3 Failed Banks For August 7, 2009

Banking Failures – 72 and Counting

2009 has now seen a total of 47 more failed banks than occurred for all of 2008.  The latest banking closures by the FDIC bring total banking failures for 2009 to 72.  The latest three failed banks on August 7, 2009 had total assets of $769 million and total losses to the FDIC Deposit Insurance Fund (DIF) are estimated at $185 million.

The latest four failed banks are as follows:

First State Bank, Sarasota, Florida -Number 70

The FDIC, as receiver for First State Bank entered into a purchase and assumption agreement with Stearns Bank, National Association, St. Cloud, Minnesota, to assume all deposits (except brokered deposits) of First State Bank.

First State Bank had nine branches in Florida.  As of May 31, 2009 First State Bank had total deposits of $387 million and total assets of $463 million.  Stearns Bank agreed to purchase $451 million of First State Bank’s assets with the balance being retained by the FDIC for later disposition.   Stearns Bank and the FDIC entered into a loss-share transaction on $364 million of First State’s assets, under which Stearns Bank will share in losses covered by the loss-share transaction.

First State Bank is the 70th banking failure this year and the fifth bank to fail in Florida.  The FDIC estimates the loss to the FDIC Deposit Insurance Fund (DIF) at $116 million.

Community National Bank of Sarasota County, Venice, Florida – Number 71

The FDIC, as receiver for Community National, entered in a purchase and assumption agreement with Stearns Bank, National Association, St. Cloud, Minnesota, to assume all of the deposits of Community Bank.

Community National was a relatively small bank with four branch offices in Florida.  Community National had total total deposits of $93 million and assets of $97 million.  Stearns Bank will purchase $94 million of Community National’s assets with the FDIC retaining the balance for later disposition.  The purchased assets are subject to a loss-share transaction in which Stearns will share in losses on the asset pool covered by the loss-share transaction.

Community National is the 71st failure of an FDIC insured institution this year and the sixth banking failure for Florida in 2009.   The cost to the FDIC DIF is estimated at $24 million.

Stearns Bank Sees Opportunity In Failed Banks

Stearns Bank has over $1 billion in assets and a very strong Tier I capital ratio of 20.3%.  The latest purchases of the two failed Florida banks will expand Stearns presence in the State of Florida.  Stearns Bank’s management had the foresight to anticipate and prepare for tough economic times and is now able to capitalize on opportunities to acquire failed bank assets.

This is not the first time that Stearns Bank has been involved with the FDIC.  In February 2009, Stearns acquired a $730 millon loan portfolio from the FDIC which was viewed an opportunity by Stearns Chairman and CEO Norman C. Skalicky

February 27, 2009. Stearns Bank, N.A. acquired a $730 Million loan portfolio from the FDIC. The purchased loans are for properties in the states of Arizona, Nevada, California and New Mexico and came from the former First National Bank of Arizona and Nevada.

Stearns Bank and the FDIC are partnering on these loans and they will be serviced and managed by Stearns Bank. When asked about taking on such a risk during these economic times, Chairman and CEO Norman C. Skalicky stated, “We have been preparing for opportunities, such as this, since late 2006. We began to curtail lending and increase our capital ratios and really focused on this beginning in August 2007. One of our main strategies during that time was to be prepared to capitalize on opportunities prior to the end of this banking cycle.”  Skalicky went on to say, “We think that it’s the noble thing to do to contribute to our Nation’s overall economy. These distressed assets need to be flushed out of the system.”

Community First Bank, Prineville, Oregon – Number 72

The FDIC entered into a purchase and assumption agreement with Home Federal Bank, Nampa, Idaho to assume all of the deposits of Community First Bank, excluding brokered deposits which will be paid off directly by the FDIC.

Community Bank had eight branches, total assets of $209 million and total deposits of $182 million.  Home Federal agreed to purchase $197 million of the failed bank’s assets, subject to a loss-share agreement with the FDIC on $155 million of the purchased assets.

Community First Bank is the 72nd banking failure this year and the third in Oregon.  The failed bank is expected to cost the FDIC DIF $45 million.

Comments

  1. When do the “big banks” have to add there toxic paper to the bottom line? (matk to market). What a con job! These banks are already under water, and are busy stealing the silverware form the dinning room of the Titanic before it sinks in the form of fees.

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