Regulators close 7 banks in Fla., Ga., Ill., Kan., Ariz.; 139 US
bank failures this year
Regulators on Friday shut down a total
of seven banks in Florida, Georgia, Illinois, Kansas and Arizona,
lifting to 139 the number of U.S. banks that have fallen this year
as soured loans have mounted and the economy has sputtered.
The Federal Deposit Insurance Corp.
took over the banks, the largest of which by far was Hillcrest
Bank, based in Overland Park, Kan., with $1.6 billion in
A newly chartered bank subsidiary of Boston-based NBH Holdings
Corp. was set up to take over Hillcrest's assets and deposits. The
new subsidiary is called Hillcrest Bank N.A.
The FDIC and Hillcrest Bank N.A. agreed to share losses on $1.1
billion of the failed bank's assets. Its failure is expected to
cost the deposit insurance fund $329.7 million.
Also shuttered were First Bank of Jacksonville in Jacksonville,
Fla., with $81 million in assets; Progress Bank of Florida, based
in Tampa, with $110.7 million in assets; First National Bank of
Barnesville in Barnesville, Ga., with $131.4 million in assets;
Gordon Bank of Gordon, Ga., with $29.4 million in assets; First
Suburban National Bank in Maywood, Ill., with $148.7 million in
assets; and First Arizona Savings, based in Scottsdale, Ariz., with
assets of $272.2 million.
Ameris Bank, based in Moultrie, Ga., agreed to assume the assets
and deposits of First Bank of Jacksonville. Bay Cities Bank, based
in Tampa, is buying the assets and deposits of Progress Bank.
United Bank, based in Zebulon, Ga., is assuming the assets and
deposits of First National Bank of Barnesville, while Morris Bank
of Dublin, Ga., is assuming the deposits and $11.5 million of the
assets of Gordon Bank. The FDIC will retain the rest for eventual
Seaway Bank and Trust Co., based in Chicago, is assuming the assets
and deposits of First Suburban National Bank.
The FDIC was unable to find a buyer for First Arizona Savings, and
it approved the payout of the bank's insured deposits. The agency
said it will mail checks to depositors for their insured funds on
In addition, the FDIC and Ameris Bank agreed to share losses on $60
million of First Bank of Jacksonville's loans and other assets. The
FDIC and Bay Cities Bank are sharing losses on $82.6 million of
Progress Bank of Florida's assets, while the agency and United Bank
are sharing losses on $107.3 million of First National Bank of
The FDIC and Seaway Bank and Trust are sharing losses on $116.6
million of First Suburban National Bank's assets.
The failure of First Bank of Jacksonville is expected to cost the
deposit insurance fund $16.2 million; the failure of Progress Bank
of Florida is expected to cost $25 million; that of First National
Bank of Barnesville, $33.9 million; that of Gordon Bank, $9
million; First Suburban National Bank, $31.4 million; and First
Arizona Savings, $32.8 million.
Florida, Georgia and Illinois are among the states hardest hit by
bank collapses, stemming from the meltdown in the real estate
market that brought an avalanche of soured mortgage loans. The
shutdowns Friday brought the number of bank failures in Florida
this year to 27, and to 16 each for Georgia and Illinois.
With 139 closures nationwide so far this year, the pace of bank
failures exceeds that of 2009, which was already a brisk year for
shutdowns with a total of 140. By this time last year, regulators
had closed 106 banks.
The pace has accelerated as banks' losses mount on loans made for
commercial property and development. Many companies have shut down
in the recession, vacating shopping malls and office buildings
financed by the loans. That has brought delinquent loan payments
and defaults by commercial developers.
The 2009 total of bank failures was the highest annual tally since
1992, at the height of the savings and loan crisis. The 2009
failures cost the insurance fund more than $30 billion. Twenty-five
banks failed in 2008, the year the financial crisis struck with
force; only three succumbed in 2007.
The growing bank failures have sapped billions of dollars out of
the deposit insurance fund. It fell into the red last year, and its
deficit stood at $15.2 billion as of June 30.
The number of banks on the FDIC's confidential "problem" list
jumped to 829 in the second quarter from 775 three months earlier,
even as the industry as a whole had its best quarter since 2007,
making $21.6 billion in net income. Banks with more than $10
billion in assets -- only 1.3 percent of the industry -- accounted
for $19.9 billion of the total earnings.
The FDIC expects the cost of resolving failed banks to total around
$52 billion from 2010 through 2014.
Depositors' money -- insured up to $250,000 per account -- is not
at risk, with the FDIC backed by the government. That insurance cap
was made permanent in the financial overhaul law enacted in
Written by: Marcy Gordon, AP Business Writer