120 Banking Failures In 2009
Regulators closed 5 additional failed banks today in California, Missouri, Minnesota, Michigan and Georgia. Four of the five failed banks were relatively insignificant, having only 8 branches and total assets of $400 million.
The largest failed bank of the week was United Commercial Bank, San Francisco, CA which had $11.2 billion in assets. The cost to the FDIC of closing United Commercial is estimated at $1.4 billion. Total assets of all five failed banks amounted to $11.6 billion with total estimated losses to the FDIC of $1.5 billion.
United Commercial was the 4th largest banking failure this year in terms of total assets and the fifth largest in terms of total loss to the FDIC.
Institution Date of Closure Loss To FDIC Assets ($Billions)
- Bank United May 21, 2009 $4.9 Billion $13.1
- Guaranty Bank August 21, 2009 $3.0 Billion $13.5
- Colonial Bank August 14, 2009 $2.8 Billion $25.5
- Corus Bank September 11, 2009 $1.7 Billion $7.0
- United Commercial November 6, 2009 $1.4 Billion $11.2
The five banking failures for this week are as follows:
Number 116 – United Security Bank, Sparta, GA
Number 117 – Home Federal Savings Bank, Detroit, MI
Number 118 – Prosperan Bank, Oakdale, MN
Number 119 – Gateway Bank of St Louis, St Louis, MO
Number 120 – United Commercial Bank, San Francisco, CA
The FDIC, as receiver, entered into purchase and assumption agreements for all five failed banks. The acquiring banks assumed all of the failed bank’s deposits and purchased virtually all of the failed bank’s assets. The vast majority of the failed bank’s assets were purchased subject to a loss-share transaction between the FDIC and the acquiring banks.
Although the loss-share transactions may wind up costing the FDIC more in losses than originally estimated, the FDIC believes that the loss-share arrangements will “maximize returns on the assets covered by keeping them in the private sector”.