Banking Failures – 64 And Counting
2009 has now seen a total of 39 more failed banks than occurred for all of 2008. The latest banking closures by the FDIC bring total banking failures for 2009 to 64. The six banks closed in Georgia this week were all bank subsidiaries of Security Bank Corp, Macon, Georgia. The latest Georgia banking failures bring the total of failed banks in Georgia for 2009 to 16 banks. Georgia now accounts for 25% of all banking failures in the United States this year. (See How Georgia Became The Failed Bank Capital Of The US).
The FDIC announced 7 more failed banks this week as follows:
Security Bank Corporation, Macon, Georgia – 6 Failed Banks
The six failed banks of Security Bank Corp were taken over by State Bank and Trust Company, Pinehurst, Georgia. State Bank will assume all of the deposits of the six failed banks. The six failed banks had 20 branches located in Georgia.
The six failed banks had total deposits of $2.4 billion and total assets of $2.8 billion. State Bank will acquire $2.4 billion of the failed banks assets, subject to a loss sharing agreement with the FDIC on $1.7 billion of the acquired assets.
The FDIC estimates that the total losses on the closing of Security Bank will amount to $807 million.
State Bank and Trust received a capital infusion of $300 million from a group of 26 investors prior to taking over the six failed banks of Security Bank. State Bank and Trust is a tiny Georgia Bank that opened in October 2005 and has only 2 offices in the State of Georgia. The FDIC did not disclose the exact terms that the private group of investors received for the capital infusion required to take over Security Bank. The FDIC had previously indicated that they would require higher capital ratios for private investors taking over failed banks.
The FDIC procedure for failed banks thus far has been to have a stronger area bank take over the failed bank without the use of outside private capital. The manner in which the FDIC disposed of the six failed Georgia banks may indicate that the FDIC was not able to find a willing and financially strong bank to assume the failed banks.
Waterford Village Bank, Clarence, NY
The FDIC entered into an agreement with Evans Bank, Angola, NY to assume all deposits of failed Waterford Village Bank. Waterford Village Bank had one office in the State.
Waterford Village had total deposits of $58 million and total assets of $61.4 million. Evans Bank purchased essentially all of Waterford Village Bank’s assets and entered into a loss-share transaction with the FDIC on $56 of the purchased assets.
The FDIC estimates a loss to the Deposit Insurance Fund (DIF) of $5.6 million on the closing of Waterford
FDIC Losses Mount
The estimated losses for the FDIC Insurance Fund are mounting rapidly. The total estimated cost to the FDIC for the 64 bank closing that have occurred this year now total approximately $13.5 billion dollars. The balance in the Deposit Insurance Fund at March 31, 2009 per the FDIC amounted to $13 billion. To increase the Deposit Insurance Fund, Congress and the FDIC have recently taken actions to bolster the balance in the DIF fund and to increase the line of credit available to the FDIC from the Treasury.