WASHINGTON — Regulators closed institutions in five states late Friday, bringing the year's toll to 69 and leaving the Federal Deposit Insurance Corp. with almost $1 billion more in losses.
The largest failure was that of $1.6 billion-asset Mutual Bank in Harvey, Ill., the 13th failed institution in Illinois this year. Virtually all of its operations were sold off to United Central Bank in Garland, Texas.
Regulators also shuttered $706 million-asset Peoples Community Bank, a thrift in West Chester, Ohio; $166 million-asset First BankAmericano in Elizabeth, N.J.; $119 million-asset Integrity Bank in Jupiter, Fla.; and $103 million-asset First State Bank of Altus in Oklahoma.
The five failures closed out a tough July for the industry, as well as a demanding month for the FDIC. A total of 24 institutions fell, the most in any month since the crisis began. Since July 2, the industry has averaged almost five failures a week.
In Friday's closings, most of the banks' holdings were taken over by other healthier institutions. United Central agreed to assume all $1.6 billion of Mutual's deposits and acquire essentially all of its assets.
The acquirer and the FDIC entered into a loss-sharing agreement on $1.3 billion of the Illinois bank's assets. The failure is estimated to cost the FDIC nearly $700 million.
Meanwhile, First Financial Bank in Hamilton, Ohio, assumed all $598 million of Peoples Community's deposits, paying a 1.5% premium, and acquired roughly all of its assets. The acquirer and the FDIC agreed to share losses from $657.6 million of those assets.
The failure is estimated to cost the government $129 million.
Prior to Peoples' failure, $3.8 billion-asset First Financial was already on track to buy essentially most of the troubled institution. In May, the companies announced that First Financial would buy 17 of Peoples' 19 branches, $260 million in loans and $310 million in deposits for $12 million, or a 4% premium on deposits.
By June, First Financial upped its offer 25% to $15.5 million, or 5% of deposits, after Peoples received a higher unsolitcited bid from an unidentified company. At the time, Peoples said in an filing with the Securities and Exchange Commission that it renegotiated with First Financial rather than take the higher bid because it was running out of time to find capital. Critically undercapitalized at the end of the first quarter, the Office of Thrift Supervision had given Peoples until July 14 to be recapitalized.
Had the deal gone through, Peoples would have had $325 million in assets, including all of its nonperforming assets, but its executives said the deal would have generated enough money to return the bank to well capitalized status.
The company hadn't reported a profit since 2006, losing $110.2 million in the past 11 quarters leading up to March 31. Peoples spent the last two years trying to strike deals to no avail. A deal with Integra Bank Corp., of Evansville, Ind., collapsed in early 2008 and a deal to sell most of itself to CenterBank of Milford, Ohio, fell through in January.
Crown Bank in Brick, N.J., took over all $157 million of First BankAmericano's deposits and roughly all of its assets. Losses from the failure are estimated at $15 million.
Integrity's $102 million of deposits were transferred to Stonegate Bank in Fort Lauderdale. Stonegate paid a 0.2% premium and also agreed to buy $52 million in assets. The failure is estimated to cost $46 million.
The FDIC estimated the Oklahoma failure's cost at $25 million. Herring Bank in Amarillo, Texas, agreed to assume all $98 million of First State Bank of Altus' deposits, and acquire roughly $64 million of its assets.