of failed banks to continue rising this year as the financial crisis plays out and the economic outlook remains dark.
While I certainly don’t mind being COMPLETELY disrespectful to the fallen – I just don’t think I can stand another week of Queen screaming out “ANOTHER ONE’S GONE, AND ANOTHER ONE’S GONE, AND ANOTHER ONE BITES THE DUST!” So, no matter how appropriate that song is for Bank Failure Friday, this weekend I just won’t play it.

Instead, I bring you a little Kansas that’s a little more peaceful in terms of bank failure music – and it may be more soothing to the ears of the elderly who are being forced to work countless hours of overtime at the FDIC, it's fitting to play at funerals, AND it's a fine song to play as our fiat money makes its eternal journey back to the fiat gods.

Kansas – Dust in the Wind: