Three More Banks Down for the Count
Three more banks closed Friday, bringing the total number of banks closed in 2008 thus far to twenty, according to reports by the Federal Deposit Insurance Corp. Ringing in at number eighteen, the FDIC approved Friday the payout of the insured deposits of FirstCity Bank. The Stockbridge, Georgia bank was closed by the Georgia Department of Banking and Finance, which appointed the FDIC as receiver. The FDIC will provide payment to insured depositors by mailing checks for their insured funds on Monday, the FDIC said. Direct deposits from the federal government, such as Social Security and Veterans' payments, will be transferred to SunTrust Bank. As of March 18, 2009, FirstCity had total assets of $297 million and total deposits of $278 million. At the time of closing, the bank had approximately $778,000 in deposits that exceeded the insurance limits; although, the estimate is likely to change once the FDIC obtains additional information from customers. The FDIC estimates the cost of the failure to its Deposit Insurance Fund to be approximately $100 million. Paola, Kansas-based Teambank, was also closed Friday. The Office of the Comptroller of the Currency shut down the bank and appointed the FDIC as receiver. The FDIC then entered into a purchase and assumption agreement with Great Southern Bank, out of Springfield, Missouri, to assume all of the deposits of Teambank. The 17 offices of Teambank reopened as branches of Great Southern Bank Saturday. As of year-end 2008, Teambank had total assets of $669.8 million and total deposits of $492.8 million. Great Southern will assume $474 million in deposits and the FDIC will pay out $18.8 million directly to the broker. In addition to assuming all of the deposits of the failed bank, Great Southern Bank agreed to purchase approximately $656.5 million in assets at a discount of $100 million, and pay a 1 percent premium on deposits. The FDIC will retain the remaining assets for later disposition. The FDIC and Great Southern Bank entered into a loss-share transaction, in which the FDIC will share 80/20 percent in the losses with Great Southern Bank on approximately $450 million in assets covered under the agreement. The FDIC estimates that the cost to the Deposit Insurance Fund will be $98 million. Teambank was affiliated with Colorado National Bank, Colorado Springs, which was also closed Friday by the Office of the Comptroller of the Currency and handed over to the FDIC. The FDIC entered into an agreement with Amarillo, Texas-based Herring Bank, to assume all of Colorado National's deposits. The four offices of Colorado National reopened as branches of Herring Bank on Saturday. Colorado National had total assets of $123.5 million and total deposits of $82.7 million at the end of 2008. Herring Bank has agreed to purchase approximately $117.3 million in assets at a discount of $4.2 million, and pay a discount of 1.27 percent on deposits. The FDIC will retain the remaining assets for later bestowal. The FDIC and Herring Bank also entered into a loss-share transaction on approximately $62 million in assets covered under the agreement. The loss-sharing arrangement is projected to maximize returns on the covered assets and minimize disruptions for loan customers. The FDIC is likely to take a $9 million dollar hit on Herring's closing. Write to Kelly Curran at firstname.lastname@example.org. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.