Another Round of Bank Failures

Another Round of Bank Failures - 2/2/2009

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2009 News and Press Releases

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News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

HEADLINE NEWS:

Another Round of Bank Failures
Kevin LaCroix

The D & O Diary. February 2, 2009
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EXCERPT: As detailed in a recent post, one of the more worrisome trends in an economic environment full of thing to worry about is the increasing number of bank failures involving community banks. This trend continued this past Friday night when the FDIC closed three more banks, brining the 2009 bank closure tally up to six. The three banks closed on Friday were MagnetBank of Salt Lake City, Utah, which has assets of $292.9 million the Suburban Federal Savings Bank of Crofton, Maryland, with assets of $360 million and Ocala National Bank of Ocala, Florida, with assets of $223.5 million. A particularly troublesome note regarding the Utah bank’s closure is that the FDIC was unable to find a buyer for the bank’s assets or deposits, which the Wall Street Journal described as a “rare event and an ominous sign for regulators.” According to news reports, this is the first time in over five years that the FDIC has been unable to find a buyer for a failed bank’s assets. In the absence of a buyer, the FDIC will issue checks to the bank’s depositors, increasing the impact on the FDIC insurance fund. The failure of the Suburban Federal Savings Bank was the first bank failure in Maryland since 1992. As detailed in the Washington Post, the bank’s failure was precipitated by mounting losses in the bank’s mortgage loan portfolio. Perhaps even more noteworthy than the fact that the total number of bank failures in 2009 is already up to six banks is the fact that the total number of bank failures in the seven month period between July 1, 2008 and January 31, 2009 is 27.

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