One Small Failed Bank For July 10, 2009 – $27 Million In Losses For FDIC

Failed Banks

There was one more failed bank this week on July 10, 2009, as detailed below:

1.  Bank of Wyoming, Thermopolis, Wyoming

2009 has now seen a total of 28 more failed banks than occurred for all of 2008.  The latest banking closure by the FDIC brings total banking failures for 2009 to 53.

The FDIC estimates that the latest banking failure will cost the FDIC Deposit Insurance Fund (DIF) $27 million.

Bank of Wyoming, Thermopolis, Wyoming

Bank of Wyoming, Thermopolis, Wyoming, was closed today by the State of Wyoming, Department of Audit, Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Central Bank & Trust, Lander, Wyoming, to assume all of the deposits of Bank of Wyoming.

As of June 30, 2009, Bank of Wyoming had total assets of $70 million and total deposits of approximately $67 million. In addition to assuming all of the deposits of the failed bank, Central Bank and Trust agreed to purchase approximately $55 million of assets. The FDIC will retain any remaining assets for later disposition.

Central Bank & Trust will purchase all deposits, except about $8 million in brokered deposits, held by Bank of Wyoming. The FDIC will pay the brokers directly for the amount of their funds. Customers who placed money with brokers should contact them directly for more information about the status of their deposits.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $27 million. Central Bank & Trust’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to alternatives. Bank of Wyoming is the 53rd FDIC-insured institution to fail in the nation this year, and the first in Wyoming. The last FDIC-insured institution to be closed in the state was Westland, FS & LA, Rawlins, on July 26, 1991.

The FDIC press release on the closure of Bank of Wyoming makes no mention of a loss-share transaction between Central Bank & Trust and the FDIC on the assets being acquired by Central Bank.  Virtually all of the previous bank closings this year involved some type of loss-share transaction with the assuming bank.  This may imply that Central Bank chose to purchase only the highest quality loans of the failed bank, or perhaps that the FDIC is changing their strategy regarding failed bank assets.