Is this propaganda? I just received this e-mail from the FDIC’s consumer news with the title above. Personally, I never doubted that unbrokered deposits under $250,000 are safe at U.S. depositary institutions. But, the natural sceptic in me doesn’t like to see someone reaffirm what I thought I already knew.

As bank failures are in the news, the Federal Deposit Insurance Corporation is helping consumers understand why, as Chairman Sheila C. Bair has said, "there’s no safer place in the world for their checking, savings or retirement money." The Fall 2009 issue of FDIC Consumer News gives facts and figures explaining the agency’s financial resources run deep and that insured deposits are fully protected.

"Depositors should understand that the chances of their bank failing are low, and even if their bank does fail, depositors have nothing to worry about," said Chairman Bair. "The FDIC fully guarantees their insured deposits and provides them with seamless access to their money. For the insured depositor, a bank failure is a non-event."

The newsletter gives these reasons why consumers can trust the ironclad protection of FDIC insurance:

• By law, federal deposit insurance is backed by "the full faith and credit of the United States government." It means that the financial resources of the U.S. government protect federally insured depositors. "In short," said Chairman Bair, "we cannot run out of money."
• If needed, the FDIC can quickly borrow money from the U.S. Treasury. However, Chairman Bair has stressed that the FDIC expects to continue to collect premiums from the banking industry to pay for banking industry problems — without borrowing from U.S. taxpayers.
• Federal law also requires that all insured deposits be paid "as soon as possible." If a bank fails, the FDIC has always paid every penny of insured deposits, up to the insurance limit, including principal and any accrued interest through the date of the closing. In most cases, the FDIC provides access to accounts on the next business day by arranging with a healthy institution to assume the insured deposits. .

According to Chairman Bair, the bottom line for consumers is this: "No insured depositor has ever lost a penny of insured deposits — and none ever will. The FDIC was created specifically for times like these. Our resources are strong. Your insured deposits are absolutely safe."

A related article reminds consumers that the basic maximum insurance amount under current law is $250,000 through year-end 2013, but that, as always, customers may qualify for much more protection at the same bank depending on the types and ownership of their accounts. The same article highlights FDIC resources that can help answer consumers’ questions about deposit insurance coverage.

Also in this issue are tips for paying with plastic. One article helps consumers understand the potential benefits and concerns when choosing and using debit cards versus credit cards. Another article examines prepaid cards, which have evolved from gift cards sold by individual retailers to multi-purpose, "reloadable" cards that can be used to pay for purchases and access cash at ATMs around the world.

Another article offers five things to know about safe deposit boxes and home safes. Among the tips: Bank safe deposit boxes are good choices to store originals of key documents, such as birth certificates and property deeds, but probably not for anything someone might need to access quickly on a night, weekend or holiday. Also, people are better off stashing their cash in a bank deposit account than in a home safe or a safe deposit box, where the money can’t earn interest and won’t be protected by FDIC insurance.

The goal of FDIC Consumer News is to deliver timely, reliable and innovative tips and information about financial matters, free of charge. The latest issue can be read or printed atwww.fdic.gov/consumers/consumer/news/cnfall09. To find current and past issues, including special editions, visit www.fdic.gov/consumernews or request paper copies by contacting the FDIC’s Public Information Center toll-free at 1-877-275-3342, by e-mail to publicinfo@fdic.gov, or by writing to the FDIC Public Information Center, 3501 North Fairfax Drive, Room E-1002, Arlington, VA 22226.

There are two ways to subscribe to the quarterly FDIC Consumer News. To receive an e-mail about each new issue with links to stories, go to www.fdic.gov/about/subscriptions/index.html. To receive the newsletter in the mail, free of charge, contact the Public Information Center as listed above.

Source

No Safer Place in the World for Your Money – FDIC

Related posts:

• Westsound Bank seized by FDIC
• SunTrust Bank receives insured deposits of Omni National Bank
• FDIC Friday Night Special: Lincolnwood
• FDIC shuts down Haven Trust and Sanderson State
• FDIC moves in at Great Basin Bank

Orion Bank, Naples, Florida

As of October 31, 2009, Orion Bank had total assets of $2.7 billion and total deposits of approximately $2.1 billion. The FDIC accepted a 1.5 percent discount from IBERIABANK on the deposits of the failed bank. In addition to assuming all of the deposits of the failed bank, IBERIABANK agreed to purchase $2.4 billion of the failed bank’s assets. The FDIC retained the remaining assets for later disposition.

The FDIC and IBERIABANK entered into a loss-share transaction on approximately $1.9 billion of Orion Bank’s assets. IBERIABANK will share in the losses on the asset pools covered under the loss-share agreement.

Century Bank, Federal Savings Bank, Sarasota, Florida

As of October 31, 2009, Century Bank, FSB had total assets of $728 million and total deposits of approximately $631 million. The FDIC accepted a 1.5 percent discount on the deposits of the failed bank from IBERIABANK. In addition to assuming all of the deposits of the failed bank, IBERIABANK agreed to purchase $706 million of the failed bank’s assets. The FDIC retained the remaining assets for later disposition.

The FDIC and IBERIABANK entered into a loss-share transaction on approximately $656 million of Century Bank, FSB’s assets. IBERIABANK will share in the losses on the asset pools covered under the loss-share agreement.

Pacific Coast National Bank, San Clemente, California

As of August 31, 2009, Pacific Coast National Bank had total assets of $134.4 million and total deposits of approximately $130.9 million. Sunwest Bank did not pay a premium to assume all of the deposits of Pacific Coast National Bank. In addition to assuming all of the deposits of the failed bank, Sunwest Bank agreed to purchase essentially all of the assets.

Related posts:

• Seven banks seized by FDIC
• FDIC shutters five more banks
• FDIC moves in at Great Basin Bank
• FDIC Friday Night Special: San Joaquin Bank, Bakersfield, California
• FDIC Bank seizures 56 and 57

Of the five, United Commercial is pretty darn big ($11.2 billion in assets)

United Commercial Bank
San Francisco, CA

As of October 23, 2009, United Commercial Bank had total assets of $11.2 billion and total deposits of approximately $7.5 billion. East West Bank paid the FDIC a premium of 1.1 percent for the right to assume all of the deposits of United Commercial Bank. In addition to assuming all of the deposits of the failed bank, East West Bank agreed to purchase approximately $10.2 billion in assets of the failed bank. As part of the purchase and assumption agreement, the FDIC transferred to East West Bank all qualified financial contracts to which United Commercial Bank was a party and those contracts remain in full force and effect.

The FDIC and East West Bank entered into a loss-share transaction on approximately $7.7 billion of United Commercial Bank’s assets.

Gateway Bank of St. Louis
St. Louis, MO

As of September 25, 2009, Gateway Bank of St. Louis had total assets of $27.7 million and total deposits of approximately $27.9 million. Central Bank of Kansas City did not pay the FDIC a premium for the deposits of Gateway Bank of St. Louis. In addition to assuming all of the deposits of the failed bank, Central Bank of Kansas City agreed to purchase essentially all of the assets.

Prosperan Bank
Oakdale, MN

As of August 31, 2009, Prosperan Bank had total assets of $199.5 million and total deposits of approximately $175.6 million. Alerus Financial, N.A. will pay the FDIC a premium of 1.02 percent to assume all of the deposits of Prosperan Bank. In addition to assuming all of the deposits of the failed bank, Alerus Financial, N.A. agreed to purchase approximately $173.9 million of the failed bank’s assets.

The FDIC and Alerus Financial, N.A. entered into a loss-share transaction on approximately $173.9 million of Prosperan Bank’s assets

Home Federal Savings Bank
Detroit, MI

As of September 24, 2009, Home Federal Savings Bank had total assets of $14.9 million and total deposits of approximately $12.8 million. Liberty Bank and Trust Company did not pay a premium to assume all of the deposits of Home Federal Savings Bank. In addition to assuming all of the deposits of the failed bank, Liberty Bank and Trust Company agreed to purchase essentially all of the assets.

United Security Bank
Sparta, GA

As of September 14, 2009, United Security Bank had total assets of $157 million and total deposits of approximately $150 million. Ameris Bank will pay the FDIC a premium of 0.36 percent to assume all of the deposits of United Security Bank. In addition to assuming all of the deposits of the failed bank, Ameris Bank agreed to purchase essentially all of the assets.

The FDIC and Ameris Bank entered into a loss-share transaction on approximately $123 million of United Security Bank’s assets.

Related posts:

• Seven banks seized by FDIC
• Three more FDIC bank seizures
• Five banks seized in FDIC Friday night special
• FDIC Friday Night Special: San Joaquin Bank, Bakersfield, California
• FDIC moves in at Great Basin Bank

This is the biggest weekend for FDIC seizures yet. Seven banks have been shut down.

Below is the list of banks.

Partners Bank, Naples, Florida (Stonegate assumes assets)

• As of September 30, 2009, Partners Bank had total assets of $65.5 million and total deposits of approximately $64.9 million. Stonegate Bank did not pay the FDIC a premium for the deposits of Partners Bank. In addition to assuming all of the deposits of the failed bank, Stonegate Bank agreed to purchase essentially all of the assets.

