Bank closings top 100 for year; most since 1992, reports The Associated Press
From a story by Marcy Gordon:
U.S. bank closings for the year surpassed 100 on Friday when regulators shut down small banks in Florida and Georgia. Financial institutions nationwide have collapsed under the weight of soured real estate loans and the Great Recession.
The Federal Deposit Insurance Corp. took over Partners Bank, a small bank in Naples, with $68.7 million in assets and $63.4 million in deposits. Stonegate Bank, based in Fort Lauderdale, Florida, agreed to buy the deposits and assets of Partners Bank.
American United Bank in Lawrenceville, Georgia, with $111 million in assets and $101 million in deposits also failed. Ameris Bank, based in Moultrie, Georgia, is buying its deposits and assets.
The 101 failures are the most in a year since 1992 at the height of the savings-and-loan crisis. They have cost the federal deposit insurance fund about $25 billion so far this year, and hundreds more bank failures are expected to raise the cost to around $100 billion through 2013.
The 101 bank failures this year compare with 25 last year and three in 2007. It's the highest number in a year since 1992 during the savings-and-loan crisis, when 120 institutions collapsed. Closures peaked during that crisis in 1989, when 534 banks were shuttered.
The most severe financial crisis since the 1930s has hit banks large and small. With unemployment rising, consumer spending slack and businesses shuttered, experts say up to 400 more banks could fail in the next couple of years.
Banks have been especially hurt by failed real estate loans. Banks that had lent to seemingly solid businesses are suffering losses as buildings sit vacant. As development projects collapse, builders are defaulting on their loans.
The 101 failures may not fully reflect the depth of banks' travails. Many more banks — perhaps hundreds — are so weak they could have been shut down already, experts say. Many vulnerable banks are in limbo. Regulators have threatened to close them unless they shore up their balance sheets, but the recession has made it difficult to raise capital or sell assets.
The number of banks on the FDIC's confidential "problem list" jumped to 416 at the end of June from 305 in the first quarter. That's the most since June 1994. About 13 percent of banks on the list generally end up failing, according to the FDIC.