Three More Banks Closed !!!!
Monday, November 10, 2008
Three more community banks in Texas, California, and Florida have fallen under the pressures of the country's economic and housing crises, bringing the total number of institutions on the Federal Deposit Insurance Corporation's (FDIC's) failed bank list to nineteen in 2008. Franklin Bank, S.S.B. in Houston and Security Pacific Bank of Los Angeles were closed on Friday. Freedom Bank in Bradenton, Florida was shut down on October 31.
Franklin Bank is the fourth largest bank to fail this year, with total assets of $5.1 billion, total deposits of $3.7 billion, and 46 offices throughout the state of Texas. Prosperity Bank, also based in Houston, agreed to assume all Franklin's deposits, including brokered deposits, from the FDIC for a premium of 1.7 percent. Prosperity said it would also purchase approximately $850 million of Franklin's assets. The FDIC estimates that the cost of the transaction to its Deposit Insurance Fund will be between $1.4 billion and $1.6 billion.
According to a local CBS television station, analysts are attributing the bank's failure to poor lending practices. The Houston Business Journal said Franklin had the highest ratio of past-due loans on the books of any other Houston-area bank, according to FDIC data. Most of those loans were in states such as Florida, Arizona, and Nevada that have been hardest hit by the housing downturn. Franklin is the first bank to go under in Texas since 2002.
Los Angeles' Pacific Western Bank has agreed to acquire Security Pacific Bank's $450.1 million in deposits from the FDIC at a 2 percent premium. Pacific Western will also purchase approximately $51.8 million of the failed bank's $561.1 million assets and take over its four L.A. branches. The FDIC estimates the cost to the agency's insurance fund will be $210 million. Security Pacific is the third bank to fail in California this year, including subprime mortgage giant IndyMac.
When Florida's Freedom Bank was closed at the end of October, Fifth Third Bank of Grand Rapids, Michigan stepped in to take over Freedom's four branches in the Bradenton-Sarasota area and agreed to acquire the insolvent bank's $254 million in deposits for a premium of 1.16 percent. Fifth Third also purchased approximately $36 million of Freedom's $287 million assets. The FDIC estimates the bankruptcy will cost it between $80 million and $104 million. Freedom was the second Bradenton bank to fail this year. Regulators shut down First Priority Bank on Aug. 1, with SunTrust Bank assuming its deposits. Both banks fell on hard times as the real estate market weakened in Florida.
Franklin Bank is the fourth largest bank to fail this year, with total assets of $5.1 billion, total deposits of $3.7 billion, and 46 offices throughout the state of Texas. Prosperity Bank, also based in Houston, agreed to assume all Franklin's deposits, including brokered deposits, from the FDIC for a premium of 1.7 percent. Prosperity said it would also purchase approximately $850 million of Franklin's assets. The FDIC estimates that the cost of the transaction to its Deposit Insurance Fund will be between $1.4 billion and $1.6 billion.
According to a local CBS television station, analysts are attributing the bank's failure to poor lending practices. The Houston Business Journal said Franklin had the highest ratio of past-due loans on the books of any other Houston-area bank, according to FDIC data. Most of those loans were in states such as Florida, Arizona, and Nevada that have been hardest hit by the housing downturn. Franklin is the first bank to go under in Texas since 2002.
Los Angeles' Pacific Western Bank has agreed to acquire Security Pacific Bank's $450.1 million in deposits from the FDIC at a 2 percent premium. Pacific Western will also purchase approximately $51.8 million of the failed bank's $561.1 million assets and take over its four L.A. branches. The FDIC estimates the cost to the agency's insurance fund will be $210 million. Security Pacific is the third bank to fail in California this year, including subprime mortgage giant IndyMac.
When Florida's Freedom Bank was closed at the end of October, Fifth Third Bank of Grand Rapids, Michigan stepped in to take over Freedom's four branches in the Bradenton-Sarasota area and agreed to acquire the insolvent bank's $254 million in deposits for a premium of 1.16 percent. Fifth Third also purchased approximately $36 million of Freedom's $287 million assets. The FDIC estimates the bankruptcy will cost it between $80 million and $104 million. Freedom was the second Bradenton bank to fail this year. Regulators shut down First Priority Bank on Aug. 1, with SunTrust Bank assuming its deposits. Both banks fell on hard times as the real estate market weakened in Florida.
