WASHINGTON (AP) — Regulators closed a small lender in California on Friday, marking the 17th U.S. bank failure this year after 24 closures in 2013.
The Federal Deposit Insurance Corp. said it has taken over Frontier Bank FSB, based in Palm Desert.
The bank, better known as El Paseo Bank, operated two branches. It had about $86.4 million in assets and $82.1 million in deposits as of June 30.
Bank of Southern California NA, based in San Diego, agreed to pay the FDIC a premium of 1.06 percent to acquire all of Frontier Bank's deposits. In addition, Bank of Southern California agreed to buy essentially all of the failed bank's assets.
Frontier Bank's failure is expected to cost the federal deposit insurance fund $4.7 million.
U.S. bank failures have been declining since they peaked in 2010 in the wake of the financial crisis and the Great Recession.
Only three banks went under in 2007. That jumped to 25 in 2008, after the financial 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 recession. They declined to 92 in 2011 and fell to 51 in 2012.
In a strong economy, about four or five banks close annually.
From 2008 through 2011, bank failures cost the deposit insurance fund, which is financed by insured banks, an estimated $88 billion, and the fund fell into the red in 2009. With failures slowing, the fund's balance turned positive in the second quarter of 2011, and it had a $51.1 billion balance as of June 30.
The FDIC has said it expects bank failures from 2012 through 2016 will cost the fund $10 billion.