Friday, April 15, 2011

Bank Failure Friday: FDIC Seizes 6 Banks! (Charts) *Superior Bank largest 2011 failure*

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2010 bank failures were 157 and 2009 bank failures were 140

The FDIC closed banks on Friday, April 15, 2011, 2 in Georgia, 2 in Alabama, 1 in Minnesota, and 1 in Mississippi, which increases the 2011 total bank failures to 34. Annual charts of USA bank seizures, FDIC Deposit Insurance Fund Cost for Failed Banks, and the FDIC problem bank list are below. States where banks have been closed in 2011 are: Alabama 2, Arizona 1, California 3, Colorado 2, Florida 2, Georgia 8, Illinois 4, Michigan 1, Minnesota 1, Mississippi 1, Nevada 1, New Mexico 1, North Carolina 1, Oklahoma 2, South Carolina 1, Wisconsin 3.

Overall, 4 of these banks were small community banks, with total assets less than $500 million each. Nexity Bank was a mid-size bank with $793.7 million in total assets. Superior Bank was a large bank with $3.0 billion in total assets and the largest bank failure to-date in 2011. The previous largest 2011 bank failure (January 28) was United Western Bank of Denver, CO with $2.05 billion in total assets. The 6 banks were closed via purchase and assumption agreements. The estimated cost to the FDIC Deposit Insurance Fund for the 2011 bank closures year-to-date is $2.50 billion. This has been the most expensive week in 2011 for the FDIC Deposit Insurance Fund with a cost of $588.1 million. (See chart below).

#29 Bartow County Bank, Cartersville, GA
* Hamilton State Bank, Hoschton, Georgia, to assume all of the deposits
* As of December 31, 2010, Bartow County Bank had approximately $330.2 million in total assets
* Hamilton State Bank agreed to purchase essentially all of the assets
* FDIC and Hamilton State Bank entered into a loss-share transaction on $247.5 million
* FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $69.5 million

#30 New Horizons Bank, East Ellijay, GA
* Citizens South Bank, Gastonia, North Carolina, to assume all of the deposits
* As of December 31, 2010, New Horizons Bank had approximately $110.7 million in total assets
* Citizens South Bank agreed to purchase essentially all of the assets
* FDIC and Citizens South Bank entered into a loss-share transaction on $84.7 million
* FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $30.9 million

#31 Nexity Bank, Birmingham, AL
* AloStar Bank of Commerce, Birmingham, Alabama, a newly-chartered bank, to assume all of the deposits
* As of December 31, 2010, Nexity Bank had approximately $793.7 million in total assets
* AloStar Bank of Commerce agreed to purchase essentially all of the assets
* FDIC and AloStar Bank of Commerce entered into a loss-share transaction on $384.2 million
* FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $175.4 million

#32 Superior Bank, Birmingham, AL
* Superior Bank, N.A., Birmingham, Alabama, a newly-chartered bank subsidiary of Community Bancorp LLC, Houston, Texas, to assume all of the deposits
* As of December 31, 2010, Superior Bank had approximately $3.0 billion in total assets
* Superior Bank, N.A. agreed to purchase essentially all of the assets
* FDIC and Superior Bank, N.A. entered into a loss-share transaction on $1.84 billion
* FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $259.6 million

#33  Rosemount National Bank, Rosemount, MN
* Central Bank, Stillwater, Minnesota, to assume all of the deposits
* As of December 31, 2010, Rosemount National Bank had approximately $37.6 million in total assets
* Central Bank agreed to purchase essentially all of the assets
* There was no loss-share agreement
* FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $3.6 million

#34 Heritage Banking Group, Carthage, MS
* Trustmark National Bank, Jackson, Mississippi, to assume all of the deposits
* As of December 31, 2010, Heritage Banking Group had approximately $224.0 million in total assets
* Trustmark National Bank agreed to purchase essentially all of the assets
* FDIC and Trustmark National Bank entered into a loss-share transaction on $156.4 million
* FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $49.1 million

The next FDIC bank closings, if any, will most likely be announced on Friday, April 22.


USA Failed Banks by Year

Bank failures and therefore FDIC seizure of banks, dramatically increased in 2009 and 2010 - a 2-year total of 297 compared to 0 in both 2005 and 2006. As noted below regarding total problem banks, bank failures in 2011 are expected to continue at a high rate and be 100+. The chart below is the data from 2004 through 2010. Bank failures for 2011 are estimated by extrapolating 2011 actual closures based on a 52-week year. Actual 2011 bank failures will be included on the chart later this year as the closures accumulate to a higher level.
Year, Total Bank Failures
2004: 4
2005: 0
2006: 0
2007: 3
2008: 25
2009: 140
2010: 157
2011: 34 actual, 118 estimated


FDIC Deposit Insurance Fund Cost of Failed Banks

Failed banks and the seizure by the FDIC cost money. The seized banks' deposits are usually assumed by another bank as are most of the assets. However, not all assets of the failed bank have value (usually the worst performing loans, non-performing loans, repossessions, and foreclosures). The FDIC may enter into a loss-share agreement with another bank to manage the questionable assets or take direct possession of the assets and attempt to dispose of them. Upon seizure of a bank, the FDIC estimates the loss to the Deposit Insurance Fund. The Deposit Insurance Fund is normally funded by the banking community through FDIC assessments to each FDIC insured bank based on insured deposits, plus special assessments. Below is a chart of the estimates by the FDIC of costs (losses) incurred upon seizure of banks in 2011. The chart is by week for 2011 and shows the accumulated losses as the year goes along.


FDIC Problem Banks by Year

The FDIC problem bank list continues to rise, actually skyrocket, although the total assets of these banks has leveled off. Now at 12/31/2010 the total is an astronomical 884. The total assets of the problem banks from the year-ends 2004 through 2009 were $28B, $7B, $8B, $22B, $159B, and $403B, respectively. The total assets of the current (12/31/2010) 884 problem banks is $390B, indicating most of these are small to medium community banks. The FDIC reports the total problem banks on a quarterly basis.
Date, Total Problem Banks
12/31/2004: 80
12/31/2005: 52
12/31/2006: 50
12/31/2007: 76
12/31/2008: 252
12/31/2009: 702
12/31/2010: 884


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