Two More Failed Banks - 16 so Far in '09Nevada, Illinois Institutions are the Latest on the List Two more banks were closed on Friday, bringing the total number of banks that have failed so far in 2009 to16.
The Security Savings Bank, Henderson, NV was closed by the Nevada Financial Institutions Division. The FDIC, as receiver, sold the deposits of the failed bank to the Bank of Nevada, Las Vegas, NV. Security Savings Bank had total assets of $283.3 million and deposits of $175.2 million.
The two offices of the failed bank will reopen today as branches of Bank of Nevada. Bank of Nevada will also buy $111.3 million in assets of the failed bank. The FDIC estimates that the cost to the Deposit Insurance Fund will be $59.1 million. The last bank to fail in Nevada was Washington Mutual Bank, Henderson, on September 25, 2008.
Heritage Community Bank, Glenwood, IL was closed by the Illinois Department of Financial Professional Regulation, Division of Banking. The FDIC, as receiver sold the deposits of the failed bank to MB Financial Bank, N.A., Chicago, IL. Heritage Community Bank had assets of $232.9 million and deposits of $218.6 million. MB Financial Bank also bought $230.5 million in assets at a discount of $14.5 million.
The four offices of Heritage Community Bank reopened as branches of MB Financial Bank on Saturday. The FDIC and MB Financial Bank entered into a loss-share transaction. MB Financial Bank will share in the losses on approximately $181 million in assets covered under the 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 as they will maintain a banking relationship.
The cost of the Heritage Community Bank failure to the FDIC Deposit Insurance Fund will be $41.6 million. The last FDIC-insured institution closed in Illinois was Corn Belt Bank and Trust Company, Pittsfield, on February 13, 2009.
These two bank failures come at the same time the FDIC's number of problem banks on its "troubled banks list" has gone up from 171 to 252. The banks that end up on the closely watched list are usually ones that have financial difficulties or have operation or management problems. Few ever reach the point of failure, on average only 13 percent of banks on the list actually fail.
While the FDIC doesn't name the banks on the list, the total assets of the banks on the list increased to $159 billion during the last quarter, an increase from the $116 billion in the third quarter. With the last two failures on Friday, a total of 16 banks have failed in 2009. Only two credit unions have closed so far this year. The FDIC late last year announced it was hiring 1,400 more employees, in part due to the expected increase in bank failures due to rising loan losses in the receding economy.