WASHINGTON (AP) — Federal regulators have seized 3 banks, one each in Florida, Georgia and Tennessee, bringing to 31 the number of U.S. banks that have failed so far this year.
The Federal Deposit Insurance Corp. said Friday that it closed Putnam State Bank in Palatka, Fla., Security Exchange Bank, in Marietta, Ga., and The Farmers Bank of Lynchburg, in Lynchburg, Tenn.
(Note: The Tennessee Department of Financial Institutions news release on the Lynchburg bank is at the end of this post.)
The FDIC lined up other lenders to assume the deposits and assets of each of the banks.
Regulators estimate that the failure of the three banks will cost the insurance fund $100 million.
Putnam State Bank, which had three branches, had about $169.5 million in assets and $160 million in deposits as of March 31.
Harbor Community Bank, in Indiantown, Fla., agreed to assume all of Putnam’s deposits and to buy essentially all its assets. Regulators and Harbor Community Bank entered into a loss-share transaction on $112.3 million of Putnam State Bank’s assets.
Fidelity Bank, based in Atlanta, agreed to assume Security Exchange Bank’s assets and essentially all of its deposits, the FDIC said.
As of March 31, Security Exchange Bank had $147.9 million in deposits and $151 million in assets. Its two branches will reopen on Monday as Fidelity Bank locations.
The FDIC said it entered into a loss-share transaction with Fidelity Bank on $102.8 million of Security Exchange Bank’s assets.
The Farmers Bank of Lynchburg’s four branches will reopen under the banner of Clayton Bank and Trust, based in Knoxville, Tenn., which agreed to assume all of Farmers Bank’s deposits and the bulk of its assets.
Farmers Bank had about $163.9 million in assets and $156.4 million in deposits as of March 31.
Clayton Bank and Trust agreed to pay the FDIC a 0.10 percent premium for Farmers Bank’s deposits, regulators said.
The pace of bank closures has slowed sharply after ballooning as the financial crisis took hold in 2008. By this time last year, 45 banks had failed.
In 2010, regulators seized 157 banks, the most in any year since the savings and loan crisis two decades ago. Those failures cost the deposit insurance fund around $23 billion. The FDIC has said 2010 likely was the high-water mark for bank failures from the Great Recession. Last year’s 92 failures cost an estimated $7.9 billion.
In 2009, there were 140 bank failures that cost the insurance fund about $36 billion, more than it paid out the following year because the banks involved in 2009 were bigger on average. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three were closed in 2007.
From 2008 through 2011, bank failures cost the fund an estimated $88 billion. The FDIC expects failures from 2012 through 2016 to cost $12 billion.
The deposit insurance fund fell into the red in 2009. With failures slowing, the fund’s balance turned positive in the second quarter of last year.
By Dec. 31, it stood at $11.8 billion, about 50 percent higher than three months earlier, according to the FDIC..
News release from Tennessee Department of Financial Institutions:
NASHVILLE – The Tennessee Department of Financial Institutions (“Department”) took possession of The Farmers Bank of Lynchburg, Tennessee at 5:00 p.m. CDT on June 15, 2012. The Department has appointed the Federal Deposit Insurance Corporation (“FDIC”) as Receiver of the Bank effective upon the Department taking possession of The Farmers Bank of Lynchburg.
The Department took possession of The Farmers Bank of Lynchburg due to The Farmers Bank of Lynchburg’s impaired capital, unsound condition and the bank’s inability to continue normal operations.
Through an agreement with the FDIC, deposit accounts of The Farmers Bank of Lynchburg have been transferred to Clayton Bank and Trust, Knoxville, Tennessee and will be available immediately. Depositors of The Farmers Bank of Lynchburg will automatically become depositors of Clayton Bank and Trust. Depositors will be able to access their accounts at the former main office and branch locations of The Farmers Bank of Lynchburg during regular business hours. Customers of The Farmers Bank of Lynchburg should continue to use their existing branches until Clayton Bank and Trust can fully integrate the deposit records of The Farmers Bank of Lynchburg. Additionally, the former depositors of The Farmers Bank of Lynchburg can continue to access their accounts through automated teller machine transactions, checks and debit transactions.
The FDIC has established a website and a toll-free phone number to answer questions from depositors, creditors and other interested parties regarding the receivership of The Farmers Bank of Lynchburg. Please refer to the FDIC’s website at http://www.fdic.gov/bank/individual/failed/farmersbank.html for further information regarding the details of the transaction. The toll-free number is 1-800-774-8035. The phone number will be operational this evening until 9:00 p.m., Central Daylight Time (CDT); on Saturday from 9:00 a.m. to 6:00 p.m., CDT, on Sunday from noon to 6:00 p.m., CDT; on Monday from 8:00 a.m. to 8:00 p.m., CDT; and thereafter from 9:00 a.m. to 5:00 p.m., CDT.