American United Bank, Lawrenceville, Georgia (Ameris Bank assumes assets)

• As of August 11, 2009, American United Bank had total assets of $111 million and total deposits of approximately $101 million. Ameris Bank will pay the FDIC a premium of 1.02 percent to assume all of the deposits of American United Bank. In addition to assuming all of the deposits of the failed bank, Ameris Bank agreed to purchase essentially all of the assets.

  The FDIC and Ameris Bank entered into a loss-share transaction on approximately $92 million of American United Bank’s assets. Ameris Bank will share in the losses on the asset pools covered under the loss-share agreement.

Hillcrest Bank Florida, Naples (Stonegate Bank assumes these assets too)

• As of October 1, 2009 , Hillcrest Bank Florida had total assets of $83 million and total deposits of approximately $84 million. Stonegate Bank will pay the FDIC a premium of 0.50 percent to assume all of the deposits of Hillcrest Bank Florida. In addition to assuming all of the deposits of the failed bank, Stonegate Bank agreed to purchase $28 million of the failed bank’s assets. The FDIC will retain the remaining assets for later disposition.

Bank of Elmwood, Racine, Wisconsin (Tri Citi National Bank assumes assets)

• As of September 30, 2009, Bank of Elmwood had total assets of $327.4 million and total deposits of approximately $273.2 million. Tri City National Bank did not pay the FDIC a premium for the deposits of Bank of Elmwood. In addition to assuming all of the deposits of the failed bank, Tri City National Bank agreed to purchase essentially all of the assets.

Flagship National Bank, Bradenton, Florida (First Federal Bank of Florida assumes assets)

• As of August 31, 2009, Flagship National Bank had total assets of $190 million and total deposits of approximately $175 million. First Federal Bank of Florida did not pay the FDIC a premium for the deposits of Flagship National Bank. In addition to assuming all of the deposits of the failed bank, First Federal Bank of Florida agreed to purchase essentially all of the assets.

  The FDIC and First Federal Bank of Florida entered into a loss-share transaction on approximately $130 million of Flagship National Bank’s assets. First Federal Bank of Florida will share in the losses on the asset pools covered under the loss-share agreement

Riverview Community Bank, Otsego, Minnesota (Central, Bank, Stillwater, MN assumes assets)

• As of August 31, 2009, Riverview Community Bank had total assets of $108 million and total deposits of approximately $80 million. Central Bank did not pay the FDIC a premium to assume all of the deposits of Riverview Community Bank. In addition to assuming all of the deposits of the failed bank, Central Bank agreed to purchase essentially all of the assets.

The FDIC and Central Bank entered into a loss-share transaction on approximately $75 million of Riverview Community Bank’s assets. Central Bank will share in the losses on the assets covered under the loss-share agreement.

First Dupage Bank, Westmont, Illinois (First Midwest Bank assumes assets)

As of July 31, 2009, First Dupage Bank had total assets of $279 million and total deposits of approximately $254 million. First Midwest Bank will pay the FDIC a premium of 0.75 percent to assume all of the deposits of First Dupage Bank. In addition to assuming all of the deposits of the failed bank, First Midwest Bank agreed to purchase essentially all of the assets.

The FDIC and First Midwest Bank entered into a loss-share transaction on approximately $247 million of First Dupage Bank’s assets. First Midwest Bank will share in the losses on the asset pools covered under the loss-share agreement.

Related posts:

• Three more FDIC bank seizures
• FDIC shutters five more banks
• Five banks seized in FDIC Friday night special
• FDIC Friday Night Special: San Joaquin Bank, Bakersfield, California
• FDIC Friday Night Special: First National Bank of Anthony

From the FDIC:

San Joaquin Bank, Bakersfield, California, was closed today by the California Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. 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…

As of September 29, 2009, San Joaquin Bank had total assets of $775 million and total deposits of approximately $631 million. Citizens Business Bank did not pay the FDIC a premium for the deposits of San Joaquin Bank. In addition to assuming all of the deposits of the failed bank, Citizens Business Bank agreed to purchase essentially all of the assets.

The FDIC and Citizens Business Bank entered into a loss-share transaction on approximately $683 million of San Joaquin Bank’s assets. Citizens Business Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-share arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers.

This is the 99th failure this year.

Related articles

Fed Gives Calif’s San Joaquin Bank Deadline To Shape Up – NASDAQ, 5 Oct 2009

San Joaquin Bank reassures customers ahead of deadline – Bakersfield.com, 14 Oct 2009

San Joaquin Bank keeps mum through deadline – Bakersfield.com, 15 Oct 2009

Related posts:

• FDIC Friday Night Special: First National Bank of Anthony
• Five banks seized in FDIC Friday night special
• Three more FDIC bank seizures
• FDIC Friday Night Special: American Sterling Bank
• FDIC moves in at Great Basin Bank

Starwood Capital Group gets the assets in a consortium with TPG capital, Perry Capital and WLR LeFrak (another Wilbur Ross company – this guy is cleaning up in the FDIC private equity bonanza).

Here’s the press release:

The Federal Deposit Insurance Corporation (FDIC) has signed a bid confirmation letter to sell a 40 percent equity interest in a limited liability company (LLC) created to hold assets of Corus Bank, NA, Chicago, Illinois, to a consortium managed by Starwood Capital Group (Starwood) that also includes TPG Capital, Perry Capital and WLR LeFrak.

The sale was conducted on a competitive bid basis, and the best and final offers were received on Wednesday, September 30, 2009. A total of eight bidders submitted bids to purchase an ownership interest in the LLC, to which the FDIC as Receiver of Corus will convey a portfolio of predominantly performing and non-performing construction loans and real estate owned (REO) assets with an unpaid principal balance of approximately $4.5 billion. The FDIC initially will hold a 60 percent equity interest in the LLC.

The bid received from the consortium was determined to be the offer that would result in the greatest return for the receivership of all competing bids. Corus Bank failed on September 11, 2009, and the FDIC immediately entered into a purchase and assumption agreement with MB Financial Bank, National Association, Chicago, Illinois, to assume all of the deposits of the institution and approximately $3 billion of the assets, comprised mainly of cash and marketable securities. This transaction completes the sale of the majority of the remaining assets of Corus Bank.

The expected closing date is in mid-October, consistent with the timeline previously provided by the FDIC.

Corus was the big fish amongst a trio of failed banks which went bust on 11 September 2009 (see my links post). At the time, only $3 billion of the assets were disposed of via MB Financial.  The FDIC was forced to hold the other $4 billion in assets for later disposition.  The Starwood-TPG-Wilbur Ross trio came away with the assets.

Wilbur Ross was also involved in the giveaway known as BankUnited (see my post “BankUnited goes bust and is replaced by BankUnited”). Back in August, I called this and other Private Equity transactions the socialization of losses.

Imagine you are Sheila Bair.  You have shuttered 80-odd institutions this year and you realize that 150, 200, maybe 300 more institutions could fail still.  No way on earth does your organization have the manpower to deal with this avalanche of bank failures without sloughing the assets off on willing buyers.  How do you entice those buyers? In a word, price.

It’s what is known as a sweetheart deal.  There were a number of bidders for Guaranty including US Bank, and a private-equity consortium led by Gerald Ford which included Blackstone, Carlyle and TPG.  Yet, the deal went to BBVA in a loss-share agreement that caps their exposure at 20%?  I ‘d like to get in on a deal like that.  If you are a private equity buyer, you’re probably chomping at the bit for more deals like this.

And this will continue to be an inevitability for an FDIC short of cash. If you are a large private equity company, you are probably going to be making a shed load of cash very soon.

Related posts:

• BankUnited goes bust and is replaced by BankUnited
• FDIC list of problem banks
• Georgia bank fails with $1.1 billion in assets
• Fifth Third takes on assets of Freedom Bank
• Seven more bank failures brings total to 64

Last week I was at the Clinton Global Initiative Annual Meeting to listen to their ideas on how to solve some of the world’s most pressing problems like poverty and education. I may have more to say about this topic in a later post, but I wanted to first address the too-big-to-fail issue which became a central focus of a panel discussion that featured regulator Sheila Bair and bank CEOs Peter Sands and Jamie Dimon.

The ostensible topic of discussion was “Moving from Crisis to Opportunity – Financing an Equitable Future” and it centered around how to use the developed economy’s financial system to better the lives of the poorest. The moderator was Maria Bartiromo and the most topical panelist was Fale Abed, Founder and Chairman of BRAC, a group that works with people whose lives are dominated by extreme poverty, illiteracy, and disease by providing microfinance, education and health care. However, given the day jobs of the other panelists, the discussion quickly turned to the financial crisis and its aftermath.

What I found interesting was the general agreement between Dimon, Sands and Bair that regulatory reform to date has been a bust.  Bair was typically diplomatic in underscoring the things she would like to see done in the future.  Nevertheless, I was certainly left with the impression that she is not holding her breath that anything substantive is actually achieved. In fact, the conversation made clear that Bair, Dimon and Sands all felt that the first and most important bit of financial reform must be to set up a resolution process in order to deal with too-big-to-fail institutions. Let me characterize Dimon and Bair’s remarks below.

