3 More Banks Down for the Count
Regulators shut down two banks in California and one in Atlanta on Friday, marking the seventh, eighth and ninth bank failures of the new year, according to the Federal Deposit Insurance Corp. The total number of banks that have collapsed during the recession which started in December of 2007, now rings in at 34. McDonough, Georgia-based FirstBank Financial Services was shut down by the Georgia Department of Banking and Finance, which appointed the FDIC as its receiver. To protect the depositors, the FDIC said, it entered into a purchase and assumption agreement with Regions Bank, out of Birmingham, Alabama, to assume all of the deposits of FirstBank Financial Services. FirstBank's offices will reopen on Monday, according to the FDIC's statement, as branches of Regions Bank. Depositors of FirstBank will automatically become depositors of Regions. And deposits will continue to be insured by the FDIC. As of December 31, 2008, FirstBank had total assets of approximately $337 million and total deposits of $279 million. In addition to assuming all of the failed bank's deposits, including those from brokers, Regions agreed to purchase approximately $17 million in assets. The FDIC will retain the remaining assets for later disposition. Number Eight Alliance Bank, based in Culver City, California, was also shut down Friday. Its regulator, the California Department of Financial Institutions, named the FDIC the receiver. The FDIC then entered into a purchase and assumption agreement with San Diego-based California Bank & Trust to assume all of the deposits of Alliance Bank. As of year-end 2008 Alliance Bank had total assets of approximately $1.14 billion and total deposits of $951 million. In addition to assuming all of the deposits of the failed bank, California Bank & Trust agreed to purchase approximately $1.12 billion in assets at a discount of $9.9 million. The FDIC will retain the remaining assets from Alliance for later disposition as well. California Bank & Trust will share with the FDIC in the losses on the asset pools covered under a loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector, the FDIC said. The agreement also is expected to minimize disruptions for loan customers as they will maintain a banking relationship. Number Nine Lastly, Merced, Calif.-based County Bank, was closed Friday by the California Department of Financial Institutions, which appointed the FDIC as receiver. Under a purchase and assumption agreement, Westamerica Bank, out of San Rafael, California, will assume all of the deposits of County Bank. As of February 2, 2009, County Bank had total assets of approximately $1.7 billion and total deposits of $1.3 billion, according to the FDIC's statement. Westamerica Bank agreed to purchase all of County Bank's assets and assume all of its failed bank deposits. The FDIC and Westamerica Bank also entered into a loss-share transaction. The FDIC estimates that the cost to the Deposit Insurance Fund will be $135 million. Westamerica Bank's acquisition of all deposits was the "least costly" resolution for the FDIC's Deposit Insurance Fund compared to alternatives. County Bank is the ninth bank to fail in the nation this year, and the third in California. Unfortunately, we've seen a steady flow of bank closings since the start of the year. On the last Friday in January, three banks closed in quick succession. The Office of Thrift Supervision closed Crofton, Md.-based Suburban Federal Savings Bank. The Office of the Comptroller of the Currency closed Florida-based Ocala National Bank, the non-brokered deposit accounts of which transferred to Winter Haven, Fla.-based CenterState Bank of Florida. And the Utah Department of Financial Institutions closed Salt Lake City-based MagnetBank. Write to Kelly Curran at email@example.com. 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.