Banking Failures – 92 And Counting
2009 has now seen a total of 67 more failed banks than occurred for all of 2008. The latest banking closures by the FDIC bring total banking failures for 2009 to 92. The latest three failed banks on September 11, 2009 had total assets of over $8 billion and total losses to the FDIC Deposit Insurance Fund (DIF) are estimated at $2 billion.
The latest three failed banks are as follows:
Corus Bank, National Association, Chicago, Illinois – Number 90
The failure of Corus Bank should not come as a surprise to anyone. A September closing of Corus was previously predicted – see Corus Bankshares – September Closing Would Be In Top Five Banking Failures For 2009. The only surprise involving Corus Bank was the amount of time that it took for the Office of the Comptroller of the Currency to close down Corus – see Is Corus On The Problem Bank List?
Typically, delays in closing a financially troubled bank result in greater losses to the FDIC. The admitted losses by the FDIC on the closing of Corus are $1.7 billion representing a huge 24% of the failed banks assets. The ultimate losses to taxpayers on the closure of Corus will not be know for some time since the FDIC has long tailed loss exposure on many failed banks due to loss-share transaction whereby the FDIC agrees to cover a substantial portion of final losses on assets purchased by the acquiring institution.
Corus is the 4th largest banking failure this year based on assets and the 4th largest closing for 2009 based on the amount of losses to the FDIC. The 5 banking failures this year where losses to the FDIC DIF fund exceeded $1 billion dollars are as follows:
- Bank United May 21, 2009 $4.9 Billion
- Guaranty Bank August 21, 2009 $3 Billion
- Colonial Bank August 14, 2009 $2.8 Billion
- Corus Bank September 11, 2009 $1.7 Billion
- Silverton Bank May 1, 2009 $1.3 Billion
To protect depositors on the closing of Corus Bank, the FDIC entered into a purchase and assumption agreement with MB Financial Bank, N.A., Chicago, IL, to assume all deposits of Corus Bank. As of June 30, 2009 Corus had total deposits of $7 billion and total assets of $7 billion. Given the poor quality of the Corus loan portfolio, it is not surprising that MB Financial agreed to purchase only $3 billion of the failed bank’s assets, comprised mainly of cash and marketable securities. $4 billion in assets will be retained by the FDIC and are expected to be sold within the next 30 days in a private placement transaction.
Corus Bank is the 16th banking failure in Illinois this year.
Brickwell Community Bank, Woodbury, Minnesota – Number 91
Brickwell Bank was closed today and the FDIC entered into a purchase and assumption agreement with CorTrust Bank, N.A., Mitchell, South Dakota, to assume all deposits and assets of the failed bank.
Brickwell is a small bank with only one branch and $72 million in assets and $63 million in deposits as of July 24, 2009. The FDIC and CorTrust entered into a loss-share transaction on $65 million of the failed bank’s assets.
Brickwell is the 3rd banking failure in Minnesota this year and the closing is expected to cost the FDIC Insurance Deposit Fund (DIF) $22 million.
Venture Bank, Lacy, Washington – Number 92
Venture Bank was closed today and the FDIC entered into a purchase and assumption agreement with First-Citizens Bank and Trust Company, Raleigh, North Carolina, to assume all deposits of the failed bank.
Venture had total deposits of $903 and total assets of $970 at July 28, 2009. First-Citizens agreed to purchase $874 million of the failed bank’s assets, subject to a loss-share transaction with the FDIC on $715 million of the purchased assets. The FDIC will retain $96 million of the failed bank’s assets for later disposition.
Venture Bank is the third banking failure in Washington this year and the cost to the FDIC DIF is expected to be $298 million or 30.7% of the failed bank’s assets.