WASHINGTON – Late on Friday, state and federal regulators shut three more banks – $538-million Warren Bank in Michigan, $56.3-million Jennings State Bank of Spring Grove, Minn., and $39.5 million Southern Colorado National Bank in Pueblo.
There have been 98 bank failures to date in 2009, nearly four times the total from last year, with many more expected this year.
The Federal Deposit Insurance Corp. said this week it expects failures to cost $100 billion over the next four years, up from a $70 billion estimate in May. As a result, the agency is planning to require banks to prepay three years worth of premiums to ensure it has sufficient liquidity to deal with more failures.
FDIC reported Huntington National Bank of Columbus, Ohio, has agreed to purchase all $501 million of Warren Bank's deposits, but bought just $83 million of its assets. The FDIC said it would retain the rest for later disposition. Huntington agreed to pay a 0.27% premium to assume the deposits.
As with many other recent failures, Warren Bank was small, but the cost to the Deposit Insurance Fund was high. American Banker, an affiliate of Credit Union Journal, reported the FDIC estimated the resolution would cost $275 million, more than 50% of Warren Bank's asset size.
Central Bank of Stillwater, Minn., agreed to purchase all of Jennings State Bank's $52.4-million in deposits and virtually all of its assets. The FDIC said Central Bank did not pay a premium for the deposits. The agency entered into a loss-sharing agreement with Central Bank on $37.7 million of the failed bank's assets. The FDIC estimated Jennings State Bank's failure will cost $11.7 million.
Legacy Bank of Wiley, Colo., agreed to purchase all of Southern Colorado National Bank's $31.9 million after paying a 1% premium. Legacy agreed to purchase virtually all of the failed bank's assets, and entered into a loss-sharing agreement with the FDIC on approximately $25.5 million of them. The failure is expected to cost $6.6 million.
