Regulators shuttered banks in California, Maryland and Minnesota, pushing US bank failures to 84 this year amid continuing fallout from the worst economic crisis since the Great Depression.
The Federal Deposit Insurance Corp (FIDC) was named receiver for Affinity Bank of Ventura, California, Bradford Bank of Baltimore and Mainstreet Bank of Lake Forest, Minnesota, after Friday’s closings, the FDIC said.
Assets of US$1.9 billion and deposits of US$1.7 billion from the three banks were turned over to new lenders at a total cost of about US$446 million to the FDIC’s deposit insurance fund, agency statements said.
Regulators have closed banks at the fastest pace in 17 years and more are likely as losses mount from soured real-estate debt. A total of 416 banks with combined assets of US$299.8 billion failed the FDIC’s grading system for asset quality, liquidity and earnings in the second quarter, the most since June 1994, the regulator said in a report on Thursday.
Pacific Western Bank of San Diego will assume the deposits of Affinity Bank, the FDIC said. Affinity, with US$1 billion in assets and US$922 million in deposits, had 10 branches. Two, based in San Mateo and San Francisco, open today as Pacific Western branches; the rest will open on Monday under new ownership, the FDIC said.
The FDIC agreed to share losses on US$934 million of the assets.
Central Bank of Stillwater, Minnesota, assumed US$434 million in deposits at Mainstreet Bank, the FDIC said. Central Bank will pay a premium to purchase Mainstreet’s US$459 million in assets, with the FDIC sharing losses on about US$268 million. Mainstreet’s eight branches open today as Central offices.
Manufacturers & Traders Trust Co (M&T) of Buffalo, New York, took over the deposits of Bradford Bank, the FDIC said. M&T, whose parent counts billionaire investor Warren Buffett among its biggest shareholders, is buying Bradford’s US$383 million in deposits and US$452 million in assets. The FDIC is sharing losses on US$338 million of assets in the deal, the regulator said.
Bradford is the second Maryland-based bank acquired this year by M&T, which bought Provident Bank-shares Corp of Baltimore in May. M&T picked up US$5.1 billion in deposits and US$6.3 billion in assets in the Provident deal, a company filing said.
The FDIC insures deposits at 8,195 institutions with roughly US$13.5 trillion in assets and reimburses customers for deposits of up to US$250,000 per account when a bank fails. The surge in failures has depleted the FDIC’s deposit insurance fund, which fell to US$10.4 billion at the end of June from US$13 billion in the previous quarter, the Washington-based agency said. The total was the lowest since 1993.
The agency has brokered the 6th and 11th largest bank failures in history this year in Birmingham, Alabama-based Colonial BancGroup Inc and Austin, Texas-based Guaranty Financial Group Inc.
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