FDIC Seizes Three More Banks, Bringing Failure Toll This Year to 98

Oct. 3 (Bloomberg) — Banks in Minnesota, Michigan and Colorado were shut by regulators, bringing this year’s toll of U.S. failures to 98 amid the worst financial crisis in more than seven decades.

Jennings State Bank of Spring Grove, Minnesota, and Warren Bank of Warren, Michigan, were closed by state regulators and the Federal Deposit Insurance Corp. was named receiver, the agency said yesterday in statements on its Web site. Southern Colorado National Bank of Pueblo was closed by the Office of the Comptroller of the Currency, the FDIC said.

“Deposits will continue to be insured by the FDIC,” the agency said. “There is no need for customers to change their banking relationship to retain their deposit insurance coverage.”

Regulators this year have closed the most banks since the savings-and-loan crisis of the early 1990s as lenders struggle with mounting losses on real-estate loans. U.S. job losses accelerated last month as the unemployment rate climbed to the highest level since 1983.

U.S. payrolls dropped by 263,000 in September, exceeding the median forecast in a Bloomberg survey, the Labor Department said yesterday. The jobless rate rose to 9.8 percent from 9.7 percent in August, while working hours matched a record low.

The FDIC deposit-insurance fund has been depleted by 120 bank failures in the past two years. The agency proposed asking banks to prepay three years of premiums to raise $45 billion. Yesterday’s failures cost the fund $293.3 million.


Huntington Bancshares Inc., a Columbus, Ohio-based bank- holding company, agreed to acquire the deposits of Warren Bank. The FDIC said Warren Bank had deposits of $501 million and assets of $538 million. Huntington will buy $83 million of the assets, the FDIC said. Huntington Chief Executive Officer Stephen Steinour said the acquisition helps the bank gain business in southeast Michigan.

“This transaction affords the opportunity to immediately deepen our presence and better positions us to take advantage of the pockets of growth opportunities that exist,” Steinour said in a statement.

Huntington fell 2 cents to $4.45 yesterday at the close of regular Nasdaq Stock Market trading. The stock has dropped 42 percent this year.

Central Bank of Stillwater, Minnesota, agreed to assume the $52.4 million in deposits at Jennings State Bank, the FDIC said. Central Bank purchased all of Jennings’ $56.3 million in assets, with the FDIC entering into a loss-share agreement on about $37.7 million.

Legacy Bank of Wiley, Colorado, will pay a 1 percent premium for Southern Colorado’s $31.9 million in deposits, the FDIC said. Legacy Bank will buy $39.5 million in assets, with the FDIC sharing losses on $25.5 million.

To contact the reporter on this story: Dakin Campbell in San Francisco at dcampbell27@bloomberg.net

Last Updated: October 3, 2009 00:00 EDT
By Dakin Campbell

Source: Bloomberg

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