4 Failed Banks Cost FDIC $342 Million

On the day of the most bank closings so far in 2009, regulators closed four more banks late Friday and named the Federal Deposit Insurance Corp. as receiver. The announcement brought total closings to 13 for the year as of Feb. 13. The estimated cost of all four banks to the Deposit Insurance Fund will be some $341.6, the FDIC said. Number 10 The Nebraska Department of Banking and Finance closed Sherman County Bank of Loup City, Neb., naming the FDIC receiver. The banks four offices are set to reopen as branches of Wood River, Neb.-based Heritage Bank on Tuesday. The FDIC said it had entered a purchase agreement with Heritage, which will pay a 6 percent premium on all of the failed bank’s $85.1 million in deposits. It also agreed to purchase $21.8 million of the $129.8 in assets. The FDIC said it “will retain the remaining assets for later disposition” and it expects a $28 million cost to the insurance fund. Number 11 The Florida Office of Financial Regulation closed Cape Coral-based Riverside Bank of the Gulf Coast, naming the FDIC as receiver. The bank’s nine office will reopen Tuesday as branches of Naples-based TIB Bank, which has entered a purchase agreement with the FDIC. TIB will pay the FDIC a 1.3 percent premium on the failed bank’s $424 million deposits (it also agreed to take over $125 million of the bank’s $539 million in assets) but will not purchase some $142.6 million in brokered deposits. The FDIC said it will pay the brokers for all insured funds directly, bringing the failed bank’s impact on the insurance fund to $201.5 million. Number 12 The Division of Banking, Illinois Department of Financial Regulation closed Corn Belt Bank and Trust Co. The two offices of the Pittsfield, Ill.-based bank are set to reopen as branches of The Carlinville National Bank on Tuesday after the holiday. The FDIC, which was named receiver of the failed bank, said it had entered a purchase and assumption agreement with Carlinville National, which has agreed to pay the FDIC a 1.75 percent premium on the bank’s $234.4 million total deposits (it also agreed to purchase $60.7 million in assets), but which will not assume some $92 million in brokered deposits. The FDIC instead will pay the brokers directly for the insured funds, bringing the total loss to the fund on the failed bank to $100 million. Number 13 The Oregon Division of Finance and Corporate Securities shut down Beaverton, Ore.-based Pinnacle Bank, the sole office of which will reopen Tuesday as a branch of Washington Trust Bank. The FDIC said it had entered a purchase agreement with Spokane-based Washington Trust to assume all of the $64 million in total deposits. Washington Trust has agreed to a loss-sharing plan on some $66 million in Pinnacle’s assets covered under the agreement. The FDIC said the estimated cost to the deposit insurance fund will total $12.1 million. Regulators had shut down two Californian banks and one Atlantan bank on Feb. 6 at a total estimated cost to the insurance fund of $452 million. Regulators had shut down three banks on Jan. 30 — based in Florida, Maryland and Utah — at a total cost to the fund of $345 million. The failure of one Californian bank on Jan. 23 cost the fund $227. Two banks — based in Washington and Illinois — were closed on Jan. 16, costing the fund between $217.1 million and $242.1 million, based on the FDIC’s initial estimates at the time. Altogether, failed banks so far in 2009 will cost the fund at least $1.58 billion, according to the FDIC’s estimates. Write to Diana Golobay at [email protected].