Jamie Dimon. It is clear that Dimon believes JPMorgan Chase was never in any real jeopardy during the financial crisis. He spoke on several occasions about the lack of a resolution crisis to deal with large firms without mentioning any names, but clearly intimating that other beleaguered institutions like Citi and BofA were saved by this. He said that the financial crisis should not be used as an excuse to break up large institutions (like his) because the crisis was the result of bad lending as in any other crisis. He said, smaller imprudent lenders are being liquidated systematically by the FDIC. The only reason larger companies did not face liquidation is because no resolution mechanism was or still is in place to deal with them. Whether he sees Washington Mutual in this same light, I do not know. He was not asked whether JPMorgan Chase benefitted from its demise. Interestingly, every time he mentioned his firm by name, he said JPMorgan not JPMorgan Chase or Chase, the legacy bank he came from.

While Dimon gave Paulson, Bernanke and Geithner a free pass for letting Lehman fail, resolving the too-big-to-fail issue is priority number one for any new regulation for Dimon. He said the present reform proposals are not heading in the right direction and used an analogy saying, “If we had a problem with our legal department, I would tell the guys to fix the legal department. If the government had the same problem, it would create a second new legal department.”  Over-regulation is not the answer. Smart regulation is.

Sheila Bair. Bair was in stunning agreement with Dimon on the core issues. She too said the first priority of any financial regulation must be to put a resolution mechanism in place to deal with too-big-to-fail institutions. She rejected the concept of the Federal Reserve as the main financial regulator, something even Ben Bernanke is now rejecting. But, she disagreed with Dimon. Instead she felt that the financial system had veered excessively into derivatives and other complicated financial products and that this was a major contributor to the financial collapse. She advocated regulating these and increasing the focus on traditional banking products typical in community banking. It was clear from these remarks that she favors community banks over too-big-to-fail institutions.

Bair also tipped her hand on the New York Times flap about allowing the FDIC to borrow from the banks it regulates.  She indicated there was no real possibility this would occur even though it is legally permissible and one option they were considering.

On the issue of the developed economy financial system’s help with issues central to the poorest, Abed was at home. But, Sands had deep knowledge of the issues as well. I was impressed. On the issue of the financial system and regulatory reform, I left this session feeling that everyone but the Obama Administration and Congress knows what needs to be done. When two big bank CEOs and the chief bank regulator are singing the same tune but no one in Washington or London is listening, you have a clear case of capture. When crisis comes again, this issue will loom even larger.

Related posts:

• Jamie Dimon makes the best case for not breaking up banks
• Quote of the day: “Jamie is always hanging around the hoop”
• Quote of the day: Wells and BofA are choking on acquisitions
• Bill Poole calls Treasury capital injections unconstitutional
• Greenspan: “If they’re too big to fail, they’re too big”

In the latest inexplicable move to extricate the U.S. banking system from crisis, the FDIC is reportedly close to asking the very banks it regulates for a loan to top up its balances. The plan is “strongly supported by bankers and their lobbyists” according to the New York Times.

Are you kidding me? This is the most preposterous thing I have heard yet.  How is the FDIC suppose to adequately regulate banks when it owes them money?  If your looking for a textbook route to regulatory capture, I present you Exhibit A. What’s more is banks are restricting lending right now.  How is this going to help that situation?

The New York Times, like the even-handed mainstream media outlet it is supposed to be, reports this story like it is something truly reasonable.

Tired of the government bailing out banks? Get ready for this: officials may soon ask banks to bail out the government.

Senior regulators say they are seriously considering a plan to have the nation’s healthy banks lend billions of dollars to rescue the insurance fund that protects bank depositors. That would enable the fund, which is rapidly running out of money because of a wave of bank failures, to continue to rescue the sickest banks.

The plan, strongly supported by bankers and their lobbyists, would be a major reversal of fortune.

A hallmark of the financial crisis has been the decision by successive administrations over the last year to lend hundreds of billions of taxpayer dollars to large and small banks.

“It’s a nice irony,” said Karen Shaw Petrou, managing partner of Federal Financial Analytics, a consulting company. “Like so much of this crisis, this is an issue that involves the least worst options.”

Bankers and their lobbyists like the idea because it is more attractive than the alternatives: yet another across-the-board emergency assessment on them, or tapping an existing $100 billion credit line to the Treasury.

No, bankers like this idea because it makes the regulator beholden to the regulated. Am I wrong or is this the worst idea you have heard since this crisis began?

More here.

CNBC video below

Related posts:

• Chinese officials warn banks about reckless lending
• Lehman’s collapse: The money fund “ice-nine wasn’t noticed… at first’”
• Abu Dhabi sovereign wealth fund loses $125 billion
• Zombie banks Scandinavian edition and the threat of too big to fail
• Bernstein: America “practically invites another catastrophe”

Sheila Bair has run out of options to seize banks because the FDIC’s coffers are running dry.  Now she either needs to tap taxpayer money via a loan from the Treasury or she has to raise funds through a special assessment on banks, who are already capital-constrained.

Via Reuters:

U.S. bank regulators are considering tapping a line of credit with the U.S. Treasury Department and may explore other lesser-known options to replenish the dwindling fund that safeguards bank deposits.

Federal Deposit Insurance Corp Chairman Sheila Bair said on Friday that the agency would meet at the end of the month to discuss options to rebuild the fund, which has been significantly drained by a sharp increase in bank failures.

"We are carefully considering all our options, including borrowing from Treasury," Bair said, referring to the agency’s $500-billion line of credit with the Treasury Department. She was speaking at a global finance conference in Washington.

But regulators are still reluctant to tap the line of credit because they want to avoid temporarily using taxpayer money to clean up the banking mess, she said.

Bair said the FDIC also had lesser-known alternatives for replenishing the fund, such as prepayments of assessments on banks and issuing a note. She did not give further details on those options.

Other options include more special assessments on banks. The FDIC has already charged the industry one emergency fee of $5.6 billion this year, and is authorized to levy two more.

A few comments are in order.

1. Anyone could see this coming.  Last month I indicated that there were not enough funds on hand in my post “The FDIC to draw on its line of credit at Treasury soon.” I said my piece there and in the post “The FDIC and the socialization of banking losses” about how this will socialize losses.
2. Earlier in the week, Sheila Bair was telegraphing publicly that she was considering levying fees on banks to make up for the lack of funds.  On Wednesday, Sheila Bair explained FDIC strategy to Maria Bartiromo, stating that she was considering getting the money to pay for seizing banks from other banks.
3. Bartiromo asked Bair point blank whether it was wise to try and get the money from still solvent banks when they were capital constrained as this would restrict lending.  Bair artfully dodged the question because she doesn’t have an answer for this.
4. Having prudent banks pay up for the mistakes of their reckless brethren is the height of moral hazard.  This would not be good policy.

Meanwhile the bankruptcies continued unabated. Here are 93 and 94 for 2009:

First Financial Bank, National Association, Hamilton, Ohio, Assumes All of the Deposits of Irwin Union Bank, F.S.B., Louisville, Kentucky, and Irwin Union Bank and Trust Company, Columbus, Indiana

The FDIC and First Financial Bank entered into a loss-share transaction on approximately $2.5 billion of the assets of Irwin Union B&T Company and Irwin Union Bank, F.S.B. First Financial Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-share arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers.

Despite the phony stress tests, the end of mark-to-market, the bailouts, the huge money supply increase, the buying up of toxic assets by the Fed and all the other extraordinary measures, the U.S. banking system is still very, very weak.`

Related posts:

• The FDIC and the socialization of banking losses
• FDIC moves in at Great Basin Bank
• Seven banks seized by FDIC
• Two more FDIC Friday Night Specials brings total to 55 failed banks
• Guaranty is bankrupt: BBVA gets its FDIC-seized assets

Bair spoke to CNBC’s Maria Bartiromo about the Fed as a single regulator, her agency’s available capital, premiums for deposit insurance, FDIC seizures, private equity buyers and much more. The video is below and runs just under 11 minutes.

Related posts:

• Five banks seized in FDIC Friday night special
• FDIC Chairman Sheila C. Bair Statement on the Legacy Loans Program
• Two more FDIC Friday Night Specials brings total to 55 failed banks
• FDIC Friday Night Special: American Sterling Bank
• FDIC moves in at Great Basin Bank

I just received notice that the FDIC Board has approved the phase out of the Temporary Liquidity Guarantee Program (TLGP) in a first clear sign that the U.S. Federal Government has started policy normalisation.

The FDIC Board today adopted a Notice of Proposed Rulemaking (NPR) that reaffirms the expiration of the debt guarantee component of the Temporary Liquidity Guarantee Program (TLGP) on October 31st, 2009. Under the NPR, the Federal Deposit Insurance Corporation will seek comment on whether a temporary emergency facility should be left in place for six months after the expiration of the current program.

