California’s regulatory agency for banks, the California Department of Financial Institutions, shut down San Joaquin bank on Friday, marking the 99th bank failure this year.
The Federal Deposit Insurance Corporation (FDIC) was appointed as the receiver for San Joaquin Bank, based in Bakersfield, CA. The bank had $775 million in assets and $631 million in deposits as of September, 29th.
The FDIC says that the bank’s deposits will be assumed by Citizens Business Bank, based in Ontario, CA. San Joaquin Bank’s five branches will re-open on Monday as branches of Citizens Business Bank.
There have been a total of 99 bank failures this year, compared to 25 in 2008 and just 3 in 2007. 2009 has had the highest number of bank failures since 1992 during the tail end of the savings and loan crisis, when 120 financial institutions failed. 2009’s failures are nothing compared to the height of the savings and loan crisis when 534 banks were shuttered in 1989. Some analysts expect that up to 400 additional bank failures could happen in the next two to three years.
The number of bank failures in 2009 might not be fully reflective of the true financial situation that banks are facing. Many more banks, perhaps even hundreds, are weak enough to where they could be shut-down already. Many financially weak banks are in a state of limbo. Regulators have threatened to shut many of them down if they don’t shore up their balance sheets, but the recession has made that difficult. The FDIC currently has 416 banks on their “problem” list.
