By: Dakin Campbell
Dec 18, 2010 12:07 PM ET
Regulators shuttered six banks holding a total of $1.23 billion in assets, including three in Georgia and one each in Arkansas, Minnesota and Florida, as real-estate losses drive this year’s bank failures to 157.
Florida has lost 29 lenders this year while 21 banks in Georgia were seized, the Federal Deposit Insurance Corp. said today in statements on its website. Regulators have closed 322 banks since the start of 2008. Today’s six closures cost the FDIC’s deposit-insurance fund a total of $267.6 million.
“We’re over the hump in terms of number of failures and the average size, and potentially in the cost of them,” Bert Ely, a banking consultant in Alexandria, Virginia, said in an interview. The crisis is “far from over but we’re making headway.”
This week’s failures may be the final closures for 2010 because regulators seldom shut down banks on holiday weekends, Ely said. The next two Fridays are Christmas Eve, a market holiday in the U.S., and New Year’s Eve.
More than 500 banks may fail before the cycle that started in 2007 comes to a close, “given the severity of the problems and the prolonged nature of the recovery,” Ely said.
The FDIC said last month that its list of “problem” banks — those at heightened risk of failure — rose 3.7 percent to 860 in the third quarter, the most in 17 years. Banks on the confidential list had $379.2 billion in assets as of Sept. 30, down from $403 billion at the end of the second quarter.
The financial crisis drove down home and commercial property values and pushed the unemployment rate above 10 percent. The U.S. economy rose 2.5 percent in the third quarter after declining as much as 6.8 percent in the fourth quarter of 2008, according to the U.S. Department of Commerce. The average over the last 20 years is growth of 2.9 percent.
The largest failure today was Coral Gables, Florida-based Bank of Miami, which was purchased by 1st United Bancorp of Boca Raton, the FDIC said. 1st United picked up almost $375 million in deposits, more than $442 million in assets and three branches.
“Their deposits are safe, FDIC-insured, and readily accessible,” 1st United Chief Executive Officer Rudy Schupp said in a statement. “Customers will be able to conduct business as usual at their existing branch locations with their familiar banking associates.”
Three banks in Georgia were shuttered, the largest being Chestatee State Bank of Dawsonville, the FDIC said. Little Rock, Arkansas-based Bank of the Ozarks Inc. added about $240 million in deposits and four branches with the Chestatee purchase.
Bank Rises to Record
Bank of the Ozarks rose to a record close of $42.60 today in Nasdaq Stock Market trading. It has surged 46 percent this year. This is the lender’s fourth failed-bank purchase this year, according to FDIC data.
Regulators also closed United Americas Bank, of Atlanta, and Appalachian Community Bank of McCaysville, Georgia, the FDIC said. Macon, Georgia-based State Bank and Trust Co. bought United, and Madisonville, Tennessee-based Peoples Bank of East Tennessee purchased Appalachian.
In Arkansas, regulators shut First Southern Bank of Batesville and the FDIC sold it to Southern Bank, based in Missouri. Southern paid the FDIC a 0.25 percent premium to acquire almost $156 million in deposits at First Southern.
Farmers & Merchants Savings Bank of Manchester, Iowa, purchased Community National Bank of Lino Lakes, Minnesota. It was the eighth bank to be closed by regulators in Minnesota this year, the FDIC said.