“The TLGP has been very effective at helping financial institutions bridge the uncertainty and dysfunction that plagued our credit markets last fall,” said FDIC Chairman Sheila C. Bair. “As domestic credit and liquidity markets appear to be normalizing and the number of entities utilizing the Debt Guarantee Program has decreased, now is an important time to make clear our intent to end the program. It is also important to note that the FDIC has collected over $9 billion in fees associated with this program. The FDIC will be using some of this money to off set resolution costs associated with bank failures.”

I view this announcement as confirmation that the Obama Administration sees the financial crisis as over and is declaring victory.  I would anticipate other policy announcements from the Administration and/or Federal Reserve to reflect this view.

Just yesterday Zero Hedge reported that the money stock is now falling, another clear sign that the excess liquidity about which inflation hawks have been concerned is being drained. In the main, one should take this premature ‘tightening’ bias as bearish for equities and bullish for government bonds.

While I had anticipated the Fed and the Obama Administration would be loath to cut the recovery short and would maintain accommodative fiscal and monetary stances, this announcement is the first contrary indicator.

More here.

Related posts:

• More signs of liquidity withdrawal, now from the U.S. Treasury
• FDIC Chairman Sheila C. Bair Statement on the Legacy Loans Program
• Should GE be a AAA company?
• Liquidity
• How will the Fed withdraw all that liquidity?

There is an effort underway to install the Federal Reserve as super-regulator for all banks and financial institutions, concentrating power in one institution. I find these efforts one of the most disturbing outgrowths of the financial crisis we have been witnessing. Such a system is sure to increase the power of too big to fail financial institutions and weaken small community banks. Moreover, the Federal Reserve is the one institution which should not take on a greater role in the U.S. economy.  It has failed in its present role by pushing interest rates too low for too long and has shown a complete lack of regulatory courage in preventing excesses that resulted from this policy.

The Obama Administration as defenders of the status quo

The Obama Administration is at the front of the queue advocating for this line of regulatory reform.  In my view, this has weakened the Administration, as the American people have grown to distrust the Federal Reserve as witnessed by the broad support for the Federal Reserve Transparency Act of 2009 proposed by Ron Paul to audit the Fed (H.R. 1207).

It is clear to most everyone now that actions taken by the Federal Reserve led to excessive risk taking in the financial services industry, particularly by large institutions. The risk posed by these institutions is what brought the global financial system to the verge of collapse.

Why then has the Obama Administration been supporting large institutions through large bailouts without requiring any changes in leadership or compensation?  Why is the Administration proposing to put the one regulatory institution most Americans feel failed in the period leading up to crisis in charge of all regulation? Do they not realize that this is an outrage to which the American people are wise? Do they not realize that this lessens any sense that Obama is ‘change we can believe in,’ hurting his chance at enacting legislation elsewhere?

Barack Obama was elected despite widespread concern about inexperience because he was perceived as a change agent who could demonstrate the power of government to do good in a time of crisis. Yet, the narrative now being crafted through these policy missteps is one of big government that enables the well-connected and powerful at the expense of the common man. This theme was evident with the financial bailouts. It was evident again in regards to how differently the automakers were treated. And it is evident again in how much sway lobbyists have held in the healthcare debate.

So, Obama’s poll numbers have slipped. They are not down because he is running left and outsourcing his policy decisions to Congress as some might have you believe.  Disaffection with the administration’s policies are as great in his base of supporters as they are from independents. Obama’s numbers are down because he campaigned as a man of change, but has governed as a defender of the status quo.

And when a country is beset by crisis and economic calamity, the status quo is not acceptable.

The attack of Sheila Bair

Enter Sheila Bair. She has not been toeing the party line on regulatory reform.  She rightly sees a problem with having a super-regulator to fix the problems at the heart of the financial crisis.  This has not sat well with the Administration.  But, she has continued to be a dissonant voice, most recently in an Op-Ed which appeared this past Monday in the New York Times. Title? The Case Against a Super-Regulator.

The Obama administration has proposed sweeping changes to our financial regulatory system. I am an active supporter of the key pillars of reform, including the creation of a consumer financial protection agency and the administration’s plan to consolidate the supervision of federally chartered financial institutions in a new national bank supervisor. This consolidation would improve the efficiency of federally chartered institutions while not undercutting our dual system of state and federally chartered banks.

But some are advocating even more drastic changes, like the creation of a single regulator for all banks (and bank holding companies). We clearly need to streamline the system, but a single regulator is not the solution. Calls for consolidation beyond the administration’s plan fail to identify the real roots of last year’s financial meltdown. The truth is, no regulatory structure — be it a single regulator as in Britain or the multiregulator system we have in the United States — performed well in the crisis.

The principal enablers of our current difficulties were institutions that took on enormous risk by exploiting regulatory gaps between banks and the nonbank shadow financial system, and by using unregulated over-the-counter derivative contracts to develop volatile and potentially dangerous products. Consumers continue to face huge gaps in personal financial protections. We also lack a credible method for closing large financial institutions without inflicting severe collateral damage on the economy.

My translation of what Bair is saying

I would like to paraphrase here, if I could, because Bair is using the diplomacy of a high-ranking government official in order to get along.  Reading between the lines presents another picture.

Translation:

Obama and his economic team have put together a decent first effort on regulatory reform. Let me list some stuff I agree with to be diplomatic. Below I get to what this Op-Ed is really about.

These people want to insert the Fed as the all-powerful financial regulator. Sure, we need change but not this kind of change.  That’s why my title is “The Case against a Super-Regulator.” Makes sense? Other countries have a similar system to what Geithner and Summers are proposing. If you look around – at England or Germany, for example – these guys are not exactly covering themselves in glory.

The problem is not the regulatory structure, it’s unregulated financial institutions operating outside the regulatory umbrella and too big to fail institutions inside the umbrella taking on too much risk.

A better approach

So clearly, changing the placement of regulatory captains is irrelevant here.  What is highly relevant is controlling excessive risk taking, especially by systemically important institutions as we saw with Citigroup in 1990, Goldman in 1994, Long-Term Capital Management in 1998, and Lehman and Bear Stearns in 2008.

In the past, the Federal Reserve has not been willing to rein in excessive risk taking. I would argue that its very function is to subvert market forces and encourage risk-taking by manipulating interest rates to achieve its dual goals of full employment and economic growth. Why should we expect an institution which lowered interest rates to 1% in order to encourage risk-taking and then refused to crack down on excesses this policy engendered to be the systemic risk regulator? It makes no sense.

This is the same institution which now has interest rates at 0% and has used all manner of credit easing mechanisms to foster credit growth and risk-taking as policy remedy to the present crisis.  Should we expect that it will magically change tack, pivot 180 degrees and start cracking down on excessive risk-taking and systemic risk? This too does not seem logical. And I would be remiss if I didn’t point out the lack of transparency at the Federal Reserve as demonstrated by the lawsuit by Bloomberg LP under the Freedom of Information Act (I do think Bernanke has been more forthcoming about monetary policy decisions and is welcome change on that score).

Forget about instituting a whole new labyrinth of rules, regulations and regulators. This is what we did after 9/11 when the Department of Homeland Security was created – and that has not been successful. But, a Department of Financial Security (DFS) may be coming. Back in May 2008, well before Lehman collapsed, I predicted this would happen.

This means that the de-regulation era has effectively ended. Big mergers will be eyed suspiciously. The cost of doing business will increase as red tape and regulation increases. All of this is bad for anyone looking to make a boatload of money based on capital gains in a new bull market. I happen to think that the pendulum does need to shift substantially away from de-regulation, but this will certainly mean an end to inflated asset prices in the capital markets.

As far as regulation goes, I predict a ’super-regulator’ is in the offing a la the Department of Homeland Security (DHS). This bout of big government is going to produce a federal agency akin to DHS because people are going to want to see an all-powerful federal agency formed that can effectively keep the capitalist wolves at bay when they overreach. This is a transformation that I view with some dread because I believe that, while de-regulation had swung way too far, big government is a problem, not a solution.

My hope is that the Obama Administration will see a DFS as big government that people do not want.  The writing is on the wall about ‘big government.’ We see it in the healthcare debate.  This should serve as a warning to the Administration that any legislation it proposes cannot be seen as big government or it will fail. It is better to enforce the rules and regulations that are currently on the books than to build in a whole new super-structure.

I propose the following:

1. Shelve any talk of a super-regulator.  It is a dangerous idea that will prove both politically unpopular and ineffective.
2. Enforce the regulations that currently exist. For example, anti-trust law should prohibit any institution from holding more than 10% of banking assets. Another example is the Home Owner Equity Protection Act of 1994, which gave the Federal Reserve the authority to stop abusive mortgage lending practices.
3. Promote smaller community banks. The Bush and Obama Administration’s policies during this crisis have favoured big banks. Meanwhile, community banks are being held to a disadvantage in access to cheap capital. Why doesn’t the FDIC spin off seized assets as small community banks with new leadership instead of gifting them to private equity or other banks?
4. Regulate OTC derivatives. Full-stop.  No clearinghouses. No loopholes.  We need an exchange-traded OTC derivatives market. (listen to the audio at the bottom of this post to hear how lobbyists gutted the OTC derivatives regulation in Obama’s reform package).
5. Keep the Consumer Finance Protection Agency. If we want any new regulators, this is where we need them.  The Fed failed to protect consumers from abusive mortgage lending practices and there is now a balkanized regulatory structure to oversee consumer protections. The CFPA would change this.
6. Bring the shadow banking system into the regulatory orbit. This means regulating hedge funds and money market funds in addition to banks, thrifts, credit unions and brokerage houses.

