Three more banks in the U.S. were closed on Friday, and the FDIC wasn’t able to find a buyer for the largest of them all, forcing them to create what they call a bridge bank, which will exist temporarily for the purpose of customers to transfer their money somewhere else.
Although the year has started off with a whimper, with four banks being closed so far, it’s expected to pick up significantly going forward, with most industry watchers believing 2010 will end with a minimum of 200 or more bank closures before its through.
States closing the banks in this round were based in Utah, Minnesota and Illinois, with the banks in the latter two states being relatively small.
Total deposits at the bank came to $24.7 million, and the closure will cost the deposit insurance fund of the FDIC approximately $7.2 million.
The Illinois bank shuttered was Town Community Bank and Trust based in Antioch, which consisted of only one branch. First American Bank, based in Elk Grove, Illinois, will assume all the deposits of Town Community Bank and Trust, while also entering into a share/loss deal with the FDIC for the $56.2 million in assets held by Town Community.
Town Community held $69.6 million in assets along with $67.4 million in deposits as of the quarter ending September 30, 2009.
Closing the bank will cost the deposit insurance fund about $17.8 million.
Barnes Banking Company, the largest of the three banks closed this week was the one which the FDIC couldn’t find a buyer for, and as mentioned above, they had to create a bridge or temporary bank to allow customers time to transfer their money elsewhere.
The bridge bank was named the Deposit Insurance National Bank of Kaysville, and will be opened until February 12, 2010 for existing customers at Barnes Banking Company.
According to the FDIC, all insured deposits at Barnes Banking had been transferred to the bridge bank, with the exception of individual retirement accounts, brokered deposits and certificates of deposit.
Barnes Banking Company had assets worth $827.8 million and deposits of $786.5 million as of September 30, 2009. The FDIC said it will cost an estimated $271.3 million for this bank failure.
Salt Lake City, Utah-based Zion’s First National Bank will manage the operations of the bridge Deposit Insurance National Bank during the deposit transfer period.
This particular closing has to be considered a disaster, and if a lot of banks close in 2010 without having another bank or financial institution acquire them, the estimates to the cost incurred to the deposit insurance fund of the FDIC could be adjusted upwardly in a way that could make them even more nervous than they already are.
