By Ari Levy and Margaret Chadbourn
March 20 (Bloomberg) -- Banks in Kansas, Colorado and Georgia were
seized, bringing this year’s tally of failed U.S. lenders to 20, as
foreclosures surged amid a recession and the highest unemployment in a
quarter century.
The banks with $1.1 billion in total assets and $853 million in deposits
were shut by regulators, and the Federal Deposit Insurance Corp. was
named receiver, according to e-mailed statements from the FDIC.
The deposits of TeamBank in Paola, Kansas, will be passed to Great
Southern Bank in Springfield, Missouri. Herring Bank in Amarillo, Texas,
is assuming the deposits of Colorado National Bank in Colorado Springs.
Regulators were unable to find a bidder for FirstCity Bank of
Stockbridge, Georgia, and the FDIC will send payments to insured
depositors beginning on May 23.
The U.S. economy has shed 4.4 million jobs since the recession began in
December 2007. Unemployment jumped to 8.1 percent in February, the
highest in more than 25 years. A $787 billion government stimulus
package is aimed at creating or saving 3.5 million jobs and easing credit.
“The FDIC will fulfill its obligation to insured depositors by mailing
checks for their insured amounts,” the regulator said, referring to
FirstCity. It is the second time this year the agency couldn’t find a
bidder for a failing bank, after it shut down Salt Lake City-based
MagnetBank on Jan. 30.
FDIC-insured banks lost $32.1 billion from October through December, the
first quarterly loss since 1990. The agency’s deposit insurance fund,
used to reimburse customers of closed banks, tumbled 45 percent to $18.9
billion in the quarter from $34.6 billion in the preceding period,
reflecting the closing of 25 lenders last year.
‘Difficult’ Period
“There is no question that this is one of the most difficult periods
we’ve had to deal with since the FDIC was created 75 years ago,”
Chairman Sheila Bair said today at the Independent Community Bankers of
America conference in Phoenix.
Herring Bank will take Colorado National’s four branches and buy $117.3
million of Colorado National’s assets at a discount of $4.2 million, the
FDIC said. TeamBank’s 17 offices will open tomorrow as branches of Great
Southern. The acquiring bank will purchase $656.5 million in assets at a
discount of $100 million. The FDIC said the three failures will cost its
deposit insurance fund, supported by fees on insured banks, about $207
million.
The FDIC, which is proposing a one-time fee on banks to replenish the
deposit insurance fund, may lower the charge once Congress expands the
agency’s borrowing authority from the Treasury Department. Bair said the
levy of 20 cents per $100 of insured deposits may be trimmed to “single
digits.”
Breathing Room
“I’m optimistic that Congress will soon act on the borrowing authority
increase,” Bair told the community bankers, who are fighting the
assessment. “This should give us the breathing room we need to reduce
the special assessment, while covering all projected losses, with
industry funds.”
Bair said the FDIC is considering calculating the levy based on a bank’s
assets, rather than domestic deposits, so larger lenders will bear more
of the cost.
Community lenders have said the one-time fee may significantly reduce
2009 earnings. The Independent Community Bankers of America said more
than 1,000 bank executives complained, by letter, about the extra fees
in the week after the charges were announced.
The FDIC classified 252 banks as “problem” in the fourth quarter, a 47
percent jump from the previous period and the highest total since June
1995. The Washington-based agency doesn’t name the “problem” banks. The
FDIC projects bank failures will cost its insurance fund $65 billion
through 2013.
The FDIC, which regulates 8,305 institutions with $13.9 trillion in
assets, collects fees from banks to protect customer deposits. Congress
is considering making permanent an increase in deposit-insurance
coverage to $250,000 deposit coverage, up from $100,000, to increase
confidence in banks.
One in 440 U.S. housing units received a foreclosure filing last month,
and the total was the third-highest on record. Filings rose 6 percent
from January.
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