Feds shut down Colonial BancGroup
Real estate bank Colonial BancGroup Inc has been shut down by federal officers in the largest US bank failure this year. The Federal Deposit Insurance Company , which was appointed receiver of the Montgomery, Ala.-based Colonial and its about $25 bln in assets, recounted the failed bank’s 346 branches in Alabama, Florida, Georgia, Nevada and Texas will reopen at the ordinary times beginning on Sat. as offices of Winston-Salem, N.C.-based BBT.
The FDIC has authorized the sale of Colonial’s $20 bn. in deposits and about $22 bn. of its assets to BBT Co . Regulators also closed 4 other banks : Community Bank of Arizona, based in Phoenix ; Union Bank, based in Gilbert, Ariz. ; Community Bank of Nevada, based in Vegas ; and Dwelling House Savings and Loan organisation, located in Pittsburgh. The closures boosted to 77 the number of federally insured banks that have failed in 2009.
The agency established a non permanent state bank for Community Bank of Nevada to give depositors about thirty days to open accounts at other money establishments. The failed bank had assets of $1.52 bn. and deposits of $1.38 bill as of June thirty. Community Bank of Arizona had assets of $158.5 million and deposits of $143.8 million as of June thirty, while Union Bank had assets of $124 million and deposits of $112 million as of June 12. The FDIC claimed that MidFirst Bank, based in Oklahoma City, has agreed to think all of the deposits and $125.5 million of the assets of Community Bank of Arizona, as well as about $24 million of the deposits and $11 million of the assets of Union Bank. The FDIC will keep the rest for eventual sale.
Dwelling House had $13.4 million in assets and $13.8 million in deposits as of March 31. PNC Bank, part of Pittsburgh-based PNC Financial Services Group Inc, has agreed to think all of Dwelling House’s deposits and about $3 million of its assets ; the FDIC will keep the rest for eventual sale. The failure of Colonial is anticipated to cost the deposit insurance fund a computed $2.8 bill and that of Community Bank of Nevada, $781.5 million ; Union Bank, $61 million ; Community Bank of Arizona, $25.5 million ; and Dwelling House, $6.8 million. The 77 bank screw ups nationwide this year compare with twenty-five last year and 3 in 2007. As the economy has soured with unemployment rising, home costs tumbling and loan defaults rising bank disasters have cascaded and sapped billions out of the deposit insurance fund. It now stands at its lowest level since 1993, $13 bill as of the first quarter.
While losses on home mortgages might be leveling off, delinquencies on commercial real estate loans remain a hot spot of potential difficulty, FDIC officials say.
If the recession deepens, defaults on the high-risk loans could spike.
The amount of banks on the FDIC’s list of problem establishments jumped to 305 in Q1 the highest number since 1994 in the savings and loan crisis from 252 in the 4th quarter. The FDIC expects US bank screw ups to cost the insurance fund around $70 bn. through 2013. The May closing of struggling Florida thrift BankUnited FSB is anticipated to cost the insurance fund $4.9 bln, the second-largest hit since the fiscal crisis started.
The costliest was the July 2008 episode of giant California bank IndyMac Bank, that the insurance fund is guessed to have lost $10.7 bill. The largest US bank failure ever also came last year : Seattle-based thrift Washington Mutual Inc slipped in Sep , with approximately $307 bn. in assets. It was bought by JPMorgan Chase & Corp for $1.9 bill in a deal brokered by the FDIC.
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