5 Failed Banks For September 4, 2009

Banking Failures – 89 And Counting

2009 has now seen a total of 64 more failed banks than occurred for all of 2008.  The latest banking closures by the FDIC bring total banking failures for 2009 to 89.  The latest five failed banks on September 4, 2009 had total assets of $1.14 billion and total losses to the FDIC Deposit Insurance Fund (DIF) are estimated at $401.3 million.

The latest five failed banks are as follows:

First Bank of Kansas City, Kansas City, Missouri – Number 85

First Bank of Kansas was closed today and the FDIC entered into a purchase and assumption agreement with Great American Bank, De Soto, Kansas, to assume all deposits and assets of the failed bank.

First Bank of Kansas at June 30, 2009 had total deposits of $15 million and total assets of $16 million.  First Bank of Kansas is the second smallest bank failure this year (in terms of assets) since the failure of Dwelling House Savings and Loan, Pittsburgh, PA that was closed on August 14, 2009 with $13 million in assets.

The FDIC did not disclose the purchase price paid by Great American for the failed bank’s assets.   Based on the fact that there was no standard “loss-share” agreement between the FDIC and Great American,  and based on the estimated loss to the FDIC of $6, the sales price of the failed bank’s assets can be estimated at $10 million.  The FDIC loss represents a huge 37.5% markdown of the failed bank’s assets.

First Bank is the second bank to fail in Missouri this year.

InBank, Oak Forest, IL – Number 86

InBank was closed today and the FDIC, as receiver, entered into a purchase and assumption agreement with MB Financial Bank, National Association, Chicago, IL, to assume all deposits (except brokered deposits) and essentially all the assets of the failed bank.

InBank at August 3, 2009 had total deposits of $199 million and total assets of $212.  MB agreed to purchase the assets of the failed bank from the FDIC at an undisclosed price.

The loss to the FDIC DIF fund is estimated at $66 million or 31% of the failed bank’s assets.  InBank was the 14th banking failure in Illinois this year.

Vantus Bank, Sioux City, IA – Number 87

Vantus Bank was closed today and the FDIC, as receiver, entered into a purchase and assumption agreement with Great Southern Bank, Springfield, Missouri, to assume all the deposits of the failed bank.  Vantus had 15 branches.

Vantus, as of August 28, 2009, had total deposits of $368 million and total assets of $458 million.  Great Southern Bank agreed to purchase $387 million of the failed bank’s assets, subject to a loss-share agreement with the FDIC on $338 million of Vantus Bank’s assets.

Vantus Bank is the first banking failure in Iowa this year.  The estimated cost to the FDIC DIF fund for the failed bank is $168 million or 36.7% of the failed bank’s assets.

Platinum Community Bank, Rolling Meadows, IL – Number 88 – The Bank That Nobody Wanted

Platinum Bank was closed today and the FDIC appointed as receiver.  The FDIC approved the payout of the insured deposits.  Checks to insured depositors will be mailed on Tuesday, September 8.  Until then, customers of the failed bank will not have access to any of their funds.

The fact that the FDIC simply shut down Platinum indicates that 1) Platinum Bank’s assets were of such low quality that a potential acquirer saw little benefit in purchasing the failed bank’s assets or 2) the FDIC simply could not locate another financial institution capable of or willing to takeover Platinum Bank, despite the routine offers by the FDIC of loss-share agreements under which the majority of losses on purchased assets are assumed by the FDIC.

The FDIC did not indicate  the dollar amount, if any, of uninsured deposits at the failed bank.  Given the very weak state of the banking industry, it is inconceivable that anyone would maintain banking deposits in excess of the FDIC insurance limits. There have been previous banking failures this year in which depositors suffered losses.  Depositors with funds not covered by FDIC insurance will possibly recover some of their money (eventually), depending on the FDIC recovery value on the failed bank’s assets.

Platinum is the 15th banking failure in Illinois this year.  The estimated cost to the FDIC to close Platinum Bank is estimated at $114.3 million or 33% of total assets.

First State Bank, Flagstaff, AZ – Number 89

First State Bank was closed today and the FDIC, as receiver, entered into a purchase and assumption agreement with Sunwest Bank, Tustin, CA, to assume all of the deposits and assets of the failed bank.

First State, as of July 24, 2009, had total assets of $105 million and total deposits of $95 million.  Sunwest Bank purchased the failed bank’s assets at an undisclosed price.

First State is the 3rd banking failure in Arizona this year.   The estimated cost to the FDIC Deposit Insurance Fund to close the failed bank is $47 million or a whopping 44.8% of the failed bank’s assets.