The government seized banks in three states late Friday, bringing the failure total in the new year to four.
The state of Utah closed $828 million-asset Barnes Banking Co. after it was unable to meet a Federal Reserve Board ultimatum to bolster capital.
Regulators also shuttered $70 million-asset Town Community Bank and Trust in Antioch, Ill., and $25 million-asset St. Stephen State Bank in St. Stephen, Minn. The FDIC estimated the total cost of the three failures at nearly $300 million.
The Federal Deposit Insurance Corp. was unable to find a buyer for Barnes, which was based in Kaysville. As a result, the agency formed a temporary charter – known as a deposit insurance national bank – to hold the bank's insured deposits so customers can open accounts elsewhere. The failed bank had $786 million in deposits, including an estimated $100,000 in uninsured funds.
The transitional bank, which will be managed by Zions First National Bank in Salt Lake City, will remain open until Feb. 12.
The failure came shortly after the Fed issued a "prompt corrective action" order against Barnes, which said the bank was "critically undercapitalized." Under the order, which was dated Dec. 22, Barnes had until today to raise new capital or sell itself.
The FDIC estimated the cost of the failure will be $271 million.
Meanwhile, Town Community's operations were sold to First American Bank in Elk Grove Village, Ill., which agreed to assume all $67 million of the failed bank's deposits and acquire nearly all of its assets. The FDIC and the acquirer will share losses on a $56 million portion of those assets. The failure's estimated cost to the government is $17.8 million.
First State Bank of St. Joseph agreed to assume all of St. Stephen's $23 million in deposits and purchase roughly all of its assets. The FDIC and First State will share losses on $20 million of those losses. The failure is estimated to cost $7.2 million.