Financial Controls: Bank Failure Friday: FDIC Seizes 1 Bank (Charts) *2011 Totals: Failures 40, Cost $3.16 Billion*

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2010 bank failures were 157 and 2009 bank failures were 140

The FDIC closed 1 bank on Friday, May 6, 2011 in Florida, which increases the 2011 total bank failures to 40. 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 5, Georgia 10, Illinois 4, Michigan 2, Minnesota 1, Mississippi 1, Nevada 1, New Mexico 1, North Carolina 1, Oklahoma 2, South Carolina 1, Wisconsin 3.

Coastal Bank of Cocoa Beach, FL was a small community bank, with total assets of less than $500 million.

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) First Community Bank, Taos, NM $260.0 million

3) Superior Bank, Birmingham, AL $259.6 million

4) FirsTier Bank, Louisville, Ky 242.6 million

The total estimated cost to the FDIC Deposit Insurance Fund for the 2011 bank closures year-to-date is $3.16 billion. (See chart below).

#40 Coastal Bank, Cocoa Beach, FL

* Premier American Bank, National Association, Miami, Florida to assume all of the deposits

* As of March 31, 2011, Coastal Bank had total assets of $129.4 million

* Premier American Bank agreed to purchase essentially all of the assets

* FDIC and Premier American Bank, N.A. entered into loss-share transactions on the failed bank's assets

* FDIC estimates that the cost to the Deposit Insurance Fund (DIF) $13.4 million

The next FDIC bank closings, if any, will most likely be announced on Friday, May 13.

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: 40 actual, 116 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