Financial Controls: Bank Failure Friday: FDIC Seizes 3 Banks (Charts) *2011 YTD: Failures 14, Cost $1.305 billion*

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2010 bank failures were 157, 2009 bank failures were 140

Bank Failure Friday: FDIC Seizes 3 Banks

The FDIC closed 3 banks on Friday, February 4, 2011 to increase the 2011 total to 14. 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: Arizona 1, Colorado 2, Florida 1, Georgia 4, Illinois 1, New Mexico 1, North Carolina 1, Oklahoma 1, South Carolina 1, Wisconsin 1.

Total assets of the 3 closed banks were $442,500 ($442.5 million), based on the December 31, 2011 call report (regulatory financial statements). All were merged via purchase and assumption agreements into other banks.

Overall, all 3 banks were small community banks.

The estimated cost to the FDIC Deposit Insurance Fund for the 3 bank closures this week was $118.4 million. The 2011 YTD total cost is now $1.305 billion. (See chart below).

#12 American Trust Bank, Roswell, GA

* Renasant Bank, Tupelo, Mississippi, to assume all of the deposits

* As of December 31, 2010, American Trust Bank had approximately $238.2 million in total assets

* Renasant Bank agreed to purchase approximately $147.4 million of the failed bank's assets

* FDIC will retain the remaining assets for later disposition.

* The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $71.5 million

#13 North Georgia Bank, Watkinsville, GA

* BankSouth, Greensboro, Georgia, to assume all of the deposits

* As of December 31, 2010, North Georgia Bank had approximately $153.2 million in total assets

* BankSouth agreed to purchase approximately $123.9 million of the failed bank's assets, including all of the loans

* The FDIC will retain the remaining assets for later disposition.

* The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $35.2 million

#14 Community First Bank Chicago, Chicago, IL

* Northbrook Bank and Trust Company, Northbrook, Illinois, to assume all of the deposits

* As of December 31, 2010, Community First Bank – Chicago had approximately $51.1 million in total assets

* Northbrook Bank and Trust Company agreed to purchase essentially all of the assets.

* The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $11.7 million

The next FDIC bank closings, if any, will most likely be announced on Friday, February 11.

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 actual data from 2005 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

2005: 0

2006: 0

2007: 3

2008: 25

2009: 140

2010: 157

2011: 14 actual, 146 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. From the year-ends 2005 through 2009, the total problem banks were 52, 50, 76, 252, and 702, respectively. Now at 9/30/2010 the total is an astronomical 860. The total assets of the problem banks from the year-ends 2005 through 2009 were $7B, $8B, $22B, $159B, and $403B, respectively. The total assets of the current (9/30/2010) 860 problem banks is $379B, indicating most of these are small to medium community banks. Chart data, from YE 2005 through the QE September 30, 2010, is:

Date, Total Problem Banks

12/31/2005: 52

12/31/2006: 50

12/31/2007: 76

12/31/2008: 252

12/31/2009: 702

9/30/2010: 860