4 Small Banks Closed By FDIC

WASHINGTON (Reuters) - U.S. authorities closed four banks -- one in Denver and three in the U.S. Southeast -- on Friday with total assets of $2.7 billion, bringing the number of failures in 2011 so far to seven.

The pace of bank failures is expected to decrease in 2011 as the economy recovers and the impact of the 2007-2009 financial crisis fades. In 2010, 157 banks failed, following 140 failures in 2009.

FDIC Chairman Sheila Bair has said the agency expects the number of failures to drop in 2011.

"You will still have elevated bank failures in 2011 but based on our current projections it will be significantly lower than what we had last year," she said on Jan. 13.

Smaller banks, those with less than a billion dollars in assets, continue to struggle and have made up the bulk of recent closures. Many are having trouble dealing with the sluggish real estate market, particularly its effect on loans they made for commercial property.

The FDIC announced the following closures on Friday:

* United Western Bank (UWB.BO), of Denver. It had assets of $2.05 billion. First Citizens Bank & Trust Company (FCNCA.O), of Raleigh, North Carolina, will assume the deposits. United Western Bank had eight branches, including in Boulder and Fort Collins.

First Citizens already had three branches in the Denver area operated by its IronStone Bank division. First Citizens has purchased assets of four other banks, in Florida, California and Washington state, in the past 18 months.

* CommunitySouth Bank and Trust, of Easley, South Carolina. Had $440.6 million in assets. CertusBank, National Association, of Easley, South Carolina, a newly-chartered bank subsidiary of Blue Ridge Holdings Inc, Charlotte, North Carolina, assumed the deposits.

* Bank of Asheville, North Carolina. It had assets of $195.1 million. First Bank, Troy, North Carolina, to assume the deposits.

* Enterprise Banking Company, of McDonough, Georgia. It had assets of $100.9 million. FDIC created Deposit Insurance National Bank of McDonough, which will remain open until Jan. 28, to allow depositors access to insured deposits and time to open accounts elsewhere.

On Nov. 23 the FDIC released its latest quarterly report on the state of the banking industry. It showed that the industry overall continues to recover from the financial crisis but that large banks are doing better than smaller institutions.

The net income for the banking industry was $14.5 billion for the third quarter, which compares to $21.4 billion in the second quarter and $2 billion in the third quarter of 2009, according to the FDIC.

The agency said that third-quarter earnings would have reached a three-year high had it not been for a $10.4 billion goodwill charge taken by Bank of America (BAC.N) during the quarter for its card business.

The banking industry has been setting aside less money to guard against losses, helping to boost earnings in recent quarters.

Bair has cautioned against banks reducing these reserves too quickly given the state of the economy.

Despite the improving revenue numbers for the industry as a whole, community banks continue to be hit hard by the weak economy and the amount of bad loans on their books, particularly in the commercial real estate sector.

For instance, the number of banks on the agency's "problem list" grew to 860 from 829, to reach the highest number since March of 1993 when there were 928 institutions on the list. Most of these institutions will not fail but the list provides an indication of how many banks are struggling. (Reporting by Charles Abbott; Editing by Tim Dobbyn, Bernard Orr)

Copyright 2010 Thomson Reuters. Click for Restrictions.

Comments

[TeaLady005]

09:59 PM on 01/24/2011

The FDIC received an $80 billion cash infusion from the FED because they are broke. There isn't enough money to close down all the banks that will fail this year. It's going to get ugly and if you have money in the "big banks" you should consider other options.

