FDIC closes an additional 5 U.S. banks to bring total to 69 failed banks for 2009

August 1, 2009 by · Leave a Comment
Filed under: Bank Failure 

Wow, the U.S. bank failures are picking up speed in 2009.  We should see premiums increase in the coming months or some other emergency action to bring more backing to the FDIC fund.  Just in these closure alone we have approximately $1 billion more in deposits.

Many of these banking institutions are holding commercial, home-builder, equity lines along with normal loans.  Many of these deals were not setup to survive a protracted downturn and only because of lax lending standards they made sense and were approved.  This debt needs to default and get pushed through the system so we can achieve balance.  So every time I hear one of these announcements it tells me we are one step closer to a “real” recovery.

News (Reuters):

Bank regulators closed five banks on Friday, bringing the number of failures so far this year to 69 as the struggling economy and falling home prices take their toll on financial institutions.

Read more

Seven more U.S. banks fail going into the holiday weekend, brings total to 52 for 2009

July 3, 2009 by · Leave a Comment
Filed under: Bank Failure 

The market does not like this news. The Dow down over 2.5% at the time of this writing. This does seem to be accelerating and that does not bode well as a sign for future events to pass.  We are going to see more regional and local banks go bust as the loans on their books go into default and that make their capital reserve inadequate  for what regulators are requiring.  This also is putting a severe strain on the FDIC and its funds.  It already has had raise rates this year to cover the number of banks that went bust in 2008.

News (Bloomberg):

Six banks in Illinois and one in Texas were seized by regulators as the deepening financial crisis pushed the toll of failed U.S. lenders this year to 52, the most since 1992.

Read more

FDIC closes 4 more U.S. banks to bring the 2009 total to 44

June 28, 2009 by · Leave a Comment
Filed under: Bank Failure 

And more to come.  Many loans are going into default and that puts stress on the banks to raise their reserves to they are within federal and state guidelines for capital reserves ratios to deposits.

News (Reuters):

U.S. regulators closed four small banks on Friday — two in Georgia, one in Minnesota and one in California, bringing the total of U.S. bank failures to 44 this year.

The Federal Deposit Insurance Corp said the closings were:

— Community Bank of West Georgia, a small bank in Villa Rica, Georgia, with assets of $199.4 million and total deposits of $182.5 million, as of May 15. A buyer could not be found, so the FDIC was appointed as receiver and will mail checks to insured depositors for their insured funds on June 29.

— Neighborhood Community Bank, of Newnan, Georgia, with $221.6 million in assets and $191.3 million in deposits, as of March 31. CharterBank, of West Point, Georgia, agreed to assume the insured deposits and $209.6 million of the assets. Neighborhood’s four offices will reopen as CharterBank branches.

— Horizon Bank, of Pine City, Minnesota, with $87.6 million in assets and $69.4 million in deposits as of March 31. Stearns Bank, NA, of St Cloud, Minnesota, agreed to assume all of Horizon’s deposits and to buy $84.4 million of its assets. Horizon’s two offices will reopen on Saturday as Stearns branches.

— MetroPacific Bank, of Irvine, California, with $80 million in assets and $73 million in deposits, as of June 8. Sunwest Bank, of Tustin, California, agreed to assume all of the deposits, excluding those from brokers, and virtually all of MetroPacific’s assets. MetroPacific’s sole office will reopen on Monday as a branch of Sunwest Bank.

FDIC Fund Strained by Bank Failures May Have to Raise Bank Premiums

August 10, 2008 by · Leave a Comment
Filed under: Industry News 

If you looked at the FDIC’s balance sheet then this is a logical outcome of the amount in the bank insurance fund and the number of banks on the “watch list”.  I believe there is more banks in bad shape than is reported so it is good they are being pro-active to increase  the amount of money in the deposit insurance fund.

If we get anywhere close to the number of banks that failed during the Savings and Loan crisis then this could become a difficult situation where if the FDIC is out of money we could actually monetize those losses and create more inflation.  We are on a slippery slope and I hope our leaders can produce the answers we need to not put us in a worse situation.

Article:

The failure of IndyMac and seven other banks this year may erase as much as 17 percent of a government insurance fund and raise premiums for all banks, from Franklin National of Minneapolis to Bank of America Corp.

The closing of IndyMac in July, the third-biggest U.S. bank failure, may cost the fund $4 billion to $8 billion, in addition to an estimated $1.16 billion for seven closures through Aug. 1. Premiums for deposit insurance will likely rise, FDIC Chairman Sheila Bair said in a July 30 interview. A decision on the increase is due by the fourth quarter.

Read more