I had thought the first was an isolated incident, but I was wrong... we're up to 8 already (I admittedly missed 2-7) First Priority of Florida Becomes Eighth Failed Bank; SunTrust Buys Assets First Priority Bank with six branches on Florida's Gulf Coast was closed by state regulators, becoming the eighth U.S. bank to collapse this year amid failed loans and writedowns linked to a slump in home... [more]
I had thought the first was an isolated incident, but I was wrong... we're up to 8 already (I admittedly missed 2-7)
First Priority of Florida Becomes Eighth Failed Bank; SunTrust Buys Assets First Priority Bank with six branches on Florida's Gulf Coast was closed by state regulators, becoming the eighth U.S. bank to collapse this year amid failed loans and writedowns linked to a slump in home prices.
http://www.bloomberg.com/apps/news?pid=20601103&sid=a87bC3u64eTc&refer=us
First Priority Becomes Eighth Failed Bank; SunTrust Buys Assets
By David Mildenberg and Alison Vekshin
Aug. 2 (Bloomberg) -- First Priority Bank with six branches on Florida's Gulf Coast was closed by state regulators, becoming the eighth U.S. bank to collapse this year amid failed loans and writedowns linked to a slump in home prices.
First Priority, with $259 million in assets, was shut yesterday by the Florida Office of Financial Regulation, and the Federal Deposit Insurance Corp. sold $227 million in deposits to SunTrust Banks Inc. of Atlanta, the agency said in a statement. Six First Priority branches in Bradenton, Sarasota and Venice will open Aug. 4 as SunTrust offices, the FDIC said.
The pace of bank closings is accelerating as securities firms report more than $480 billion in writedowns and credit losses since 2007, when three banks were shuttered. Regulators in July closed IndyMac Bancorp, a California-based mortgage lender with $32 billion in assets, the third-largest bank seizure that will cost the U.S. deposit insurance fund $4 billion to $8 billion.
``The only thing sure other than death and taxes is that deposit insurance premiums will be going up as more banks fail,'' said Gerard Cassidy, an analyst with RBC Capital Markets in Portland, Maine. He expects 300 U.S. banks to fail in the next several years, mainly because of mounting losses from real estate-related loans.
SunTrust, the largest bank based in Georgia, will buy Bradenton-based First Priority's deposits held for 4,000 customers for no premium, while acquiring about $42 million in assets, the FDIC said. The U.S. deposit insurance fund will pay an estimated $72 million, the FDIC said. First Priority had about $13 million in uninsured deposits in 840 accounts, although the total may be revised, the FDIC said.
`Problematic Situation'
``We are pleased to be in a position to support the FDIC in its effort to resolve a problematic situation,'' SunTrust Chief Executive Officer James Wells said in a statement. SunTrust will seek jobs for 50 employees of First Priority, the bank said.
The FDIC insures deposits of up to $100,000 per depositor per bank, and up to $250,000 for some retirement accounts at 8,494 institutions with $13.4 trillion in assets.
Homeowners who defaulted in June outnumbered those who caught up on payments as Bank of America Corp., Wells Fargo & Co. and other lenders sought to modify the loans, the Mortgage Insurance Companies of America reported July 31. The pace of foreclosures more than doubled in the second quarter from a year earlier, RealtyTrac Inc. said in July.
Lenders on the FDIC's ``problem list'' climbed to 90 in the first quarter from 76 in the fourth quarter of 2007, the agency said in May. FDIC Chairman Sheila Bair said 13 percent of listed banks may fail, while the remainder are nursed back to health or are sold off to healthier lenders.
More Failures Forecast
Bair and Comptroller of the Currency John Dugan said on July 28 they expected more lenders to fail this year as the pace of shutdowns returns to more normal levels.
The FDIC has closed 36 banks since October 2000, according to a list at fdic.gov. The U.S. shut 12 banks in 2002, the highest in the period, and 2005 and 2006 had no closures.
First Priority is the first Florida bank to fail since Guaranty National Bank in Tallahassee in March 2004, the FDIC said.
U.S. bank regulators closed Reno-based First National Bank of Nevada and Newport Beach, California-based First Heritage Bank in July; Staples, Minnesota-based First Integrity Bank and ANB Financial in Bentonville, Arkansas, in May; Hume Bank in Hume, Missouri, in March; and Douglass National Bank in Kansas City, Missouri, in January. The six lenders had about $5.89 billion in assets.
