Failed Banks For June 19, 2009 – FDIC Losses Total $363 Million

Failed Banks: Southern Community Bank, Cooperative Bank and First National Bank

There were three more failed banks this week on June 19 – Southern Community Bank, Fayetteville, Georgia and Cooperative Bank, Wilmington, North Carolina and First National Bank of Anthony, Anthony, Kansas.   2009 has now seen a total of 15 more failed banks than occurred for all of 2008.  The latest 3 banking closures by the FDIC brings total banking failures for 2009 to 40 banks.

The FDIC estimates that the three latest banking failures will cost the FDIC Deposit Insurance Fund (DIF) $363.2 million in losses, as follows:

1. Southern Community Bank, Fayetteville, Georgia. To protect depositors, the FDIC entered into a purchase and assumption agreement with United Community Bank, Blairsville, Georgia to assume all deposits of Southern Community.

As of the end of May, Southern Community had total assets of $377 million and total deposits of $307 million.  United Community agreed to purchase $364 million of failed Southern Community’s assets.  The FDIC and United Community entered into a loss-share transaction on $253 million of the $364 million in assets purchased.  The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $114 million.

Southern Community is the 38th FDIC insured institution to fail this year  and the seventh in Georgia.  Georgia has been a hotbed for banking failures this year and leads the nation in total banking failures – see How Georgia Became the Failed Bank Capital of the US.

Southern Community’s capital ratios were far below the minimum required and, in addition, the bank’s latest numbers showed a horrendous delinquency rate of roughly 17% of its loan portfolio.  Many banks that have little chance of ever recovering financially probably would have been closed much sooner if the FDIC had adequate staffing in place – see Is The FDIC Ready?

2. Cooperative Bank, Wilmington, North Carolina. To protect depositors, the FDIC entered into a purchase and assumption agreement with First Bank, Troy, North Carolina, to assume all but brokered deposits of Cooperative Bank.  Brokered deposits totaling $57 million will be paid off directly by the FDIC.

As of the end of May 2009, Cooperative Bank had total assets of $970 million and total deposits of $774 million.  First Bank agreed to purchase, under a loss share agreement with the FDIC, $942 million of Cooperative’s assets.  The FDIC and First Bank entered into a loss share agreement on $852 million of Cooperative’s assets.

The FDIC estimates that the cost to the DIF will be $217 million.  Cooperative is the 39th banking failure this year and the second in North Carolina.

3. First National Bank of Anthony, Anthony, Kansas. To protect depositors, the FDIC entered into a purchase and assumption agreement with Bank of Kansas, South Hutchinson, Kansas, to assume all deposits of First National.

As of May 31, 2009, First National had total assets of $156.9 million and deposits of $142.5 million.  The Bank of Kansas agreed to purchase virtually all of First National’s assets.  The Bank of Kansas and the FDIC entered into a loss sharing transaction on $130.5 million of First National’s assets.

The FDIC estimates that the cost of closing First National will be $32.2 million.  First National is the 40th banking failure this year and the second in Kansas.