2008 Bank Failure Update

Three more banks failed Friday, November 21, 2008.  The Office of Thrift Supervision closed two California thrifts, Downey Savings & Loan and PFF Bank & Trust.  The state regulators in Georgia closed Community Bank of Loganville.  The Federal Deposit Insurance Corp. took all three companies into receivership.  

U.S. Bancorp bought all the deposits and some of the assets of the two California institutions, and Virginia based Bank of Essex bought all the deposits and some of the assets of Community Bank.

As part of the purchase by U.S. Bank, the FDIC and U.S. Bank entered into a loss share transaction.  U.S. Bank will assume the first $1.6 billion of losses on the asset pools covered under the loss share agreement, equal to the net asset position at close.  The FDIC will then share in any further losses.  Under the agreement, U.S. Bank will implement a loan modification program similar to the one the FDIC announced in August stemming from the failure of IndyMac Bank.

Downey Savings & Loan was the third-largest bank to fail this year.  The bank had assets of  over $12 billion and175 branches.  Unfortunately they were aggressive residential real estate lenders concentrating loans in the adjustable rate mortgage market.  PFF Bank had total assets of $3.7 billion and total deposits of $2.4 billion.  Downey Savings has 170 branches in California and five in Arizona and PFF Bank has 38 branches in California

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) for Downey Savings will be $1.4 billion and $700 million for PFF Bank.

The closing of PFF Bank, Downey Savings and Loan and PFF Bank & Trust were the twenty first, twenty second and twenty third banks to fail in the nation this year.

The following is an updated list of bank failures for 2008.
PFF Bank and Trust, Pomona, CA    November 21, 2008
Downey Savings and Loan, Newport Beach, CA  November 21, 2008
The Community Bank, Loganville, GA   November 21, 2008
Security Pacific Bank, Los Angeles, CA   November 7, 2008
Franklin Bank, SSB, Houston, TX    November 7, 2008
Freedom Bank, Bradenton, FL      October 31, 2008
Alpha Bank & Trust, Alpharetta, GA   October 24, 2008
Meridian Bank, Eldred, IL    October 10, 2008
Main Street Bank, Northville, MI    October 10, 2008
Washington Mutual Bank, Henderson, NV    September 25, 2008
and Washington Mutual Bank FSB, Park City, UT
Ameribank, Northfork, WV    September 19, 2008
Silver State Bank, Henderson, NV En Español   September 5, 2008
Integrity Bank, Alpharetta, GA    August 29, 2008
The Columbian Bank and Trust, Topeka, KS   August 22, 2008
First Priority Bank, Bradenton, FL    August 1, 2008
First Heritage Bank, NA, Newport Beach, CA   July 25, 2008
First National Bank of Nevada, Reno, NV   July 25, 2008
IndyMac Bank, Pasadena, CA    July 11, 2008
First Integrity Bank, NA, Staples, MN   May 30, 2008
ANB Financial, NA, Bentonville, AR   May 9, 2008
Hume Bank, Hume, MO    March 7, 2008
Douglass National Bank, Kansas City, MO   January 25, 2008

This entry was posted on Monday, November 24th, 2008 at 9:29 am and is filed under Money Rates. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.