Audio podcast with Bair

Sheila Bair is on the right track and I respect her taking her views public in a manner respectful of the Administration.  Yesterday, she spoke to NPR about this issue in an hour-long radio Diane Rehm Show broadcast with Susan Page of USA Today. There were other guest panellists taking views in support of and against a super-regulator. Below is the audio from that show. I think the debate on this audio makes for good listening and will help inform your knowledge about this issue.

Audio embedded here

Related posts:

• The failure to address the looming too-big-to-fail issue
• The FSA signals a need for regulation-heavy
• U.S. has begun to drain liquidity
• A more comprehensive look at Obama’s proposed financial reforms
• FDIC Chairman Sheila C. Bair Statement on the Legacy Loans Program

The FDIC has just released a press statement outlining the second quarter results for the fund and the financial institutions it regulates.  What was particularly notable in the statement was the decrease in funds available to deal with failed institutions and the increase in the number of problem institutions to 416. This surely indicates that the financial system in the U.S. is weakening even while the economy seems to be stabilizing.

At the end of March, the Deposit Insurance Fund had just $13 billion available for seizing failed institutions and dealing with the losses that result.  In this statement for the period ended Jun. 30, the fund had $10 billion on hand – a number that would be less by now given the failure of a number of large institutions.  Clearly, the fund has to draw on a line of credit with Treasury that it received in legislation just signed in May.  Under this provision, the FDIC may draw down up to $500 billion.

Excerpts of the FDIC press release text are below (emphasis added).

My highlights:

• The number of problem institutions is still increasing. It was 252 at the end of 2008. It grew to 305 when the FDIC last reported.  It is now 416.
• Loan losses are increasing, not decreasing. Both the charge-off rate and the non-current loans and leases are increasing.  They are at the highest level since data collection began.
• The financial sector is clearly deleveraging as $303 billion fewer assets were in the system in Q1 and an additional $238 billion fewer assets were in the system in Q2.
• The FDIC only has $10 billion left in the kitty. Clearly, more funds are needed to deal with eventual losses by failed institutions.

Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported an aggregate net loss of $3.7 billion in the second quarter of 2009, a decline of $8.5 billion from the $4.8 billion in profits the industry reported in the second quarter of 2008. Insured institutions earned $424 million in net operating income during this latest quarter even after a special assessment of $5.5 billion to bolster the FDIC’s insurance fund. However, one-time losses and other items totaling $4.1 billion pulled the industry results into negative territory…

Provisions for loan losses totaled $66.9 billion in the quarter, an increase of $16.5 billion (32.8 percent) over the second quarter of 2008. Extraordinary losses stemming from writedowns of asset-backed commercial paper totaled $3.6 billion, compared to extraordinary losses of $366 million a year earlier. Noninterest expenses were $1.7 billion (1.7 percent) higher, primarily due to increased FDIC deposit insurance premiums.

Indicators of asset quality continued to worsen during the second quarter. Both the quarterly net charge-off rate and the percentage of loans and leases that were noncurrent (90 days or more past due or in nonaccrual status) reached the highest levels registered in the 26 years that insured institutions have reported these data. Insured institutions charged off $48.9 billion in uncollectible loans during the quarter, up from $26.4 billion a year earlier, and noncurrent loans and leases increased by $40.4 billion during the second quarter. At the end of June, noncurrent loans and leases totaled $332 billion, or 4.35 percent of the industry’s total loans and leases…

Total assets of insured institutions declined by $238 billion. A $125.5 billion decline in loan and lease balances accounted for more than half of the decline in total assets of insured institutions during the second quarter. The 1.8 percent decline in industry assets followed a $303.2 billion decline in the first quarter of 2009. Banks’ balances with Federal Reserve banks fell by $99.4 billion (20.4 percent) during the quarter, and assets in trading accounts declined by $65.5 billion (7.9 percent). The industry’s investment securities portfolio increased by $130.6 billion (5.9 percent).

The number of institutions on the FDIC’s "Problem List" rose. At the end of June, there were 416 insured institutions on the "Problem List," up from 305 on March 31. This is the largest number of institutions on the list since June 30, 1994, when there were 434 institutions on the list. Total assets of "problem" institutions increased during the quarter from $220.0 billion to $299.8 billion, the highest level since December 31, 1993.

Total reserves of the Deposit Insurance Fund (DIF) stood at $42 billion. Just as insured institutions reserve for loan losses, the FDIC has to provide for a contingent loss reserve for future failures. To the extent that the FDIC has already reserved for an anticipated closing, the failure of an institution does not reduce the DIF balance. The contingent loss reserve, which totaled $28.5 billion on March 31, rose to $32.0 billion as of June 30, reflecting higher actual and anticipated losses from failed institutions. Additions to the contingent loss reserve during the second quarter caused the fund balance to decline from $13.0 billion to $10.4 billion. Combined, the total reserves of the DIF equaled $42.4 billion at the end of the quarter.

Chairman Bair distinguished the DIF’s reserves from the FDIC’s cash resources, which included $22 billion of cash and U.S. Treasury securities held as of June 30, as well as the ability to borrow up to $500 billion from the Treasury. "A decline in the fund balance does not diminish our ability to protect insured depositors," Chairman Bair concluded.

Putting this report in proper context

The report indicates that the financial sector is still in distress. Many data points suggest that the banking system is in fact weaker today than it was just last year – one reason that some bank analysts believe we will see as many as 300 more bank failures before the crisis is over. 

The weakness is very worrying given we have already had a crisis of historic proportions. John Lounsbury recently penned an analysis that indicates the share of assets owned by institutions which have failed in this crisis is an order of magnitude larger than it was in previous crises including the Great Depression and the S&L crisis.

Today’s data suggest we are by not out of the woods yet. The question is what to do.  Nationalization is off the table.  Instead, the Obama Administration and the Federal Reserve seem to be attempting to increase asset prices in order to relieve pressure on weak institutions to write down asset values(see my post “It’s the writedowns, stupid”). 

However, this tactic has not been enough to save the weakest institutions. Therefore, the FDIC has had to take on the dirty work of seizing the assets of failed banks and selling them on. Yesterday, I argued that they do so in a manner that is favorable to the institutions buying the assets but unfavorable to American taxpayers.  This is a outgrowth of the desire to dispose of those assets without nationalizing the institutions (i.e. having the government own and run the banks for a considerable period).

And late yesterday word came that, indeed, the FDIC is loosening standards for commercial buyers like private equity companies (see Rolfe Winkler’s take here and the Wall Street Journal report here).  I take a dim view of the loosening of these standards because it looks to be another Depression-era rule that is being violated in this age of de-regulation.

At the end of the day, regulators have few options.  Despite the talk of recovery, the financial sector is still weak – and this means many more bank failures are to come.  In order to process these transactions the FDIC desperately needs willing buyers of the assets of the failed institutions.  However, with the financial sector still in deleveraging mode, the ones with the most cash on hand seem to be commercial buyers.

Related posts:

• Five banks seized in FDIC Friday night special
• Westsound Bank seized by FDIC
• Georgia bank fails with $1.1 billion in assets
• FDIC Thursday Night Special? John Warner Bank
• FDIC closes banks in Michigan and California

With the Federal Deposit Insurance Corporation (FDIC) about to release its latest figures for banks it regulates and its own financial condition, now is a good time to review its role in this crisis. This post is about the FDIC’s role in the credit crisis, how it seizes banks and why I believe this matters.

In my opinion, Sheila Bair, the head of the FDIC,  is the best regulator in government these days (although not everyone feels that way). Her agency has taken on the workman’s regulatory role in this crisis of identifying undercapitalized institutions, seizing them and putting their assets in new hands. These actions are a necessary part of capitalism. When a bank is reckless, it must suffer the consequences.

However, it is the distribution of the losses from failed institutions which I would like to discuss.  Much of the loss falls on the FDIC and, hence, taxpayers. In effect, what is a necessary part of capitalism, the extinction of failed institutions, may in effect be a redistribution of wealth in disguise.

Last week, when I posted on Guaranty, the latest seizure by the FDIC, a reader noted that the loss-sharing agreement between BBVA, which had purchased Guaranty’s assets, and the FDIC was quite favorable for BBVA.

On its website BBVA states in Spanish:

BBVA ha suscrito con la FDIC un “loss sharing agreement”, que cubre todos los créditos adquiridos en la transacción, en virtud del cual la FDIC se haría cargo, en caso de producirse, del 80% de las primeros 2.300 millones de dólares de las posibles pérdidas, y del 95% a partir de dicho límite.

What this says is: “BBVA has signed a “loss sharing agreement” with the FDIC, covering all loans acquired in the transaction. Under that agreement the FDIC would cover 80% of the first 2.3 billion dollars of any losses that may occur, and 95% above that ceiling.”

