Busy Friday

June 27, 2009

FDIC announced five more bank seizures this evening, two of which are in Georgia, the Chernobyl of Banking.  None of the five will be a big drain on the Deposit Insurance Fund, but, as noted at the bottom, there’s another DIF-related issue that bears watching.

#41

  • Bank:  Community Bank of West Georgia, Villa Rica, Georgia
  • Buyer:  None  (FDIC will mail checks to insured depositors).
  • Vitals:  At 5/15/09, assets of $199.4 and deposits of $182.5 million.
  • DIF Damage:  $85 million

Note that this was a payout transaction.  FDIC couldn’t find a buyer for the banks assets.  As CR noted a couple months back, FDIC tries very hard to avoid payouts.

#42:

  • Bank:  Neighborhood Community Bank, Newnan, Georgia
  • Buyer:  CharterBank, West Point, Georgia.
  • Vitals:  At 3/31/09, assets of $221.6 million and deposits of $191.3 million
  • DIF Damage:  $66.7 million

#43

  • Bank:  Horizon Bank, Pine City, Minnesota
  • Buyer:  Stearns Bank, National Association, St. Cloud, Minnesota
  • Vitals:  At 3/31/09, assets of $87.6 million and deposits $69.4 million
  • DIF Damage:  $33.5 million

#44

  • Bank:  MetroPacific Bank, Irvine, California
  • Buyer:  Sunwest Bank, Tustin, California
  • Vitals:  At 6/8/09, assets of $80 million and deposits of $73 million
  • DIF Damage:  $29 million

#45

  • Bank:  Mirae Bank, Los Angeles
  • Buyer:  Wilshire State Bank, Los Angeles
  • Vitals:  At 5/29/09, assets of $456 million, deposits of $362 million
  • DIF Damage: $50 million

The Deposit Insurance Fund had dwindled to $13.0 billion as of March 31st.  Since then, nearly $9.0 billion of new estimated losses have accrued.  (The biggest chunk was $4.9 billion for BankUnited.)

Luckily, $13.0 billion isn’t the sum total of FDIC’s reserves.  Before Sheila Bair has to hit up Treasury, she also has $28.5 billion of loan loss reserves.  Also, there’s the (estimated) $5.6 billion special assessment that will be collected over the next week.

But there’s another potential issue here.  Once upon a time, before the cascade of bank failures, the DIF was invested entirely in Treasurys.  Now a portion is composed of received assets from busted banks.

Questions for FDIC: What portion of the DIF’s assets are illiquid?  What are the marks on these assets?  How much of the DIF may need to be written off if markets stay depressed?

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