This afternoon, just like every Friday afternoon, the FDIC announced which banks it was in the process of closing and who would be taking over the seized bank's assets. The announcement always comes on Friday afternoon after the institutions have closed so that the FDIC and the new owners have enough time over the weekend to transfer all information and accounts, keep business disruptions to a minimum and prevent panicked customers (who aren't aware of the FDIC's insurance policy) from running to the bank to try to withdraw their funds. So far this year, every Friday has been met with an FDIC announcement and 106 banks have been closed, the most since 181 were closed in 1992.
Earlier on Friday evening the dubious honor of the 100th failure went to Partners Bank, of Naples, Fla., which had $65.5 million in assets, according to the Federal Deposit Insurance Corp. The 101st failure was American United Bank, of Lawrenceville, Ga., which had $111 million in assets. The 102nd failure was another Naples, Fla., institution: Hillcrest Bank Florida, which had $83 million in assets. The 103rd closure was Bradenton, Fla.-based Flagship National Bank, with $190 million in assets. The 104th was Bank of Elmwood, based in Racine, Wis., which had $327.4 million in assets. The 105th failure was Riverview Community Bank of Otsego, Minn., with $108 million in assets. The 106th failure was First Dupage Bank in Westmont, Ill., which had $279 million in assets.
An average of 10 banks have failed per month this year, and the federal coffer is thinning under the massive strain. The fund now stands at $7.5 billion, down significantly from $45 billion a year ago.
When the FDIC factors in expected closures, the agency says the fund is in the red and will likely remain there through 2012. Bank failure costs are expected to total $100 billion over the next four years, leaving regulators strapped for cash.
While larger financial institutions received aid from the federal government, smaller banks have found themselves left adrift. Like their larger counterparts, many of these banks made risky loans to individuals and real estate developers during the boom years and are now facing large numbers of defaults as the recession drags on.Rising unemployment has made it difficult for many individuals to keep up with expenses, and businesses are feeling the crunch of consumers' reduced spending power. As a result, regional banks are left holding loans their customers can't repay.