Translation: The FDIC is on the hook for the lion’s share of any subsequent losses at Guaranty.  As a taxpayer, you would be right to feel you’re not getting a good deal here because you are ultimately the one picking up the losses. How?

Socialization of losses

It works like this. Last year, when IndyMac failed, it was the event which brought the credit crisis into mainstream consciousness. Mind you, the crisis had begun in February 2007 when HSBC wrote down billions of bad debt. But, for the man on the street, it only hit home when a run on IndyMac started in July 2008 and unsecured depositors lost money.

Soon after that event, I pointed out that the FDIC couldn’t possibly bail out all the banks likely to go bust in the crisis.  At the time, the FDIC had just over $50 billion in its kitty. The IndyMac bankruptcy alone was expected to cost $8 billion to the fund, a number that subsequently increased to $10.7 billion.

The losses have taken their toll. The last time the FDIC reported on its financial situation back at the end May, it said it had $13 billion as of the end of March. Now, we await a new report for the period through Jun 30.  Will the FDIC report any funds at all?  Is the FDIC insolvent now?  We will soon find out.  But, one thing is for certain: the FDIC will ask the U.S. Treasury for an enormous amount of money to pay for anticipated bank losses – hundreds of billions of dollars. And they will get it.

This is what is commonly known as the socialization of losses. So when Guaranty enters into a loss-sharing agreement with BBVA, you should realize any future losses will be paid out of funds contributed to the FDIC directly by Congress and the US taxpayer.

The FDIC as a redistribution mechanism

So, obviously, how the FDIC structures its deals to seize and dispose of assets is of great interest to everyone in the U.S.  I would argue that at present, the way assets are seized and sold represents a redistribution of income from taxpayers to the acquiring entities.  Let’s use the BBVA example to illustrate.

Imagine you are Sheila Bair.  You have shuttered 80-odd institutions this year and you realize that 150, 200, maybe 300 more institutions could fail still.  No way on earth does your organization have the manpower to deal with this avalanche of bank failures without sloughing the assets off on willing buyers.  How do you entice those buyers? In a word, price.

It’s what is known as a sweetheart deal.  There were a number of bidders for Guaranty including US Bank, and a private-equity consortium led by Gerald Ford which included Blackstone, Carlyle and TPG.  Yet, the deal went to BBVA in a loss-share agreement that caps their exposure at 20%?  I ‘d like to get in on a deal like that.  If you are a private equity buyer, you’re probably chomping at the bit for more deals like this.

Granted, with visions of a V-shaped recovery on the horizon, you could be forgiven for thinking there will be no further losses.  But what if there is no V-shaped recovery? Then, the American taxpayer is going to be covering a lot of losses – and that is a redistribution from taxpayers to the financial services industry.

More losses to come

I certainly believe the V-shaped recovery is unlikely.  More likely, we will see a sluggish recovery. And a relapse into recession is a distinct possibility. This means more losses on toxic assets at financial institutions, more exposure for the FDIC, and, thus, more socialization of losses.

Update: The FDIC approved a final statement of policy concerning acquisition of failed institutions which eased rules for private equity buyers.  Obviously, the FDIC wants more bidders at the table as I have suggested in this article.

The question is whether the loss-share agreements it is crafting with those bidders will expose the agency to losses which it cannot possibly repay without taxpayer monies.  As it stands now, the FDIC merely has a line of credit from the Treasury for $500 billion.  However, if losses are large, I doubt very seriously those funds will be repaid.

See FDIC press release here and Deal Book article here.

Related posts:

• Guaranty is bankrupt: BBVA gets its FDIC-seized assets
• FDIC moves in at Great Basin Bank
• Corus Bank assets: And the winning bidder is…
• Seven banks seized by FDIC
• FDIC Friday Night Special: San Joaquin Bank, Bakersfield, California

It’s official: Guaranty Bank is the second-largest bank seized by the FDIC in 2009. BBVA, through its American subsidiary Compass, is increasing its profile in the US. And now it can do so, not only through merger, but through FDIC asset seizure too. Here is the announcement that was leaked just yesterday:

Guaranty Bank, Austin, TX was closed today by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with BBVA Compass, Birmingham, Alabama, to assume all of the deposits of Guaranty Bank, excluding those from brokers.

Guaranty Bank had 103 branches in Texas and 59 branches in California. Former branches of Guaranty Bank will reopen during normal banking hours starting tomorrow as branches of BBVA Compass. Depositors of Guaranty Bank will automatically become depositors of BBVA Compass. Depositors will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branches until BBVA Compass can fully integrate the deposit records of Guaranty Bank.

This evening and over the weekend, depositors of Guaranty Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of June 30, 2009, Guaranty Bank had total assets of approximately $13 billion and total deposits of approximately $12 billion. In addition to assuming all of the deposits of the failed bank, BBVA Compass agreed to purchase $12 billion of the failed bank’s assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and BBVA Compass entered into a loss-share transaction on approximately $11 billion of Guaranty Bank’s assets. BBVA Compass will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers.

BBVA Compass will purchase all deposits, except about $344 million in brokered deposits, held by Guaranty Bank. The FDIC will pay the brokers directly for the amount of their funds. Customers who placed money with brokers should contact them directly for more information about the status of their deposits.

Customers who have questions about today’s transaction can call the FDIC toll-free at 1-800-760-3641. The phone number will be operational this evening until 9:00 p.m., Central Daylight Time (CDT); on Saturday from 9:00 a.m. to 6:00 p.m., CDT; on Sunday from noon to 6:00 p.m., CDT; and thereafter from 8:00 a.m. to 8:00 p.m., CDT. Interested parties can also visit the FDIC’s Web site at http://www.fdic.gov/bank/individual/failed/guaranty-tx.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $3 billion. BBVA Compass’s acquisition of all the deposits was the "least costly" resolution for the FDIC’s DIF compared to alternatives. Guaranty Bank is the 81st FDIC-insured institution to fail in the nation this year, and the second in Texas. The last FDIC-insured institution closed in the state was Millennium State Bank of Texas, Dallas, July 2, 2009.

Related posts:

• Westsound Bank seized by FDIC
• FDIC moves in at Great Basin Bank
• FDIC Friday Night Special: Lincolnwood
• FDIC Friday Night Special: First National Bank of Anthony
• Five banks seized in FDIC Friday night special

I count three already.  Here they are:

ebank, Atlanta, GA

• Stearns Bank, National Association, St. Cloud, Minnesota, Assumes All of the Deposits of ebank Atlanta, Georgia

CapitalSouth Bank, Birmingham, Alabama

• IBERIABANK, Lafayette, Louisiana, Assumes All of the Deposits of CapitalSouth Bank, Birmingham, Alabama

First Coweta, Newnan, Georgia

• United Bank, Zebulon, Georgia, Assumes All of the Deposits of First Coweta, Newnan, Georgia

More may come as the night wears on.

Related posts:

• FDIC Friday Night Special: FirstBank of Georgia
• FDIC Friday Night Special: American Southern Bank
• FDIC Friday Night: Silverton Bank is seized
• Two more FDIC Friday Night Specials brings total to 55 failed banks
• FDIC Friday Night Specials: Cooperative of NC and Southern Community of GA

Here are the latest FDIC seizures:

First State Bank of Altus, Altus, Oklahoma

• Total assets of $103.4 million and deposits of approximately $98.2 million
• Estimated cost to the Deposit Insurance Fund (DIF): $25.2 million.

Integrity Bank, Jupiter, Florida

• Total assets of $119 million and total deposits of approximately $102 million.
• Stonegate Bank paid a premium of 0.20 percent to acquire the deposits.
• Estimated cost to the Deposit Insurance Fund (DIF): $46 million

Peoples Community Bank, West Chester, Ohio

• Total assets of $705.8 million and total deposits of approximately $598.2 million.
• First Financial Bank, N.A. will pay the FDIC a premium of 1.5 percent to assume the deposits.
• Estimated cost to the Deposit Insurance Fund (DIF): $129.5 million

First Bankamericano, Elizabeth, New Jersey

• Total assets of $166 million and total deposits of approximately $157 million.
• Estimated cost to the Deposit Insurance Fund (DIF): $15 million.

Mutual Bank, Harvey, Illinois

• Total assets of $1.6 billion and total deposits of $1.6 billion.
• The FDIC and United Central Bank entered into a loss-share transaction on approximately $1.3 billion of Mutual Bank’s assets.
• Estimated cost to the Deposit Insurance Fund (DIF): $696 million.

Related posts:

• FDIC Friday Night Special: American Southern Bank
• Two more FDIC Friday Night Specials brings total to 55 failed banks
• Seven banks seized by FDIC
• FDIC Friday Night Special: First National Bank of Anthony
• Another Friday Night Special in Idaho

In truth this is really two failures, but one had six subsidiaries so it counts as seven.  Here are the failures:

The first bank is in New York. Waterford Village Bank, Clarence, New York, was closed by the New York State Banking Department, with the Federal Deposit Insurance Corporation (FDIC) as receiver. Evans Bank, N.A., Angola, New York, will assume all of the deposits. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $5.6 million.
http://www.fdic.gov/bank/individual/failed/waterford.html.

