Regulators close 3 banks in Fla., Pa., Wis.

[November 20, 2010]  WASHINGTON (AP) -- Regulators on Friday shut down three banks in Florida, Pennsylvania and Wisconsin, lifting the number of U.S. banks that have failed this year to 149 as soured loans pile up and the economy limps forward.

The Federal Deposit Insurance Corp. took over the banks, the largest by far being First Banking Center, based in Burlington, Wis., with $750.7 million in assets.

First Michigan Bank, based in Troy, Mich., agreed to assume the assets and deposits of First Banking Center. In addition, the FDIC and First Michigan Bank agreed to share losses on $515.6 million of First Banking Center's loans and other assets.

The failure of First Banking Center is expected to cost the deposit insurance fund $142.6 million.

Also seized were Gulf State Community Bank in Carrabelle, Fla., with $112.1 million in assets, and Allegiance Bank of North America in Bala Cynwyd, Pa., with $106.6 million in assets.

Centennial Bank, based in Conway, Ark., agreed to assume the assets and deposits of Gulf State Community Bank. Vist Bank, based in Wyomissing, Pa., is acquiring the assets and deposits of Allegiance Bank.

In addition, the FDIC and Centennial Bank agreed to share losses on $84.4 million of Gulf State Community Bank's loans and other assets. Centennial said the acquisition was the latest in a series in Florida under its strategy.

Centennial and the failed bank have competed directly in the Tallahassee and Franklin County markets in Florida, according to regulators. Separately Friday, the Federal Reserve Board approved the transaction, finding that the harmful effects of Centennial's takeover on competition in the two markets are outweighed "in the public interest" by its benefit to the communities in those areas.

The failure of Gulf State Community Bank is expected to cost the deposit insurance fund $42.7 million.

Florida has been the hardest hit state for bank failures. Gulf State Community Bank was the 28th bank to fail in the state this year. Other states that have seen large numbers of bank failures are California, Georgia and Illinois, amid an avalanche of bad loans, especially for commercial real estate.

The FDIC and Vist Bank agreed to share losses on $86.2 million of Allegiance Bank's assets. The failure of Allegiance Bank is expected to cost the deposit insurance fund $14.2 million.

The 149 closures nationwide so far this year tops the 140 shuttered in all of 2009 and is the most in a year since the savings-and-loan crisis two decades ago. By this time last year, regulators had closed 123 banks.

The 2009 failures cost the insurance fund about $36 billion; the failures so far this year have cost around $21 billion, less because the banks failing in 2010 have on average been smaller. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three succumbed in 2007.

The growing bank failures have sapped billions of dollars out of the deposit insurance fund. It fell into the red last year, and its deficit stood at $15.2 billion as of June 30.

The number of banks on the FDIC's confidential "problem" list jumped to 829 in the second quarter from 775 three months earlier, even as the industry as a whole had its best quarter since 2007, making $21.6 billion in net income. Banks with more than $10 billion in assets -- only 1.3 percent of the industry -- accounted for $19.9 billion of the total earnings.

The FDIC expects the cost of resolving failed banks to total around $52 billion from 2010 through 2014.

Depositors' money -- insured up to $250,000 per account -- is not at risk, with the FDIC backed by the government. That insurance cap was made permanent in the financial overhaul law enacted in July.

[Associated Press; By MARCY GORDON]

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