Bank failures in 3 states bring 2012 total to 37

AP News
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Posted: Jul 20, 2012 6:56 PM
Bank failures in 3 states bring 2012 total to 37

WASHINGTON (AP) — Regulators on Friday closed two small banks in Georgia, one in Florida and one in Kansas, bringing to 37 the number of U.S. bank failures this year.

That's a slower pace than in 2011; 58 banks had failed by this time last year.

The Federal Deposit Insurance Corp. seized Georgia Trust Bank, based in Buford, Ga., with $119.8 million in assets and $117.4 million in deposits; First Cherokee State Bank, based in Woodstock, Ga., with $222.7 million in assets and $193.3 million in deposits; and Royal Palm Bank of Florida, based in Naples, Fla., with $87 million in assets and $85.1 million in deposits.

Also shuttered was Heartland Bank in Leawood, Kan., with $110 million in assets and $102.6 million in deposits.

Atlanta-based Community & Southern Bank agreed to assume the deposits of the Georgia banks and to buy all the assets of First Cherokee State Bank. Community & Southern also is buying about $111.5 million of Georgia Trust Bank's assets.

First National Bank of the Gulf Coast, also based in Naples, agreed to assume all the deposits and essentially all the assets of Royal Palm Bank of Florida.

Metcalf Bank, based in Lees Summit, Mo., agreed to buy the assets and deposits of Heartland Bank.

In addition, the FDIC and Community & Southern Bank agreed to share losses on $65.9 million of Georgia Trust Bank's loans and other assets, and on $141.8 million of First Cherokee State Bank's assets.

The agency and Metcalf Bank agreed to share losses on $54.3 million of Heartland Bank's assets.

The failure of Georgia Trust Bank is expected to cost the deposit insurance fund $20.9 million; the failure of First Cherokee State Bank is expected to cost $36.9 million; that of Royal Palm Bank of Florida, $13.5 million; and Heartland Bank, $3.1 million.

The pace of bank closures has slowed sharply since peaking in 2010 in the wake of the financial crisis. In 2007, just three banks went under. That number jumped to 25 in 2008, after the meltdown, and ballooned to 140 in 2009.

In 2010, regulators seized 157 banks, the most in any year since the savings and loan crisis two decades ago. The FDIC has said 2010 likely was the high-water mark for bank failures from the Great Recession. By this time last year, 51 banks had failed.

From 2008 through 2011, bank failures cost the fund an estimated $88 billion. The deposit insurance fund fell into the red in 2009. But with failures slowing, the fund's balance turned positive in the second quarter of last year. By Dec. 31, it stood at $11.8 billion, according to the FDIC.

The FDIC expects failures from 2012 through 2016 to cost $12 billion.