2 more banks fail, lifting this year's tally to 23

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2 more banks fail, lifting this year's tally to 23
By MADLEN READ, AP Business Writer Madlen Read, Ap Business Writer – 2 hrs 7 mins ago

NEW YORK – Federal regulators shut down two more banks Friday, raising the number of bank failures so far this year to 23.

The first bank was Cape Fear Bank in Wilmington, N.C., the first North Carolina bank to fail in nearly 16 years. The other bank was New Frontier Bank of Greeley, Colo., the second Colorado bank this year to collapse.

The Federal Deposit Insurance Corp. took over both banks Friday after their respective state regulators closed them down.

The FDIC did not tap a buyer for New Frontier Bank, and instead created the Deposit Insurance National Bank of Greeley. The FDIC named San Francisco-based Bank of the West to manage the entity, which will stay open for about 30 days to give New Frontier Bank's customers time to open accounts at other insured institutions.

New Frontier Bank has $2 billion in assets and $1.5 billion in deposits, $4 million of which potentially exceeded the insurance limits. Regular deposit accounts are insured up to $250,000.

The FDIC was able, however, to sell Cape Fear Bank to First Federal Savings and Loan Association of Charleston in Charleston, S.C. On Monday, Cape Fear Bank's eight branches will reopen as First Federal branches.

First Federal is assuming all of Cape Fear Bank's $403 million in deposits and buying about $468 million of its $492 million in assets. The FDIC will retain the rest of the assets to sell later.

The most recent Colorado bank to fail was Colorado National Bank in Colorado Springs on March 20 of this year. But North Carolina has not seen a bank go under since Crown National Bank of Charlotte in May of 1993.

This year's tally of 23 bank failures is nearing the total for all of 2008, when 25 U.S. banks were seized by regulators. Two of the nation's largest savings and loans failed that year: Washington Mutual Inc. and IndyMac Corp.

A growing number of banks are becoming insolvent as home prices fall and unemployment rises, causing more individuals and businesses to default on their debt.

The FDIC estimated that the closure of Cape Fear Bank will reduce the federal deposit insurance fund by $131 million, and that the closure of New Frontier Bank will lower it by another $670 million.

As of the end of 2008, the insurance fund stood at $18.9 billion — the lowest level in nearly a quarter-century, and down from $52.4 billion at the end of 2007. The FDIC expects that bank failures will cost the insurance fund about $65 billion through 2013.

The FDIC fund operates by charging financial institutions, not with federal tax dollars. The agency has been increasing fees and premiums in an effort to replenish the fund.

At the end of 2008, the FDIC had 252 banks and thrifts on its list of troubled institutions, up from 171 in the third quarter of last year.
2 more banks fail, lifting this year's tally to 23

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2 more banks fail, lifting this year's tally to 25 - AP
Sat Apr 18, 12:48 am ET

NEW YORK – Regulators on Friday shut down two more banks, boosting the number of failures this year to as many as in all of last year.

The tally of 25 bank failures this year all but guarantees the number that fall into the arms of regulators will surpass what was seen in 2008. Two of the nation's largest savings and loans failed in 2008: Washington Mutual Inc. and IndyMac Bank. Last year's total was more than in the previous five years combined and up from only three failures in 2007.

The latest banks seized were American Sterling Bank in Missouri and Great Basin Bank of Nevada. The Federal Deposit Insurance Corp. will continue to insure deposits. Regular deposit accounts are insured up to $250,000.

Customers of both banks can still write checks and use ATM or debit cards.

The federal Office of Thrift Supervision took over American Sterling, while the Nevada Financial Institutions Division took control of Great Basin Bank of Nevada. The FDIC was appointed receiver of both banks.

The Missouri offices of American Sterling will reopen Saturday. Those in California and Arizona will open Monday. All will open as branches of Metcalf Bank. Depositors of American Sterling will automatically become depositors of Metcalf.

American Sterling is based in Sugar Creek, Mo. It had $181 million in assets and $171.9 million in deposits as of March 20. In addition to assuming the deposits of the failed bank, Metcalf Bank, based in Lee's Summit, Mo., agreed to buy about $173.6 million in assets. The FDIC will retain the rest of the assets to sell later.

The last FDIC-insured institution to fail in Missouri was Hume Bank, in Hume, in March last year.

For Great Basin Bank, based in Elko, Nev., the FDIC tapped Las Vegas-based Nevada State Bank to assume all deposits.

The offices of Great Basin Bank of Nevada will reopen Monday as branches of Nevada State Bank. Depositors of Great Basin Bank of Nevada will automatically become depositors of Nevada State.

As of Dec. 31., Great Basin Bank of Nevada had assets of $270.9 million and deposits of $221.4 million. Nevada State Bank agreed to assume all the deposits of the failed bank and purchase about $252.3 million of assets. The FDIC also will keep the bank's remaining assets for future sale.

The last FDIC-backed institution to be closed in Nevada was Security Savings Bank, in Henderson, on Feb. 27.

The list of bank failures is growing as falling home prices and rising unemployment cause more individuals and businesses to default on their debt.

The failures have sapped billions from the deposit insurance fund. It now stands at its lowest level in nearly a quarter-century, $18.9 billion as of Dec. 31, compared with $52.4 billion at the end of 2007.

The FDIC expects that bank failures will cost the insurance fund around $65 billion through 2013.

The nation's banks and thrifts lost $32.1 billion in the final quarter of last year, the biggest loss in 25 years of FDIC records. It compared with a $575 million profit in the fourth quarter of 2007.

The FDIC had 252 banks and thrifts on its list of troubled institutions at the end of 2008, up from 171 in the third quarter.

Some banks are signaling that conditions are improving. Banking titan Citigroup Inc., which has been the weakest of the large U.S. banks, reported Friday it lost money in the first quarter — but the $966 million loss wasn't as bad as Wall Street had expected.

That report followed surprisingly solid earnings from JPMorgan Chase & Co., Goldman Sachs Group Inc. and Wells Fargo & Co. But some analysts say the recent earnings announcements are concealing the depth of the financial industry's woes.

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American Sterling customers with questions can call the FDIC toll-free at 866-954-9528. Great Basin Bank of Nevada customers can call 866-782-1969.
2 more banks fail, lifting this year's tally to 25