The Federal Deposit Insurance Corp. or FDIC, reported the last bank closure in 2012 while announcing the closure of a bank in Missouri on December 14, taking the count of total U.S. bank closures in 2012 to 51, after 92 in 2011 and the 157 bank closures in 2010.
The state of Georgia was again at the top spot in 2012 with ten bank failures, the most than any other state, after topping in 2011 also. Florida and Illinois were tied for second with eight bank failures each. Since the start of the financial crisis in 2008, there have been 84 bank failures in Georgia and 66 in Florida.
With bank failures trending down and declining for the second straight year, signs are that economic normalcy is returning, which will eventually lead to higher deposit rates.
However, most of bank failures in 2012 were little-known small community banks with assets between $100 million and $1 billion. Starting in 2010, very few large banks are seen failing, with only one bank having assets over $1 billion failing in 2012, seven in 2011, and 23 in 2010.
Meanwhile, there were seven failed banks in 2009 that had over $5 billion in assets, the largest being Colonial Bank with $25 billion. The largest bank to have ever failed was Washington Mutual, Inc. or WaMu (WAMUQ), in 2008 which had $307 billion in assets.
The 51 FDIC-insured institution that failed in the nation in 2012 were closed by the regulators, with the assets of the failed banks beings assumed by other banks in FDIC assisted transactions. Out of the 51 failures, only four banks were not acquired in 2012, while there were two banks that were not acquired in 2011.
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 7,181 banks and savings associations.
Banks failures have continued at a relatively steady pace in 2012, though the size and number of closures were well below levels seen during the prior three years. On an average, just over 4 banks have failed per month in 2012, with bank closures for 2011 averaging only nearly eight per month, and thirteen in 2010.
The 51 bank closures in 2012 were sharply down from 92 in 2011, the peak of 157 in 2010 in the wake of the financial crisis, and 140 in 2009, but were double the 25 bank failures in 2008. Meanwhile, only three banks failed in 2007, and a total of 23 in the six years prior to that. The highest and all time record for bank closures was in 1989 when 534 banks closed, followed by 181 bank failures in 1992.
Looking ahead, bank failures are expected to be fewer in 2013 as the number trended down in 2012. There are still 838 banks on 'Calculated Risk's unofficial problem bank list.' However, many banks on this list may not fail. Several have been able to correct problems and get the regulator to terminate the enforcement action. Others have arranged to be acquired by other banks without help from the FDIC.
by RTT Staff Writer
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