Three More Banks Go Bye-Bye [Bank Death Watch]

11/21/2008 11:31:00 PM

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The first is The Community Bank in Loganville, GA, number 20 on the list for the year of banks to go bye bye.
hey were closed today by the Georgia Department of Banking and Finance and the FDIC was named receiver.  The FDIC entered into a purchase and assumption agreement with Bank of Essex, to assume all the deposits of The Community Bank. 

As of October 17, The Community Bank had total assets of $681.0 million and total deposits of $611.4 million.  Bank of Essex purchased approximately $84.4 million of The Community Bank’s assets, and did pay the FDIC a premium of $3.2 million for the right to assume the failed bank’s deposits.  The FDIC will retain the remaining assets for later disposition.

The FDIC estimates that the cost to its Deposit Insurance Fund (DIF) will be between $200 million and $240 million.  This is the third bank to be closed in GA this year.

The second and third are Downey Savings and Loan in Newport Beach, CA and PFF Bank and Trust, Pomona, CA.  These two banks are number 21 and 22.

These banks weren’t “closed down” per say, but sold in a transaction facilitated by the Office of Thrift Supervision (OTS) and the FDIC.  The banks were sold to U.S. Bank, National Association, Minneapolis, MN.  The combined 213 branches of the two banks will reopen as branches of U.S. Bank.

As of September 30, 2008, Downey Savings had total assets of $12.8 billion and total deposits of $9.7 billion.  PFF Bank had total assets of $3.7 billion and total deposits of $2.4 billion.  Besides assuming all the deposits from the two California banks, U.S. Bank will purchase virtually all their assets.

The FDIC and U.S. Bank entered into a loss share transaction.  U.S. Bank will assume the first $1.6 billion of losses on the asset pools covered under the loss share agreement, equal to the net asset position at close.  The FDIC will then share in any further losses.

The FDIC estimates that the cost of to the Deposit Insurance Fund (DIF) for Downey Savings will be $1.4 billion and $700 million for PFF Bank.  The two banks are the fourth and fifth banks to close in California this year.  The last bank to be closed, Security Pacific Bank, Los Angeles, was only two weeks ago.

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