To contact the reporters on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net; Alison Vekshin in Washington at avekshin@bloomberg.net
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Response by intdea
almost 18 years ago
Posts: 3
Member since: Aug 2008
The system works.
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Response by zorter
almost 18 years ago
Posts: 110
Member since: Apr 2008
Between 1990 and 1992 834 banks failed, anybody remember any????
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Response by Victor1
almost 18 years ago
Posts: 5
Member since: Aug 2008
Ignore zorter. Focus only on hyped media nonsense. I mean, ignore EddieWilson behind the curtain.
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Response by GraffitiGrammarian
almost 18 years ago
Posts: 687
Member since: Jul 2008
It's true that we've seen many bank failures in the past, esp. during sharp downturns like the one sparked by the S&L crisis of the late 80s.
The Feds handled that situation pretty well by overseeing the orderly liquidation of assets.
Their actions didn't create a panic, and that's to their credit.
However that hardly means that a rash of bank failures is not a noteworthy event!
Bank failures are not normal events, and slew of failures is a sign of systemic stress.
Our company has been told by knowledgeable people that the FDIC has been staffing up in anticipation of many more bank failures over the next few years. Most of these institutions will be smaller regional banks that made a lot of bad real estate loans -- mostly land and development loans.
BTW, there is one other noteworthy thing about the period cited by Zorter, between 1990 and 1992 -- that was the bottom of the last residential real estate cycle in NYC, when many folks found themselves sitting on coops that were not worth as much as they had paid for them.
It amuses me when people say, "but prices never go down in New York!" Which of course is not the case, they went down rather a lot in the early 1990s, and took several years to bounce back to the level they'd been at when the cycle took a southwward turn.
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Response by MMAfia
almost 18 years ago
Posts: 1071
Member since: Feb 2007
GraffitiGrammarian, good points. Most importantly, it's not the number of banks that fail- it's the amount of $$$ that gets wiped out that matters here. Who cares if 10,000 tiny banks get wiped out if they represent only a tiny amount of $$$? Zorter is focusing on the wrong number.
Remember, IndyMac was the 3rd largest bailout EVER in US history- and the most alarming fact is that it wasn't even on the FDIC's 80 or so watchlist to begin with!!!
However, this is already a moot point- the consensus among Wall St. analysts is that this is worse than the S&L crisis.
The system works.
Between 1990 and 1992 834 banks failed, anybody remember any????
Ignore zorter. Focus only on hyped media nonsense. I mean, ignore EddieWilson behind the curtain.
It's true that we've seen many bank failures in the past, esp. during sharp downturns like the one sparked by the S&L crisis of the late 80s.
The Feds handled that situation pretty well by overseeing the orderly liquidation of assets.
Their actions didn't create a panic, and that's to their credit.
However that hardly means that a rash of bank failures is not a noteworthy event!
Bank failures are not normal events, and slew of failures is a sign of systemic stress.
Our company has been told by knowledgeable people that the FDIC has been staffing up in anticipation of many more bank failures over the next few years. Most of these institutions will be smaller regional banks that made a lot of bad real estate loans -- mostly land and development loans.
BTW, there is one other noteworthy thing about the period cited by Zorter, between 1990 and 1992 -- that was the bottom of the last residential real estate cycle in NYC, when many folks found themselves sitting on coops that were not worth as much as they had paid for them.
It amuses me when people say, "but prices never go down in New York!" Which of course is not the case, they went down rather a lot in the early 1990s, and took several years to bounce back to the level they'd been at when the cycle took a southwward turn.
GraffitiGrammarian, good points. Most importantly, it's not the number of banks that fail- it's the amount of $$$ that gets wiped out that matters here. Who cares if 10,000 tiny banks get wiped out if they represent only a tiny amount of $$$? Zorter is focusing on the wrong number.
Remember, IndyMac was the 3rd largest bailout EVER in US history- and the most alarming fact is that it wasn't even on the FDIC's 80 or so watchlist to begin with!!!
However, this is already a moot point- the consensus among Wall St. analysts is that this is worse than the S&L crisis.