November 5, 2010 – The number of banking failures in 2010 now exceeds last year’s total of 140, which was the most since 1992. Four additional banking failures this week brings the year’s total to 143 as regulators closed banks in Maryland, California and Washington.
With over 10% of all FDIC insured institutions on the Problem Bank List, the pace of banking failures does not look likely to subside anytime soon.
As of the latest report released by the FDIC there were 829 problem banks at June 30, 2010 up from 775 at March 31. Total assets held by the troubled institutions is $403.0 billion, a slight decrease from $431 billion in the previous quarter.
Making the problem even worse, the FDIC Deposit Insurance Fund has been completely depleted and now has a negative fund balance of $15.2 billion at June 30, 2010.
The DIF fund had been strengthened by a special FDIC assessment of $46 billion on the banking industry at the end of 2009. The FDIC presently has liquid resources of $44 billion, a decline from $63 billion at the end of the first quarter. Liquid resources of the FDIC Insurance Fund, however, represent only a tiny fraction of total FDIC insured deposits of $5.5 trillion.
Highlights of this week’s banking failures include:
- Three out of four of this week’s failed banks were acquired by institutions that accepted TARP bailout funds from the US Treasury but have still not paid back the amounts borrowed. Selling a failed bank to a bank that has received and still owes the US Treasury TARP money is becoming a common event when the FDIC sells a failed bank. See FDIC Sells 3 Failed Banks to Bailed Out Banks and K Bank Acquired by M&T Bank.
- The week’s largest banking failure was K Bank of Randallstown, Maryland. The FDIC was unable to sell all of the failed bank’s assets. The loss on K Bank to the FDIC Deposit Insurance Fund amounted to a shocking 36% of K Bank’s total assets.
- The four failed banks had total assets of $906 million. The total loss to the FDIC Deposit Insurance Fund amounted to $254.5 million.
This week’s four banking failures occurred in three different States as listed below. Please click on the link for detailed information on each bank closing.
K Bank, Randallstown, Maryland – Banking Failure #140
Western Commercial Bank, Woodland Hills, CA – Banking Failure #141
Pierce Commercial Bank, Tacoma, WA – Banking Failure #142
First Vietnamese American Bank, Westminster, CA – Banking Failure #143