WASHINGTON: Regulators on Friday shut down two big California banks, as well as banks in Alabama, Florida, Georgia, Michigan and Illinois, bringing to 140 the number of US banks brought down this year by the weak economy and mounting loan defaults.
The Federal Deposit Insurance Corp. took over all seven. Regulators shuttered First Federal Bank of California, based in Santa Monica, with $6.1 billion in assets and $4.5 billion in deposits, as was as Imperial Capital Bank of La Jolla, Calif., with about $4 billion in assets and $2.8 billion in deposits.
California was one of the states hardest hit by the real estate market meltdown and many banks there have suffered under the weight of soured mortgage loans. First Federal and Imperial Capital bring to 17 the number of California banks to fail this year.
Also closing their doors Friday were Atlanta-based RockBridge Commercial Bank, with $294 million in assets and $291.7 million in deposits; and New South Federal Savings Bank, based in Irondale, Alabama, with $1.5 billion in assets and $1.2 billion in deposits.
Citizens State Bank of New Baltimore, Michigan, with $168.6 million in assets and $157.1 million in deposits, was shut down, along with Peoples First Community Bank of Panama City, Florida, with $1.8 billion in assets and $1.7 billion in deposits.
Regulators also closed Independent Bankers’ Bank, based in Springfield, Illinois — a sort of wholesale bank that provided services to 450 client banks in four states — with $585.5 million in assets and $511.5 million in deposits.
OneWest Bank of Pasadena, California, agreed to buy all of the deposits and essentially all of the assets of First Federal Bank.
Los Angeles-based City National Bank agreed to assume all of Imperial Capital’s deposits, as well as $3.3 billion of the failed bank’s assets. The FDIC will retain the remaining assets for a later sale. All nine branches of Imperial Capital will reopen Monday as City National Bank branches. Beal Bank, based in Plano, Texas, agreed to assume the assets and deposits of New South Federal Savings Bank, which only had one branch. Hancock Bank, based in Gulfport, Mississippi, agreed to assume the deposits and about $1.6 billion of the loans and other assets of Peoples First Community Bank. The FDIC will retain the rest for eventual sale.
The FDIC was unable to find a buyer for RockBridge Commercial Bank, so checks covering insured accounts will be mailed to retail depositors, the agency said.
The FDIC expects the cost of bank failures to grow to about $100 billion over the next four years.