Financial Controls: Bank Failure Friday: FDIC Seizes 1 Bank! (Charts) *2011 Totals: Failures 71, Cost $5.8 Billion*

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2010 bank failures were 157 and 2009 bank failures were 140

The FDIC closed 1 bank on Friday, September 9, 2011, which increased 2011 bank failures to 71. This was the 28th week of the 36 weeks in 2011 that the FDIC has seized at least 1 bank. 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 2, California 3, Colorado 5, Florida 11, Georgia 19, Illinois 7, Indiana 1, Kansas 1, Michigan 2, Minnesota 1, Mississippi 1, Nevada 1, New Mexico 1, North Carolina 1, Oklahoma 2, Pennsylvania 1, South Carolina 3, Virginia 1, Washington 3, Wisconsin 3.

#71 The First National Bank of Florida, Milton, FL

* CharterBank, West Point, GA to assume all of the deposits

* As of June 30, 2011, Patriot Bank had approximately $296.8 million in total assets

* CharterBank agreed to purchase essentially all of the assets

* FDIC and CharterBank entered into a loss-share agreement for $216.3 million

* FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $46.9 million

FDIC Losses The total estimated cost to the FDIC Deposit Insurance Fund for the 2011 bank closures year-to-date is $5.83 billion (see chart below). The mostly costly banks to the Deposit Insurance Fund in 2011 year-to-date:

1) The Park Avenue Bank, Valdosta, GA $306.1 million
2) Lydian Private Bank, Palm Beach, FL $293.2 million

3) Chicago Bank and Trust, Chicago, IL $284.3 million

4) Colorado Capital Bank, Castle Rock, CO $283.8 million

5) Atlantic Southern Bank, Macon, GA $273.5 million

6) First Community Bank, Taos, NM $260.0 million

7) Superior Bank, Birmingham, AL $259.6 million

8) FirsTier Bank, Louisville, Ky $242.6 million

9) Bank of Choice, Greeley, CO $213.6 million
10) Community Central Bank, Mount Clemens, MI $183.2 million
11) Integra Bank N.A., Evansville, IN $170.7 million

The next FDIC bank closings, if any, will most likely be announced on Friday, September 16.

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.

Year, Total Bank Failures

2004: 4

2005: 0

2006: 0

2007: 3

2008: 25

2009: 140

2010: 157

2011: 71 actual, 103 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 Quarter The FDIC problem bank list dipped slightly from 888 at 3-31-11 to 865 at 6-30-11. The total problem banks remain elevated. The total assets of the problem banks from the year-ends 2004 through 2010 were $28B, $7B, $8B, $22B, $159B, $403B, $390B, respectively. The total assets of the current (6/30/2011) 865 problem banks is $372B, or an average of $430 million in total assets per problem bank. The FDIC reports the total problem banks on a quarterly basis.

Date, Total Problem Banks

12/31/2005: 52

12/31/2006: 50

12/31/2007: 76

12/31/2008: 252

12/31/2009: 702

12/31/2010: 884

6/30/11: 865

About the FDIC

Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 7,575 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.

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