MercoPress. South Atlantic News Agency

Bank failures in United States jump to 84 in eight months

FIDC “rescue” cost of the three latest failed banks is estimated in 446 million USD

The number of bank failures in the United States reached 84 in the first four months of this year, following the collapse of three entities in California, Minnesota and Maryland, according to the latest report from the Federal Deposit Insurance Corporation, FIDC

Failure of the three banks could cost FIDC an estimated 446 million USD. In 2008 the number of bank failures was 25, and the number of those at risk at the end of June 2009 was 416.

Affinity Bank from Ventura, California and its ten branches were closed last week by the California Department of Financial Institutions, which appointed the FDIC as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Pacific Western Bank, San Diego, California, to assume all of the deposits of Affinity Bank.

As of July 10, 2009, Affinity Bank had total assets of one billion USD and total deposits of approximately 922 million USD. In addition to assuming all of the deposits of the failed bank, Pacific Western Bank agreed to purchase essentially all of the assets.

FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be 254 million. Affinity Bank is the ninth bank to fail this year in California. The last FDIC-insured institution closed in the state was Vineyard Bank, National Association, Rancho Cucamonga, on July 17, 2009.

Mainstreet Bank, Forest Lake, Minnesota and its eight branches were closed by the Minnesota Department of Commerce, with FDIC as receiver. To protect the depositors, FDIC entered a purchase and assumption agreement with Central Bank, Stillwater, Minnesota, to assume all of the deposits of Mainstreet Bank.

As of June 30, 2009, Mainstreet Bank had total assets of 459 million and total deposits of approximately 434 million. Central Bank will pay the FDIC a premium of 0.10 percent to assume all of the deposits of Mainstreet Bank. In addition to assuming all of the deposits of the failed bank, Central Bank agreed to purchase essentially all of the assets. FDIC estimates that the cost to DIF will be 95 million USD. Mainstreet Bank is the second bank failure in Minnesota.

Bradford Bank, Baltimore, Maryland and nine branches were closed by the Office of Thrift Supervision. To protect depositors, the FDIC entered into a purchase and assumption agreement with Manufacturers and Traders Trust Company (M&T), Buffalo, New York, to assume all of the deposits of Bradford Bank.

As of June 30, 2009, Bradford Bank had total assets of 452 million USD and total deposits of approximately 383 million USD. In addition to assuming all of the deposits of the failed bank, M&T agreed to purchase essentially all of the failed bank's assets.

The estimated cost for DIF will be 97 million USD. Bradford Bank is the second FDIC-insured institution to fail in Maryland.