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| | GEO Business | | Seven more banks shut in U.S. | Updated at: 2006 PST, Saturday, July 25, 2009
NEW YORK: U.S. regulators closed seven small banks on Friday, a pace matching a one-day total seen earlier in July and bringing the number of failures so far this year to 64.
Six of the banks were in Georgia and were subsidiaries of Security Bank Corp, having a total of 20 branches, $2.8 billion in assets and about $2.4 billion in deposits, the Federal Deposit Insurance Corp said.
State Bank and Trust Co of Pinehurst, Georgia, agreed to assume all of the deposits at the six banks, whose branches will reopen under State Bank's name. State Bank will also purchase $2.4 billion of the assets.
The failure of the six institutions will cost the FDIC deposit insurance fund an estimated $807 million.
The FDIC said State Bank and Trust Co received a $300 million capital infusion from a group of 26 investors to help finance the deposit assumption and purchase the assets.
The FDIC said Waterford Village Bank of Clarence, New York, had been closed, with assets of $61.4 million and deposits of about $58 million.
Evans Bank NA of Angola, New York, will assume all of Waterford's deposits and the failure is expected to cost the FDIC's insurance fund $5.6 million.
The number of bank failures has increased dramatically this year as the struggling economy and loan delinquencies have taken a severe toll on financial institutions.
In contrast to the 64 failures so far this year, there were just 25 banks seized in all of 2008, and only three in 2007.
In July alone, there have been 19 bank failures.
The failures have been draining the FDIC's deposit insurance fund, and the agency has taken steps -- including an emergency assessment on banks -- to replenish the fund.
The agency keeps a running tally of problem banks that its examiners closely monitor. At the end of the first quarter, 305 undisclosed institutions were on that list. An update on the second quarter is likely next month.
Guaranty Financial Group Inc, the second-largest publicly traded bank in Texas, has said it will probably fail after loan losses and writedowns left it "critically" short of capital.
The Austin-based lender has about $16 billion of assets and more than 150 branches in Texas and California, according to its website.
If it were to fail, it would be the largest U.S. bank to collapse in 2009.
During the current financial crisis, Seattle-based lender Washington Mutual became the biggest bank to fail in U.S. history with $307 billion in assets. It was closed in September last year while suffering from losses from soured mortgages and liquidity problems. |  |
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