Regulators close small banks in Florida, Washington to bring US
bank failures this year to 129
Regulators shut down small banks in Florida and Washington state on
Friday, lifting to 129 the number of U.S. bank failures this year
as loan defaults have mounted and economic distress has
The Federal Deposit Insurance Corp. took over Wakulla Bank, based
in Crawfordville, Fla., with $424.1 million in assets and $386.3
million in deposits, and Shoreline Bank in Shoreline, Wash., with
$104.2 million in assets and $100.2 million in deposits.
Centennial Bank, based in Conway, Ark., agreed to assume the assets
and deposits of Wakulla Bank. GBC International Bank, based in Los
Angeles, agreed to acquire the deposits and $65.7 million of the
assets of Shoreline Bank. The FDIC will keep the remainder of the
assets for eventual sale.
In addition, the FDIC and Centennial Bank agreed to share losses on
$212.7 million of Wakulla Bank's loans and other assets. The FDIC
and GBC International Bank agreed to share losses on $49.2 million
of Shoreline Bank's assets.
The failure of Wakulla Bank is expected to cost the deposit
insurance fund $113.4 million; that of Shoreline Bank is expected
to cost the fund $41.4 million.
Wakulla Bank was the 25th bank in Florida to fail this year.
Florida is 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. Other states with many failed
banks are California, Georgia and Illinois.
The 129 closures nationwide this year exceeds that of 2009, a brisk
year for shutdowns with 140. By this time last year, regulators had
closed 98 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 $20.7 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
$60 billion from 2010 through 2014.
The agency mandated last year that banks prepay about $45 billion
in premiums, for 2010 through 2012, to replenish the insurance
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