Feds Shutdown 3 More Banks

Published on Saturday, 14 November 2009 18:13 Written by Manuel Guerra

Washington, Nov 14 (TradersHuddle.com) – Federal banking regulators shut down two more banks in Florida and one in California on Friday. With these seizures the number of U.S. bank failures reached 123.

The Federal Deposit Insurance Corp. (FDIC) took over Orion Bank, based in Naples, Fla., with about $2.7 billion in assets and $2.1 billion in deposits, and Sarasota-based Century Bank, with $728 million in assets and $631 million in deposits.

In San Clemente, California Pacific Coast National Bank was also shut down. It had $134.4 million in assets and $130.9 million in deposits.

IberiaBank (NASDAQ:IBKC), based in Lafayette, La., agreed to assume all of Orion Bank's deposits and $2.4 billion of its assets, as well as Century Bank's deposits and $706 million of its assets. The FDIC will retain the rest of the assets for a future sale.  In addition, losses in both banks loan portfolio will be share equally between the FDIC and IberiaBank.

Sunwest Bank agreed to assume all of Pacific Coast National Bank's deposits and essentially all of its assets.

Regional banks (NYSE: KRE) have been especially hurt by failed real estate loans. Banks that had lent to seemingly solid developers are suffering losses as buildings sit vacant. As projects collapse, builders are defaulting on their loans.

As bank loans defaults surged due to higher unemployment, the FDIC has lost billions and now it has fallen into the red. In order to make up the difference it has mandated that insured financial institutions pay $45 billion of premiums due for the next 3 years in advance, making it a first time in the agency’s history.

With 123 bank failures in a year, we now have reached the same level we had in 1992 at the height of the savings and loan crisis.