[tangobravo1]

03:19 PM on 01/24/2011

True story. FDIC is forcing firesales of still profitable small community banks and treating their management and board members worse than drug dealers. These banks with management and directors the FDIC signed off on as being "sound" the previous year. The FDIC is extorting large insurance premiums from still profitable and successful community banks, making these banks foreclose on homeowners (ie Main streeters) who are still paying on their mortgages. The FDIC forces them to then take these losses on their books and calling them "shaky" because of these new losses. Then they have the nerve to ask for more capital. If that isn't enough already -the now inundated yet still profitable and well-run small community bank must drop everything (including servicing their current customers) to handle the flurry of reports and paperwork the FDIC slams them with. If they don't comply within an insanely short time period (ie 90 days) the FDIC sells the small community bank off in pieces for pennies on the dollar to the "Too Big to Fail" bank sharks licking their chops in the wings. Yes, these purchasers are the very banks that made toxic loans in the first place. These sharks get rewarded with STILL PROFITABLE and well run small banks that have served the community well and complied with FDIC regulations (and state) for year after year.
This is happening people, wake up. Somebody have the guts to report this story. It's outright theft by our government.

[azdirk]

09:38 AM on 01/24/2011

". . . that the industry overall continues to recover from the financial crisis but that large banks are doing better than smaller institutions."

That's why they are large!

[tristrixi]

12:28 AM on 01/23/2011

More evidence of the nature of our "economic system" which has resulted in the destruction of local finance and the separation of traditional banking and investment "banking." The national conglomerates which now occupy seats of power in the administration (and important advisor positions to legislators) are manipulators and the beneficiaries of the gamed system.

Most small fish are being swallowed up, these failures are not unexpected given the manipulation the Too Big to Fail institutions. It should come as an understanding that further consolidation of financial control is an object of the "free trade" financial ideology that dominates. Given that the sharks are loose and have been fattened still, despite having taken a huge bite of the host, speaks for itself.

What?! No, that can't be! Are we relegated to the role of "host" to the parasite and its enabler?

[redsquirell]

03:55 PM on 01/22/2011

I would recommend the folowing primer on the US banking system : http://whatreallyhappened.com/WRHARTICLES/wildbankers.php

[Kenz300]

03:17 PM on 01/22/2011

Maybe we should go to our local credit union.

[costellowriter]

05:04 PM on 01/22/2011

Better rates, better service and your not feeding into the corrupt system.
http://socyberty.com/economics/murder-of-the-middle-class/

[Raccoon1]

01:28 PM on 01/23/2011

Dunnit.

[TruelyFedUp]

02:17 PM on 01/22/2011

"The pace of bank failures is expected to decrease in 2011 as the economy recovers and the impact of the 2007-2009 financial crisis fades. In 2010, 157 banks failed, following 140 failures in 2009."

Other news here on HP says we can expect the price of oil to go up. Today we are relying on 10 units of oil energy to produce 1 unit of food. Peak oil has arrived and according to this link the government is well briefed on the fact that we are rapidly running out of it. They also know that life as we know it will end because we are so heavily invested in an oil based economy yet they are doing nothing to make sure that the populace (us) are prepared to survive the coming crisis. This website makes very clear what is known and what is coming http://www.lifeaftertheoilcrash.net/

[AlanBannacheck]

07:34 PM on 01/23/2011

Oil production is relatively flat insofar, but conventional oil will decline shortly with heavy sour crude and other liquids filling in the gap. Depending on how fast the decline will determine how radically our lives are changed

[TruelyFedUp]

12:48 PM on 01/24/2011

Plus, factor in an economy based on growth that we all rely on and unrelenting population growth world wide causing more demand...

Well, you get the picture.

[Its-All-Good]

01:35 PM on 01/22/2011

Fraud will be papered over once the Banksters buy Freddie and Fannie.. back by guess who.. the tax payers..

[costellowriter]

05:05 PM on 01/22/2011

And that is exactly what this is about. Adding complexity to cover up fraud.
http://bizcovering.com/investing/stock-market-crash-2-0/

[USNDC]

01:13 PM on 01/22/2011

Factor in potential liabilities associated with the mortgage securitization process ... as well as the foreclosure crisis ... and re-evaluate BOA, Chase, Wells Fargo solvency.

Be prepared to close them down.