Three banks, two in California and one in Georgia, were seized by regulators, bringing this year’s tally of closings to nine as a recession and record foreclosures extend the biggest financial crisis in more than 70 years.
County Bank of Merced, California, with deposits of $1.3 billion and assets of $1.7 billion, was shut yesterday by the state’s Department of Financial Institutions, according to an e-mailed statement from the Federal Deposit Insurance Corporation (FDIC). Westamerica Bancorporation, holding company for Westamerica Bank, acquired all the assets and deposits.
The Georgia Department of Banking and Finance closed McDonough-based FirstBank Financial Services, which had $337 million in assets and $279 million in deposits as of December 31, the FDIC said in a statement. The California Department of Financial Institutions shut Culver City-based Alliance Bank, with assets of $1.14 billion and $951 million in deposits.
The FDIC was named receiver of the institutions, which will resume business as branches of the acquiring banks. Regulators seized six banks in January, the largest monthly toll since 1993, including Salt Lake City-based MagnetBank, which the FDIC closed January 30 after being unable to find a buyer. The FDIC shuttered 25 banks last year, matching the total for 2001 through 2007.
The FDIC, other US bank regulators and Congress are taking steps to help banks avoid losses as the administration of President Barack Obama readies a stimulus package that may include guarantees for toxic assets, according to people familiar with the plan.
Insurance legislation
Legislation that would more than double deposit insurance coverage and offer safeguards for banks is being considered by Congress. The House Financial Services Committee unanimously approved a measure that would raise coverage to $250,000 per depositor per bank, from $100,000.
Congress also may extend the FDIC’s line of credit with the Treasury to $100 billion from $30 billion to replenish the deposit fund. The FDIC said bank failures through 2013 may cost the fund more than the $40 billion estimated in October.
“We do expect there to be more stress on banks, which could result in an increase in commercial bank failures,” said Comptroller of the Currency John Dugan in an earlier interview. A deepening recession that adds stress may lead to “significantly more losses,” said Dugan, regulator of national banks.
The FDIC on December 16 doubled premiums it charges banks to replenish its reserves, which totaled $34.6 billion as of the third quarter. The Washington-based agency oversees 8,384 institutions with $13.6 trillion in assets.
Price tag
The latest bank failures will cost the FDIC’s deposit insurance fund a combined $452 million. The fund is supported by fees on insured banks.
Westamerica, based in San Rafael, California, acquired 39 County Bank branches. The branches with Saturday hours will open as Westamerica offices today, and the rest will open Monday as usual. Westamerica shares have declined less than 1 per cent in the past 12 months, to $48.52, as the 24-company KBW Bank Index has plummeted by almost two-thirds.
