FDIC regulators close seven banks; failures may cost insurance fund $7.33 billion
Regulators on Friday shut down three banks in Puerto Rico, two in Missouri, and one each in Michigan and Washington state in a round of closings that brought the number of U.S. bank failures this year to 64 and reduced the federal deposit insurance fund by billions of dollars.
The three failed banks in Puerto Rico together held more than one-fifth of the total bank assets in the U.S. Caribbean territory. They had struggled to stay afloat during Puerto Rico's four-year recession.
The Federal Deposit Insurance Corp. took over the banks: Westernbank Puerto Rico, based in Mayaguez, with about $11.9 billion in assets; R-G Premier Bank of Puerto Rico, based in Hato Rey, with about $5.9 billion in assets; and San Juan-based Eurobank, with $2.5 billion in assets.
It was Puerto Rico's largest bank consolidation in more than two decades as well as one of the FDIC's biggest resolutions of failed banks in the financial crisis that struck in fall 2008.
The FDIC also seized CF Bancorp, based in Port Huron, Mich., with about $1.6 billion in assets; Champion Bank, of Creve Coeur, Mo., with $187.3 million in assets; BC National Banks, of Butler, Mo., with $67.2 million in assets; and Frontier Bank, based in Everett, Wash., with $3.5 billion in assets.
The agency estimates that the total cost to the deposit insurance fund of Friday's bank failures will be $7.33 billion.
As losses have mounted on loans made for commercial real estate, bank failures have sapped billions of dollars out of the deposit insurance fund. It fell into the red last year, hitting a $20.9 billion deficit as of Dec. 31.
There were 140 bank failures in the United States last year, the highest annual tally since 1992, at the height of the savings and loan crisis. They cost the insurance fund more than $30 billion. Twenty-five banks failed in 2008 and three succumbed in 2007.
The number of bank failures will probably peak this year and will be slightly higher than in 2009, FDIC Chairman Sheila C. Bair said recently. The agency expects the cost of resolving failed banks to grow to about $100 billion over the next four years.