Saturday, April 25, 2009

Bank Failure Friday – Four Banks and a Credit Union…

Just to keep everyone up to date on the bank failure count, we are now up to 29 banks which is more than all the bank failures in 2008. Friday also saw another Credit Union failure.

Regulators Shut Banks in Georgia, Michigan, California, Idaho

By Margaret Chadbourn and Ari Levy

April 24 (Bloomberg) -- Regulators seized banks in Georgia, Michigan, California and Idaho with total assets of $2.3 billion, bringing the tally of failures in the U.S. this year to 29, exceeding the total for all of 2008.

American Southern Bank of Kennesaw, Georgia; Michigan Heritage Bank in Farmington Hills; and First Bank of Beverly Hills in Calabasas, California, were shut by state agencies. First Bank of Idaho in Ketchum was closed by the Office of Thrift Supervision. The Federal Deposit Insurance Corp. was named receiver of all four.

The seizures will cost the FDIC’s insurance fund a total of $698.4 million, with more than half of that tied to the failure of the California bank. While banks in the other three states are being taken over by institutions in their regions, the FDIC couldn’t find a buyer for First Bank of Beverly Hills, forcing the regulator to assume the company’s $1.5 billion in assets.

Bank of North Georgia in Alpharetta, a unit of Synovus Financial Corp., is taking over American Southern’s insured deposits and its single office, which will open April 27. Michigan Heritage’s deposits are being assumed by closely held Level One Bank in Farmington Hills and its three branches will open next week. U.S. Bancorp in Minneapolis, the sixth-largest U.S. bank by deposits, takes control of First Bank of Idaho’s seven branches.

“Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage,” the FDIC said.

Surpassing 2008
The seizures pushed the tally of failed banks past the 25 reached last year. Foreclosure filings for March totaled 341,180, a record high, according to RealtyTrac, the California- based seller of default data. The economy has lost 5.1 million jobs since December 2007, and unemployment rose to 8.5 percent in March, the highest since 1983.

President Barack Obama said last week that his $787 billion economic stimulus package, plans to rescue banks and efforts to reduce home foreclosures are beginning to “generate signs of economic progress.” Still, he said there would be “pitfalls” ahead.

Bank of North Georgia will buy $55.6 million of American Southern’s deposits and $31.3 million of assets. The deal excludes about $48.7 million in brokered deposits. The FDIC will pay off $50 million of Michigan Heritage’s brokered deposits. Level One is acquiring $101.7 million in deposits and purchasing $46.1 million in assets.

FDIC Makes Payments
For First Bank of Beverly Hills’s insured deposits placed with the bank, the FDIC will mail customers checks next week. Brokered deposits will be paid directly to the brokers after the FDIC receives the necessary documents. Of the bank’s $1 billion in deposits, about $179,000 are uninsured.

U.S. Bancorp, which last year bought assets and deposits of failed California thrift Downey Financial Corp., is assuming First Bank of Idaho’s deposits, excluding $112.8 million in brokered deposits. U.S. Bank agreed to buy $17.8 million of the failed bank’s assets, or less than 4 percent.

The toll of failed banks last year was the most since 1993, including Washington Mutual Inc., the biggest U.S. bank failure in history. The closings drained money from the FDIC deposit insurance fund, which tumbled 45 percent in the fourth quarter to $18.9 billion. The agency has estimated future bank failures may cost the deposit insurance fund $65 billion through 2013.

“We are past the crisis stage; I think we’re in the cleanup stage now,” FDIC Chairman Sheila Bair said yesterday at a conference in Washington. “It’s going to take some time and everybody needs to be patient, and it is not going to be pretty.”

Assessment Fee
To protect FDIC reserves, the agency is forcing the banking industry to pay a one-time, emergency fee. Bair is asking Congress to expand the agency’s borrowing authority from the U.S. Treasury to $100 billion from $30 billion, which may allow the assessment to be reduced.

Community banks have said the fee may significantly reduce 2009 earnings. The FDIC received more than 1,675 public comments on the emergency assessment. Bair said the agency expects to make a final decision on the fees by late May.

The banking industry lost $32.1 billion from October through December, the first aggregate quarterly loss since 1990. The agency classified 252 banks as “problem” in the fourth quarter, a 47 percent jump from the third quarter. The FDIC doesn’t identify problem banks by name.

The FDIC insures deposits of up to $250,000 per customer at 8,305 institutions with $13.9 trillion in assets.

““We are past the crisis stage; I think we’re in the cleanup stage now,” FDIC Chairman Sheila Bair said…”

Ah, okay Sheila, whatever you say. You’ll have to excuse me if I just happen to mention that I think you’ll full of it!

Three Dog Night – Liar: