Regulators shut banks in Maryland, Illinois, Florida and Utah, pushing the number of U.S. failures to 26 this year and placing more pressure on the Federal Deposit Insurance Corp. to dispose of a growing pile of toxic assets.
The FDIC was unable to find buyers for two banks -- Centennial Bank in Ogden, Utah, and Waterfield Bank of Germantown, Maryland -- according to statements posted on the agency's Web site. In the largest of yesterday's failures by assets, Boca Raton, Florida-based Sun American Bank was purchased by First-Citizens Bank & Trust Co.
"South Florida is a great market for our company, especially with our focus on individuals, small- to mid-sized businesses and the medical community," Frank B. Holding Jr., chief executive officer of First-Citizens, said in a statement.
Lenders are collapsing at the fastest pace in 17 years amid losses on residential and commercial real estate loans made at the height of the market. U.S. "problem" banks climbed to the highest level since 1992 in the fourth quarter and FDIC Chairman Sheila Bair warned Feb. 23 that the pace of failures will "pick up" and exceed last year's total of 140.
The FDIC sold $1.81 billion of notes yesterday that are backed by mortgage securities collected from failed banks. It may issue $4 billion of bonds this month, people familiar with the matter said last week.
Sun American is First-Citizens' second acquisition through the FDIC's resolution process this year and fourth overall, according to the bank's statement. The Raleigh, North Carolina- based lender bought Sun American's $443.5 million in deposits and shared losses with the FDIC on $433 million of assets.
Illinois Transaction
Heartland Bank and Trust Co. of Bloomington, Illinois, will pay a 3.61 percent premium for Bank of Illinois's $198.5 million in deposits, after state regulators closed the Normal, Illinois- based lender. The FDIC will share losses with Heartland on $166.6 million of assets, according to the statement.
Zions Bancorporation, the lender that operates banks in 10 western U.S. states, was named to take over some operations of Centennial Bank. Utah regulators closed Centennial and put Zions in charge of direct deposits related to government benefits like Social Security. Zions has said that similar arrangements in the past have steered banking customers its way.
The Office of Thrift Supervision closed Waterfield Bank. The bank's $155.6 million in assets and $156.4 million in deposits will go to a newly chartered lender that will stay open until April 5, the FDIC said.
The FDIC said last month it had included 702 banks with $402.8 billion in assets on the confidential "problem" list as of Dec. 31, a 27 percent increase from the third quarter.
Source: BusinessWeek | Dakin Campbell
--Editors: Dan Reichl, Mike Millard
To contact the reporter on this story: Dakin Campbell in San Francisco at dcampbell27@bloomberg.net.
To contact the editor responsible for this story: Alec McCabe at amccabe@bloomberg.net.
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