WASHINGTON — Federal and state regulators shut 5 banks totaling a combined $1 billion in assets late Friday – the largest number of failures in a single night since the end of the savings and loan crisis.
While all the banks were relatively small, their estimated total cost to the Deposit Insurance Fund was not: $265 million.
In just one evening, the total number of failures in 2009 jumped more than 10% to 45. With nearly half of the year finished, total failures are nearly double their total level in 2008, in which 25 banks failed.
The largest failure of the night was also the latest. California state regulators shut $456 million-asset Mirae Bank of Los Angeles just before 10 p.m. E.S.T. All of the bank’s $362 million in deposits were bought by Wilshire State Bank, which also agreed to buy approximately $449 million in assets. The Federal Deposit Insurance Corp. said it would retain the remainder of the assets for later disposition.
The FDIC and Wilshire entered into a loss-share transaction on approximately $341 million of Mirae’s assets. Mirae Bank’s five offices will reopen Monday as branches of Wilshire, the FDIC said.
Mirae Bank’s failure was relatively cheap, given its asset size – it is estimated to cost the DIF $50 million.
Mirae Bank's failure was the second in California in one night. In the fourth failure of the night, California regulators shut the $80 million asset MetroPacific Bank in Irvine. Sunwest Bank in Tustin is buying all but about $6 million brokered deposits out of MetroPacific's total of $73 million in deposits. The FDIC will retain the rest of MetroPacific's assets, at an estimated cost to the DIF of $29 million.
Georgia also saw two failures. The first collapse of the evening was $222 million-asset Neighborhood Community Bank in Newnan. CharterBank in West Point will assume Neighborhood Community Bank's deposits and is purchasing about $210 million worth of the failed bank's assets.
CharterBank entered into a $178 million loss sharing agreement with the FDIC in a "least-cost solution" that will represent a $67 million hit to the DIF.
The FDIC could not find a buyer, however, for the $199 million-asset Community Bank of West Georgia, located in Villa Rica. The agency said it would refund insured customers. Officials estimated the total cost to the DIF to be $85 million. There were an estimated $1.1 million worth of deposits that exceeded insurance limits.
Finally, the Minnesota Department of Commerce closed the $88 million asset Horizon Bank in Pine City. Stearns Bank, N.A. in St. Cloud is paying a premium of three quarters of a basis point to buy all of Horizon's $69.4 million deposits. The FDIC announced a loss-sharing agreement with Stearns for $65 million of the failed bank's assets. The failure is expected to cost the FDIC about $34 million.
