FDIC Party: Seven US Banks Are Seized, Bank Failure Tally Reaches 140

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Dec. 19 (Bloomberg) — Seven U.S. banks were seized by regulators, bringing this year’s total of failed lenders to 140 as financial companies are tested by the recession and the Federal Deposit Insurance Corp. anticipates more shutdowns.

Banks with $14.4 billion in total assets were closed yesterday in six U.S. states, the FDIC said in statements on its Web site. The agency is overseeing the dissolution of banks at the fastest pace in 17 years.

Two of the closures were in California. The assets and deposits of Federal Bank of California in Santa Monica were bought by closely held OneWest Bank, which acquired IndyMac Federal Bank this year. Imperial Capital Bank was bought by City National Corp., the Beverly Hills-based parent of City National Bank, which expanded in Southern California with the purchase.

“Imperial Capital Bank is a very good fit for City National, given that eight of its nine locations are in communities we serve,” City National Chief Executive Officer Russell Goldsmith said in a statement. “We’re pleased to contribute to the increased stability of the banking system.”

Federal Bank was the biggest lender seized yesterday, with $6.1 billion of assets and $4.5 billion in deposits, according to the FDIC. Based in La Jolla, Imperial Capital had assets of $4 billion and $2.8 billion in deposits.

Earlier this week, the FDIC boosted its 2010 budget by 56 percent to $4 billion to manage further shutdowns. The total budget will increase from $2.6 billion and the set-aside for bank failures doubles to $2.5 billion over this year, according to a proposal approved by the FDIC board. The agency staff will increase to 8,653 next year from 7,010 this year.

‘Larger Number’ of Failures

The budget “will ensure that we are prepared to handle an ever-larger number of bank failures next year, if that becomes necessary,” FDIC Chairman Sheila Bair said in a statement. Yesterday’s bank closings will cost the agency about $1.8 billion, according to the FDIC statements.

U.S. lenders are buckling under the weight of loans tied to commercial real estate, which is plummeting in value. Prices have dropped 43 percent from their peak in October 2007, Moody’s Investors Service said last month.

The following table lists the banks seized yesterday. Asset figures are in millions of U.S. dollars.

FAILED BANK                   BUYER                    ASSETS

First Federal Bank            OneWest Bank             6,100
Santa Monica, California      Pasadena, California

Imperial Capital Bank         City National            4,000
La Jolla, California          Los Angeles

Peoples First                 Hancock Bank             1,800
Panama City, Florida          Gulfport, Mississippi

New South Federal             Beal Bank                1,500
Irondale, Alabama             Plano, Texas

Independent Bankers'          None                     585.5
Springfield, Illinois

RockBridge Commercial         None                     294
Atlanta

Citizens State                None                     168.6
New Baltimore, Michigan

To contact the reporter on this story: Dan Reichl in San Francisco at dreichl@bloomberg.net

Last Updated: December 19, 2009 00:00 EST
By Dan Reichl

Source: Bloomberg

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