Regulators Shut Down Three More Banks

The Federal Deposit Insurance Corporation [FDIC] announced Friday that three more U.S. banks had failed, bringing the total for FY2009 to nine.

• FirstBank Financial Services, McDonough, Georgia, was closed Friday by the Georgia Department of Banking and Finance, which appointed the FDIC as receiver. The FDIC entered into a purchase agreement with Regions Bank, Birmingham, Alabama, to assume all of the deposits of FirstBank Financial Services.

As of December 31, 2008, FirstBank had total assets of approx. $337 million and total deposits of $279 million. Regions also agreed to purchase approx. $17 million in assets. The FDIC said it will retain the remaining assets for later disposition and estimated that the cost to the Deposit Insurance Fund will be $111 million.

• Alliance Bank, Culver City, California, was another bank that joined the bank Friday failure list, prompting the California Department of Financial Institutions to shut it down and name the FDIC receiver. The FDIC entered into a purchase and assumption agreement with California Bank & Trust, San Diego, California, to assume all of the deposits of Alliance Bank.

As of December 31, 2008, Alliance Bank had total assets of approx. $1.14 billion and total deposits of $951 million. In addition to assuming all of the deposits of the failed bank, California Bank & Trust agreed to purchase approx. $1.12 billion in assets at a discount of $9.9 million. The FDIC estimated the cost to the Deposit Insurance Fund will be $206.0 million.

• The third and the last bank to fail Friday was County Bank, Merced, California which had all of it deposits acquired by Westamerica Bank, San Rafael, California.

As of February 2, 2009, County Bank had total assets of approximately $1.7 billion and total deposits of $1.3 billion. In addition to assuming all of the failed bank’s deposits, including those from brokers, Westamerica Bank agreed to purchase all of County Bank’s assets. The FDIC estimated that the cost to the Deposit Insurance Fund will be $135 million.

The only positive development on the failures this week was that all three banks got acquired and in the end it all worked out for the depositors. Last week The Utah Department of Financial Institutions shut down Magnet Bank of Salt Lake City. The regulator was unable to find another financial institution to take over the bank’s failing operations.

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