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Banks Closed in Four States; 13 Failures in 2009
By AP / MARCY GORDON and SARA LEPRO Saturday, Feb. 14, 2009Print
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Facebook Yahoo! Buzz Mixx Permalink Related (WASHINGTON) — Regulators on Friday closed banks based in Nebraska, Florida, Illinois and Oregon, marking 13 failures this year of federally insured institutions.



Sherman County Bank, located in Loup City, Neb., had $129.8 million in assets and $85.1 million in deposits as of Feb. 12. Cape Coral, Fla.-based Riverside Bank of the Gulf Coast had assets of $539 million and deposits of $424 million as of Dec. 31. (See TIME's "25 People to Blame for the Financial Collapse")

Corn Belt Bank and Trust Co. of Pittsfield, Ill., had total assets of $271.8 million and deposits of $234.4 million as of Dec. 31. Pinnacle Bank of Beaverton, Ore. had total assets of $73 million and deposits of $64 million as of Dec. 31.

Twenty-five U.S. banks failed last year, far more than in the previous five years combined. There were just three bank failures in 2007. It's expected that many more banks won't survive this year amid rising unemployment, falling home prices and tighter credit.

Heritage Bank, based in Wood River, Neb., will pay the FDIC about $5.1 million to assume Sherman County Bank's deposits. Due to the Presidents Day holiday on Monday, Sherman County's four branches, including those that operated under the name Howard County Bank, will reopen on Tuesday as branches of Heritage Bank. The bank also agreed to buy $21.8 million of Sherman County Bank's assets. The FDIC will retain the remaining assets for later disposition.

TIB Bank of Naples, Fla., will assume all of the deposits of Riverside Bank, except for $142.6 million in brokered deposits. TIB Bank agreed to pay the FDIC a premium of 1.3 percent on the deposits. 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 accounts, the FDIC said.

TIB Bank also agreed to buy $125 million of Riverside's assets. The FDIC will retain the remaining assets for later disposition. Riverside's nine branches will reopen Tuesday as TIB Bank branches.

The Carlinville National Bank of Carlinville, Ill., will assume all of the deposits of Corn Belt Bank and Trust, whose two branches will reopen on Tuesday as Carlinville National Bank branches. Carlinville Bank and Trust, which will not assume $92 million in Corn Belt brokered deposits, will pay the FDIC a premium of 1.75 percent. The FDIC will pay the brokers directly for the amount of the insured funds.

Carlinville National Bank will also assume $60.7 million in assets.

Spokane, Wash.-based Washington Trust Bank will assume the deposits of Pinnacle Bank. Pinnacle's sole branch will reopen as a Washington Trust Bank branch on Tuesday. In addition to assuming all of the deposits, including those from brokers, Washington Trust also agreed to buy $72 million in assets at a discount of $7.6 million.

Washington Trust also entered into a loss-sharing agreement with the FDIC, whereby the bank will share in the losses on about $66 million in assets covered under the agreement.

Pinnacle is the first bank in Oregon to fail since 1991.

The FDIC estimated that the cost to the federal deposit insurance fund from the resolution of these failed banks will be about $341.6 million.

Regular deposit accounts are insured up to $250,000.

The FDIC estimates that through 2013, there will be more than $40 billion in losses to the deposit insurance fund, including an $8.9 billion loss from the failure of IndyMac Bank last July. The agency has raised insurance premiums paid by banks and thrifts to replenish its fund, which now stands at around $34.6 billion. That is the lowest level since 2003.

An FDIC official asked Congress last week to more than triple the agency's line of credit with the Treasury Department to $100 billion from the current $30 billion, as a way to reassure the public that the government stands firmly behind insured bank deposits.

The FDIC has in place a program to guarantee as much as $1.4 trillion in U.S. banks' debt for more than three years as part of the government's $700 billion financial rescue plan. Under the program, which is meant to unfreeze the credit markets, the FDIC is providing temporary insurance for loans between banks, guaranteeing the new debt in the event of payment default by the borrowing bank.

Earlier this week, Treasury Secretary Timothy Geithner revealed plans to beef up the government's efforts to spur lending and remove toxic assets from banks' books. Investors, however, were disappointed by the lack of details on how the programs would be implemented. The government has already pumped nearly $200 billion directly into banks of all sizes through preferred stock purchases.

Of the roughly 8,500 federally insured banks and thrifts, the FDIC had 171 on its confidential list of troubled institutions as of Sept. 30 — a nearly 50 percent jump from the second quarter and the highest tally since late 1995.

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