The next six are bank subsidiaries of Security Bank Corporation, Macon, Georgia. As of March 31, 2009, the six banks had total assets of $2.8 billion and total deposits of about $2.4 billion. State Bank and Trust Company will acquire $2.4 billion in assets and all of the deposits. The FDIC and State Bank and Trust Company entered into a loss-share transaction on approximately $1.7 billion of the six banks’ assets.

Security Bank of Bibb County
http://www.fdic.gov/bank/individual/failed/sb-bibb.html

Security Bank of Houston County
http://www.fdic.gov/bank/individual/failed/sb-houston.html

Security Bank of Jones County
http://www.fdic.gov/bank/individual/failed/sb-jones.html

Security Bank of Gwinnett County
http://www.fdic.gov/bank/individual/failed/sb-gwinnett.html

Security Bank of North Metro
http://www.fdic.gov/bank/individual/failed/sb-metro.html

Security Bank of North Fulton
http://www.fdic.gov/bank/individual/failed/sb-fulton.html

Related posts:

• Two more FDIC Friday Night Specials brings total to 55 failed banks
• FDIC shuts down Haven Trust and Sanderson State
• Five banks seized in FDIC Friday night special
• Westsound Bank seized by FDIC
• FDIC Friday Night Special: First National Bank of Anthony

These two seizures are going to be costly. The first one here, Vineyard Bank in California  is going to cost the taxpayer an estimated $579 million.  The second, Temecula Valley Bank in North Carolina, is estimated to cost $391 million.

Here’s the first press release.

Vineyard Bank, National Association, Rancho Cucamonga, California, was closed today by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with California Bank & Trust, San Diego, California, to assume all of the deposits of Vineyard Bank, N.A., excluding those from brokers.

Vineyard Bank, N.A.’s sixteen offices will reopen as branches of California Bank & Trust during normal business hours. Depositors of Vineyard Bank, N.A. will automatically become depositors of California Bank & Trust. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branches until California Bank & Trust can fully integrate the deposit records of Vineyard Bank, N.A.

Over the weekend, depositors of Vineyard Bank, N.A. can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of March 31, 2009, Vineyard Bank, N.A. had total assets of $1.9 billion and total deposits of approximately $1.6 billion. In addition to assuming all of the deposits of the failed bank, California Bank & Trust agreed to purchase approximately $1.8 billion of assets. The FDIC will retain the remaining assets for later disposition.

California Bank & Trust will purchase all deposits, except about $134 million in brokered deposits, held by Vineyard Bank, N.A. The FDIC will pay the brokers directly for the amount of their funds. Customers who placed money with brokers should contact them directly for more information about the status of their deposits.

The FDIC and California Bank & Trust entered into a loss-share transaction on approximately $1.5 billion of Vineyard Banks, N.A.’s assets. California Bank & Trust will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers.

Customers who have questions about today’s transaction can call the FDIC toll-free at 1-800-523-8159. The phone number will be operational this evening until 9:00 p.m., Pacific Daylight Time (PDT); on Friday and Saturday from 9:00 a.m. to 6:00 p.m., PDT; on Sunday from noon to 6:00 p.m., PDT; and thereafter from 8:00 a.m. to 8:00 p.m., PDT. Interested parties can also visit the FDIC’s Web site at http://www.fdic.gov/bank/individual/failed/vineyard.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $579 million. California Bank & Trust’s acquisition of all the deposits was the "least costly" resolution for the FDIC’s DIF compared to alternatives. Vineyard Bank, N.A. is the 56th FDIC-insured institution to fail in the nation this year, and the seventh in California. The last FDIC-insured institution to be closed in the state was Mirae Bank, Los Angeles, on June 26, 2009.

Here’s the second.

Temecula Valley Bank, Temecula, California, was closed today by the California Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with First-Citizens Bank and Trust Company, Raleigh, North Carolina, to assume all of the deposits of Temecula Valley Bank, excluding those from brokers.

Temecula Valley Bank’s eleven offices will reopen on Monday as branches of First-Citizens Bank and Trust Company. Depositors of Temecula Valley Bank will automatically become depositors of First-Citizens Bank and Trust Company. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branches until First-Citizens Bank and Trust Company can fully integrate the deposit records of Temecula Valley Bank.

Over the weekend, depositors of Temecula Valley Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of May 31, 2009, Temecula Valley Bank had total assets of $1.5 billion and total deposits of approximately $1.3 billion. In addition to assuming all of the deposits of the failed bank, First-Citizens Bank and Trust Company agreed to purchase essentially all of the assets.

First-Citizens Bank and Trust Company will purchase all deposits, except about $304 million in brokered deposits, held by Temecula Valley Bank. The FDIC will pay the brokers directly for the amount of their funds. Customers who placed money with brokers should contact them directly for more information about the status of their deposits.

The FDIC and First-Citizens Bank and Trust Company entered into a loss-share transaction on approximately $1.3 billion of Temecula Valley Bank’s assets. First-Citizens Bank and Trust Company will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers.

Customers who have questions about today’s transaction can call the FDIC toll-free at 1-800-930-5170. The phone number will be operational this evening until 9:00 p.m., Pacific Daylight Time (PDT); on Friday and Saturday from 9:00 a.m. to 6:00 p.m., PDT; on Sunday from noon to 6:00 p.m., PDT; and thereafter from 8:00 a.m. to 8:00 p.m., PDT. Interested parties can also visit the FDIC’s Web site at http://www.fdic.gov/bank/individual/failed/temecula.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $391 million. First-Citizens Bank and Trust Company’s acquisition of all the deposits was the "least costly" resolution for the FDIC’s DIF compared to alternatives. Temecula Valley Bank is the 57thth FDIC-insured institution to fail in the nation this year, and the eighth in California. The last FDIC-insured institution to be closed in the state was Vineyard Bank, National Association, Rancho Cucamonga, also today.

I just want to remind you that the FDIC only had $56 billion just last July (See “Does the FDIC have enough money?”).  Obviously, the American taxpayer is on the hook for the poor lending of a lot of banks here.

Related posts:

• Last bankruptcy tonight: America West Bank
• FDIC Friday Night Special: San Joaquin Bank, Bakersfield, California
• FDIC moves in at Great Basin Bank
• Citizens Community Bank goes under
• Bank seizures 35 and 36 by the FDIC

The first bank failure is in Georgia, a state where many FDIC seizures have taken place.

On Friday, July 17, 2009, First Piedmont Bank, Winder, GA was closed by the Georgia Department of Banking and Finance, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver.

First Piedmont had $115 million in deposits. The cost to the FDIC is estimated at $29 million.  More here.

The second failure was in South Dakota – Sioux Falls (where Citi has had a lot of operations for its credit card business, by the way, and where unemployment has not kicked up – 5.1% unemployment rate).

On Friday, July 17, 2009, BankFirst, Sioux Falls, SD was closed by the South Dakota Division of Banking, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver.

This one is a bit more complicated as two banks are getting the assets. A loss of $91 million is expected to hit the FDIC:

As of April 30, 2009, BankFirst had total assets of $275 million and total deposits of approximately $254 million. In addition to assuming all of the deposits of the failed bank, Alerus Financial, N.A. will acquire $72 million in assets, comprised of cash, securities and loans secured by deposits. The FDIC entered into a separate agreement with Beal Bank Nevada, Las Vegas, Nevada, to acquire $177 million of the failed bank’s loans. The FDIC will retain the remaining assets for later disposition.

More here.

By the way, FDIC Chairperson Sheila Bair is expecting 500 failures before this is over.  So, we are nowhere near halfway through this.

Related posts:

• Five banks seized in FDIC Friday night special
• FDIC moves in at Great Basin Bank
• Seven more bank failures brings total to 64
• FDIC Friday Night Special: First National Bank of Anthony
• FDIC Friday Night Special: American Southern Bank

Wow.  The Feds sure know how to celebrate Independence Day.  I went out for a couple of hours and four more banks were seized bringing the grand total to seven for the day and 52 on the year.

Here are all the FDIC seizures for today. Six were in Illinois and one in Texas.

First State Bank of Winchester
Winchester, IL

Elizabeth State Bank
Elizabeth, IL

Millennium State Bank of Texas
Dallas, TX

John Warner Bank
Clinton, IL

First National Bank of Danville
Danville, IL

Founders Bank
Worth, IL

Rock River Bank
Oregon, IL

Related posts:

• Failed bank 48: Rock River Bank
• Here’s bank failure 47: First State Bank of Winchester
• FDIC Thursday Night Special? John Warner Bank
• Five banks seized in FDIC Friday night special
• FDIC Friday Night: Silverton Bank is seized

This is the press release from the FDIC.  Deposits of only $75 million.  Small banks are seized, big banks get bailed out, of course.

Rock River Bank, Oregon, Illinois, was closed today by the Illinois Department of Financial and Professional Regulation, Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with The Harvard State Bank, Harvard, Illinois, to assume all of the deposits of Rock River Bank.

