Jennings State Bank, Warren Bank and Southern Colorado National Bank Fail—Marking 98 Failures in 2009.

State and federal regulators seized three banks in Colorado, Minnesota and Michigan this year, marking the 96^th, 97^th and 98^th bank failures of the year.

The family-owned Jennings State Bank, based in Spring Grove, MN, had assets of $56.3 million and deposits of $52.4 million as of July 31^st. The Federal Deposit Insurance Corporation arranged a purchase agreement with Central Bank of Stillwater, MN. Central Bank acquired all of the bank’s assets, deposits and its two ranches. Central and FDIC agreed to share the $37.7 million that was lost in the failure.

Warren Bank, based in Warren, MI, was another bank failure of the week. It had $538 million in assets and $501 million in deposits as of July 31^st. Huntington Bank received the failed bank’s deposits, its six branches and also purchased $83 million worth of Warren’s assets.

Warren had been under increasing pressure from state regulators and the Federal Reserve for the last 6 months, as mounting losses continually hammered the bank’s capital ratios. The bank had tried to raise some new private capital, but that effort was unsuccessful. Instead, Warren Bank opted to purchase millions of dollars worth of risk-free mortgage-backed securities that were guaranteed by Ginnie Mae in hopes of boosting the bank’s capital ratios. The Federal Reserve gave Warren the go-ahead, but the effort did not do enough to resolve the toxic assets that Warren had on its books.

Finally, Southern Colorado National Bank of Pueblo, CO failed this week. The bank had $39.5 million in assets and just $31.9 million in deposits. Legacy Bank purchased Southern Colorado National Bank’s two branches, all of its deposits, and all of its assets. Legacy Bank, located in Wiley, CO, has agreed to share the expected losses of $25.5 million.

It’s estimated that the three failures this week will cost the FDIC’s dwindling insurance fund about $293.3 million.