Two More Banks Bite the Dust

NEW YORK (AP) – Regulators on Friday closed Haven Trust Bank in Georgia and Sanderson State Bank in Texas, bringing to 25 the number of U.S. bank failures this year.

The Federal Deposit Insurance Corp. was appointed receiver of Haven Trust Bank, based in Duluth, Ga., and Sanderson State, with one office in Sanderson, Texas.

Haven Trust had assets of $572 million and deposits of $515 million as of Dec. 8. Sanderson State had assets of $37 million and deposits of $27.9 million as of Dec. 3.

BB& T Corp., a large regional bank based in Winston-Salem, N.C., agreed to assume all of Haven Trust’s deposits. BB& T also will buy about $55 million of the failed bank’s assets; the FDIC will retain the rest for later disposition.

The four branches of Haven Trust Bank will reopen on Monday as BB& T branches, and deposits will continue to be insured by the FDIC.

Pecos County State Bank, based in Fort Stockton, Texas, agreed to assume all of Sanderson State Bank’s deposits. Pecos County also will buy about $3.8 million of the bank’s assets, and have the option to purchase equipment; the FDIC will retain the rest for eventual sale.

Sanderson State’s sole office will reopen Monday as a branch of Pecos County.

Regular deposit accounts are now insured up to $250,000 as part of the federal financial rescue law enacted in early October.

The FDIC said depositors of the two banks will continue to have full access to their money.

The FDIC estimated that the resolution of Haven Trust Bank will cost the federal deposit insurance fund $200 million, while that of Sanderson State Bank will cost about $12.5 million.

The 25 U.S. bank failures so far this year compare with three for all of 2007 and are far more than in the previous five years combined. It’s expected that many more banks won’t survive the next year of economic turmoil. The pressures of tumbling home prices, rising foreclosures and tighter credit have been battering financial firms nationwide.

In late September, Seattle-based thrift Washington Mutual Inc. became the biggest bank to collapse in U.S. history. It had $307 billion in assets. Its banking operations were acquired by JPMorgan Chase & Co. for $1.9 billion.

Of the roughly 8,500 federally insured banks and thrifts, the FDIC had 171 on its confidential list of troubled institutions as of Sept. 30 – a nearly 50 percent jump from the second quarter and the highest tally since late 1995.

Dec. 13, 2008

Source: AP

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