US Bank Closures Reach 31 In 2012 As Regulators Close Three Banks

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6/16/2012 9:14 PM ET

The Federal Deposit Insurance Corp. or FDIC, announced Friday the shuttering of three banks, one each in Florida, Georgia, and Tennessee, taking the count of total U.S. bank closures in 2012 to 31, after 92 in 2011 and the 157 bank closures in 2010. The three banks were closed on Friday by the regulators, with the assets of the failed banks beings assumed by other banks in FDIC assisted transactions. The FDIC estimates that the cost to the Deposit Insurance Fund or DIF, by the three bank closures will be a total of $100.0 million.

Indiantown, Florida-based Harbor Community Bank acquired the banking operations, including all the deposits, of Putnam State Bank, and Atlanta, Georgia-based Fidelity Bank, acquired the banking operations of Marietta, Georgia-based Security Exchange Bank.

Meanwhile, Knoxville, Tennessee-based Clayton Bank and Trust will assume all of the deposits of Lynchburg, Tennessee-based Farmers Bank of Lynchburg from FDIC.

Putnam State Bank was closed by Florida Office of Financial Regulation. As of March 31, 2012, the bank had about $169.5 million in total assets and $160.0 million in total deposits.

Harbor Community Bank agreed to purchase essentially all of the Putnam State Bank's assets, while assuming all of the deposits of the failed bank. The FDIC estimates that the cost to the DIF will be $37.4 million on transaction. The FDIC and Harbor Community Bank also entered into a loss-share transaction on $112.3 million of Putnam State Bank's assets.

Meanwhile, Security Exchange Bank was closed by the Georgia Department of Banking and Finance. As of March 31, 2012, the bank had $147.9 million in total deposits and about $151.0 million in total assets.

Fidelity Bank, a subsidiary of Fidelity Southern Corp. (LION: Quote), agreed to purchase all of Security Exchange Bank's assets, while assuming all of the deposits of the failed bank. The FDIC estimates that the cost to the DIF will be $34.3 million on the transaction. The FDIC and Fidelity Bank also entered into a loss-share transaction on $102.8 million of Security Exchange Bank's assets.

Further Farmers Bank of Lynchburg was closed by the Tennessee Department of Financial Institutions. As of March 31, 2012, the bank had $163.9 million in total assets and about $156.4 million in total deposits.

Clayton Bank and Trust agreed to purchase all of Farmers Bank's assets, while assuming all of the deposits of the failed bank at a premium of 0.10 percent. The FDIC estimates that the cost to the DIF will be $28.3 million on the transaction. The FDIC noted that customers of all the failed banks can this evening and over the weekend access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed, and loan customers should continue to make their payments as usual.

Customers of the failed banks are protected, by the FDIC, which has insured bank deposits since the Great Depression, currently covering customer accounts up to $250,000. The FDIC insures deposits at the nation's 7,309 banks and savings associations.

Banks failures have continued at a relatively steady pace in mid-2012, though the size and number of closures are well below levels seen during the prior three years. At the same time last year, 47 banks had failed.

On an average, 13 banks have failed per month in 2010, with bank closures for 2011 averaging only nearly eight per month, and currently averaging only near six in 2012. The 92 bank closures in 2011 were down from 157 in 2010 and 140 in 2009, but nearly four times of the 25 bank failures in 2008. Only three banks failed in 2007. The highest and all time record for bank closures was in 1989 when 534 banks closed, followed by 181 bank failures in 1992.