The four offices of Rock River Bank will reopen on Monday as branches of The Harvard State Bank. Depositors of Rock River Bank will automatically become depositors of The Harvard State Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branches until The Harvard State Bank can fully integrate the deposit records of Rock River Bank.

Over the weekend, depositors of Rock River Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of April 30, 2009, Rock River Bank had total assets of $77 million and total deposits of approximately $75.8 million. The Harvard State Bank paid a premium of 2.0 percent to acquire all of the deposits of the failed bank. In addition to assuming all of the deposits of the failed bank, The Harvard State Bank agreed to purchase approximately $72.9 million of assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and The Harvard State Bank entered into a loss-share transaction on approximately $51.3 million of Rock River Bank’s assets. The Harvard State Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers.

Customers who have questions about today’s transaction can call the FDIC toll-free at 1-800-591-2903. The phone number will be operational this evening until 9:00 p.m., Central Daylight Time (CDT); on Friday and Saturday from 9:00 a.m. to 6:00 p.m., CDT; on Sunday from noon to 6:00 p.m., CDT; and thereafter from 8:00 a.m. to 8:00 p.m., CDT. Interested parties can also visit the FDIC’s Web site at http://www.fdic.gov/bank/individual/failed/rockriver.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $27.6 million. The Harvard State Bank’s acquisition of all the deposits was the "least costly" resolution for the FDIC’s DIF compared to alternatives. Rock River Bank is the 48th FDIC-insured institution to fail in the nation this year, and the ninth in Illinois. The last FDIC-insured institution to be closed in the state was The First State Bank of Winchester, earlier today.

# # #

Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation’s banking system. The FDIC insures deposits at the nation’s 8,246 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.

FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC’s Public Information Center (877-275-3342 or 703-562-2200). PR-115-2009

Related posts:

• FDIC Friday Night Special: Lincolnwood
• FDIC moves in at Great Basin Bank
• Westsound Bank seized by FDIC
• Here’s bank failure 47: First State Bank of Winchester
• FDIC Thursday Night Special? John Warner Bank

Another tiny little bank. Deposits of $34 million.

The First State Bank of Winchester, Winchester, Illinois, was closed today by the Illinois Department of Financial and Professional Regulation, Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with The First National Bank of Beardstown, Beardstown, Illinois, to assume all of the deposits of The First State Bank of Winchester.

The two offices of The First State Bank of Winchester will reopen on Monday as branches of The First National Bank of Beardstown. Depositors of The First State Bank of Winchester will automatically become depositors of The First National Bank of Beardstown. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branches until The First National Bank of Beardstown can fully integrate the deposit records of The First State Bank of Winchester.

Over the weekend, depositors of The First State Bank of Winchester can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of April 30, 2009, The First State Bank of Winchester had total assets of $36 million and total deposits of approximately $34 million. The First National Bank of Beardstown paid a premium of 2.0 percent to acquire all of the deposits of the failed bank. In addition to assuming all of the deposits of the failed bank, The First National Bank of Beardstown agreed to purchase approximately $33 million of assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and The First National Bank of Beardstown entered into a loss-share transaction on approximately $20 million of The First State Bank of Winchester’s assets. The First National Bank of Beardstown will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers.

Customers who have questions about today’s transaction can call the FDIC toll-free at 1-800-331-6306. The phone number will be operational this evening until 9:00 p.m., Central Daylight Time (CDT); on Friday and Saturday from 9:00 a.m. to 6:00 p.m., CDT; on Sunday from noon to 6:00 p.m., CDT; and thereafter from 8:00 a.m. to 8:00 p.m., CDT. Interested parties can also visit the FDIC’s Web site at http://www.fdic.gov/bank/individual/failed/winchester.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $6 million. The First National Bank of Beardstown’s acquisition of all the deposits was the "least costly" resolution for the FDIC’s DIF compared to alternatives. The First State Bank of Winchester is the 47th FDIC-insured institution to fail in the nation this year, and the eighth in Illinois. The last FDIC-insured institution to be closed in the state was The John Warner Bank, earlier today.

# # #

Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation’s banking system. The FDIC insures deposits at the nation’s 8,246 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.

FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC’s Public Information Center (877-275-3342 or 703-562-2200). PR-114-2009

Related posts:

• FDIC Friday Night Special: Lincolnwood
• Failed bank 48: Rock River Bank
• FDIC moves in at Great Basin Bank
• FDIC Friday Night Special: First National Bank of Anthony
• Westsound Bank seized by FDIC

This is number 46 this year. Very small.  Why not wait?  Holiday weekend?

The John Warner Bank, Clinton, Illinois, was closed today by the Illinois Department of Financial and Professional Regulation, Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with State Bank of Lincoln, Lincoln, Illinois, to assume all of the deposits of The John Warner Bank.

The three offices of The John Warner Bank will reopen on Friday as branches of State Bank of Lincoln. Depositors of The John Warner Bank will automatically become depositors of State Bank of Lincoln. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branches until State Bank of Lincoln can fully integrate the deposit records of The John Warner Bank. Depositors of The John Warner Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of April 30, 2009, The John Warner Bank had total assets of $70 million and total deposits of approximately $64 million. State Bank of Lincoln paid a premium of 4.1 percent to acquire all of the deposits of the failed bank. In addition to assuming all of the deposits of the failed bank, State Bank of Lincoln agreed to purchase approximately $63 million of assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and State Bank of Lincoln entered into a loss-share transaction on approximately $31 million of The John Warner Bank’s assets. State Bank of Lincoln will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers.

Customers who have questions about today’s transaction can call the FDIC toll-free at 1-800-837-0215. The phone number will be operational this evening until 9:00 p.m., Central Daylight Time (CDT); on Friday and Saturday from 9:00 a.m. to 6:00 p.m., CDT; on Sunday from noon to 6:00 p.m., CDT; and thereafter from 8:00 a.m. to 8:00 p.m., CDT. Interested parties can also visit the FDIC’s Web site at http://www.fdic.gov/bank/individual/failed/warner.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $10 million. State Bank of Lincoln’s acquisition of all the deposits was the "least costly" resolution for the FDIC’s DIF compared to alternatives. The John Warner Bank is the 46th FDIC-insured institution to fail in the nation this year, and the seventh in Illinois. The last FDIC-insured institution to be closed in the state was Bank of Lincolnwood, Lincolnwood, on June 5, 2009.

# # #

Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation’s banking system. The FDIC insures deposits at the nation’s 8,246 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.

FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC’s Public Information Center (877-275-3342 or 703-562-2200). PR-113-2009

Related posts:

• FDIC Friday Night Special: Lincolnwood
• Here’s bank failure 47: First State Bank of Winchester
• Westsound Bank seized by FDIC
• FDIC moves in at Great Basin Bank
• FDIC Friday Night Special: First National Bank of Anthony

This is number 40 (earlier the headline read First National Bank of Kansas, but has since been corrected).

First National Bank of Anthony, Anthony, Kansas was closed today by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Bank of Kansas, South Hutchinson, Kansas, to assume all of the deposits of First National Bank of Anthony.

The six offices of First National Bank of Anthony, including the two in Johnson County, Kansas, which operate under the name of First National Bank of Johnson County, will reopen as branches of Bank of Kansas. All of the offices will maintain normal business hours. Depositors of First National Bank of Anthony will automatically become depositors of Bank of Kansas. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers of both banks should continue to use their existing branches until Bank of Kansas can fully integrate the deposit records of First National Bank of Anthony.

Over the weekend, depositors of First National Bank of Anthony can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of March 31, 2009, First National Bank of Anthony had total assets of $156.9 million and total deposits of approximately $142.5 million. Bank of Kansas paid a premium of 0.5 percent to acquire all of the deposits of the failed bank. In addition to assuming all of the deposits of the failed bank, Bank of Kansas agreed to purchase approximately $156.7 million of assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and Bank of Kansas entered into a loss-share transaction on approximately $130.5 million of First National Bank of Anthony’s assets. Bank of Kansas will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers.

Customers who have questions about today’s transaction can call the FDIC toll-free at 1-877-367-2719. The phone number will be operational this evening until 9:00 p.m., Central Daylight Time (CDT); on Saturday from 9:00 a.m. to 6:00 p.m., CDT; on Sunday from noon to 6:00 p.m., CDT; and thereafter from 8:00 a.m. to 8:00 p.m., CDT. Interested parties can also visit the FDIC’s Web site at http://www.fdic.gov/bank/individual/failed/anthony.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $32.2 million. Bank of Kansas’ acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to alternatives. First National Bank of Anthony is the 40th FDIC-insured institution to fail in the nation this year, and the second in Kansas. The last FDIC-insured institution to be closed in the state was TeamBank, Paola, on March 20, 2009.

Related posts:

• FDIC moves in at Great Basin Bank
• FDIC Friday Night Special: American Sterling Bank
• FDIC Friday Night Special: Lincolnwood
• FDIC Friday Night Special: American Southern Bank
• FDIC Friday Night Special: San Joaquin Bank, Bakersfield, California