FDIC Friday – 2 more banks failed

If it’s Friday, there must be a bank failure….  The FDIC shut down two more banks yesterday, bringing the total of failed banks to 15 for the year.

In case you’re wondering, I think this is a good thing.  It’s what we should be doing with all the failed banks.  Instead, we’re spending billions to bail them out.  Why not simply let them fail and let other solid banks bid on the assets?  That’s what the FDIC does in these cases.

Here’s part of the FDIC statement for Security Savings Bank of Henderson, NV.

Security Savings Bank, Henderson, Nevada was closed today by the Nevada Financial Institutions Division, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Bank of Nevada, Las Vegas, Nevada, to assume all of the deposits of Security Savings Bank.

As of December 31, 2008, Security Savings Bank had total assets of approximately $238.3 million and total deposits of $175.2 million. Bank of Nevada did not pay a premium to acquire the deposits of Security Savings Bank.

The FDIC estimates that the cost to the Deposit Insurance Fund will be $59.1 million. The Bank of Nevada’s acquisition of all the deposits of Security Saving Bank was the “least costly” resolution for the FDIC’s Deposit Insurance Fund compared to alternatives. Security Savings Bank is the sixteenth bank to fail in the nation this year. The last bank to fail in Nevada was Washington Mutual Bank, Henderson, on September 25, 2008.

The other failed bank is Heritage Community Bank of Glenwood, IL.  Here’s the FDIC statement.

Heritage Community Bank, Glenwood, Illinois, was closed today by the Illinois Department of Financial Professional Regulation, Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with MB Financial Bank, N.A., Chicago, Illinois, to assume all of the deposits of Heritage Community Bank.

As of December 5, 2008, Heritage Community Bank had total assets of $232.9 million and total deposits of $218.6 million. In addition to assuming all of the deposits of the failed bank, including those from brokers, MB Financial Bank agreed to purchase approximately $230.5 million in assets at a discount of $14.5 million. The FDIC will retain the remaining assets for later disposition.

The FDIC estimates that the cost to the Deposit Insurance Fund will be $41.6 million. MB Financial Bank’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s Deposit Insurance Fund compared to alternatives. Heritage Community Bank is the fifteenth FDIC-insured institution to fail in the nation this year and the third in the state. The last FDIC-insured institution closed in Illinois was Corn Belt Bank and Trust Company, Pittsfield, on February 13, 2009.

gk

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