U.S. bank regulators closed San Joaquin Bank of Bakersfield, California, on Friday, the 99th U.S. bank to fail this year, as losses on loans issued to local residential and commercial real estate developers, who were hit hard by the flagging economy, continue to mount and take their toll on financial institutions.
To protect the depositors, the FDIC entered into a purchase and assumption agreement with Citizens Business Bank, Ontario, California, to assume all of the deposits of San Joaquin Bank. The five branches of San Joaquin Bank will reopen on Monday as branches of Citizens Business Bank.
As of September 29, 2009, the failed bank had $775 million in assets and $631 million in deposits. The failure is expected to cost the FDIC deposit insurance fund [DIF] an estimated $103 million. Over the next five years DIF has projected to incur roughly $70 billion in losses due to the failure of insured institutions.
San Joaquin Bank is the tenth FDIC-insured institution to fail in California. The last bank to get closed in the state was Affinity Bank, Ventura, on August 28, 2009.